OFAC head discusses banks’ role in G7 Russian oil price cap enforcement

With the announcement this weekend that G7 member states had agreed to a price cap on Russian oil in response to Russian President Vladimir Putin’s invasion of Ukraine, Office of Foreign Assets Control Director Andrea Gacki today discussed how her office will approach implementation, and its expectations for banks.

Speaking at the ABA/ABA Financial Crimes Enforcement Conference this morning, Gacki said that OFAC has begun “engaging with different elements of the ecosystem,” including banks, to determine the types of information these entities have available regarding transactions of Russian oil. She noted that efforts have been made to “put those players in tiers,” based on their level of information about the price of oil, and that compliance obligations would be higher based on that degree of knowledge.

She noted that within this schema, “if you are a bank clearing transactions, you are perhaps at the lowest level of knowledge,” and emphasized the need to “create a sanctions program that acknowledges that [and]that doesn’t put a burden on banks to figure out the price, but to rely on, for example, attestations.”

Gacki also confirmed that “when it comes to the price cap policy, we will only take an enforcement action if the transaction is significant, and if we see elements of willfulness in trying to evade the price cap. This is a policy that’s meant to keep crude flowing at a low enough price and will not enrich Putin.”