On December 28, 2020, the Department of the Treasury Office of Foreign Assets Control (OFAC) published awaited guidance on the implementation of Executive Order (EO) 13959, “Executive Order on Addressing the Threat from Securities Investments that Finance Communist Chinese Military Companies,” which President Trump issued on November 12, 2020. EO 13959 will prohibit, as of January 11, 2021, purchases by U.S. persons of certain securities issued by so-called Communist Chinese military companies. OFAC’s guidance comes in the form of Frequently Asked Questions (FAQs) 857, 858, 859, 860, and 861. The State Department also issued a press release the same day addressing OFAC’s guidance.

The new FAQs, discussed below, address some - but not all - key questions asked by industry groups regarding the EO’s scope. While OFAC is working on additional guidance that it may publish prior to January 11, 2021, fund managers, broker-dealers, investment advisors, banks and many others are now making challenging compliance and commercial decisions with limited information about this novel sanctions program.