OFAC Publication Of Price Cap Coalition Alert

• Published date: 14 February 2024
• Law Firm: Herbert Smith Freehills
• Author: Mr Jonathan Cross, Christopher Boyd, Brittany Crosby-Banyai, Kelly Adams and Yash Dattani

On February 1, 2024, the United States Department of Treasury's Office of Foreign Assets Control ("OFAC") published a Price Cap Coalition Compliance and Enforcement Alert (the "Alert"). Per the Alert, the "Price Cap Coalition," which consists of the G7, the European Union, and Australia, has two key objectives: (1) constraining Russian revenues that could otherwise be used to fund Russia's war against Ukraine, while (2) maintaining global oil flows and protecting energy security. The Alert contains an overview of key oil price cap ("OPC") evasion methods and recommendations for identifying such methods and mitigating their risks and negative impacts as well as information of how to report OPC suspected breaches across the Price Cap Coalition. The Alert also noted that it builds on multiple previous alerts issued by the Price Cap Coalition.

Per OFAC, the Alert should be considered in full by any industry stakeholder involved in the trade of Russian oil and oil product and should adopt the recommendations included in the Alert along with those included in previous guidance documents. OFAC also notes that the guidance can help governments and industry stakeholders improve their compliance with the OPC and reduce their exposure to possible risks associated with circumvention and evasion of the measure.

OPC Evasion Methods and Recommendations

In the Alert, OFAC highlights the following common evasion methods of the OPC:

1. Falsified documents and attestations
   Falsified documentation can be used to disguise the true...