Last week, this blog reported that the effect of the Russia sanctions was, at least in certain instance, the imposition of sanctions on certain parties not named in the designation lists. This would occur due to OFAC’s rule that treats entities not named in specific designation orders as blocked if the unnamed entity is owned 50 percent or greater by parties blocked in a designation order (or as a result of the 50 percent rule). In this regard, we noted that SMP Bank in Russia was blocked because of the ownership interests of Arkady and Boris Rotenberg in the bank. Both Rotenbergs were specifically named in designation orders. As a result, MasterCard and Visa stopped allowing their credit cards to be processed through SMP Bank.

Well, today Visa and MasterCard had a change of heart and permitted SMP Bank to continue serving its Russian oligarchs and other customers. Although details of this change of heart are scarce, this blog has learned that the reason for this has to do with informal guidance from OFAC. Since neither Arkady nor Boris Rotenberg individually hold 50 percent or greater in SMP Bank, their interests are not aggregated merely because of their family relationship. This does not, however, preclude OFAC from adding SMB Bank by name to a future designation list based on the participation and control of the brothers Rotenberg.

So, for the moment at least, oligarchs can go back to charging their purchases of Almas Beluga caviar once again.