SanctionsAlert.com Sanctions Round Up
November 17, 2017
EU removes FARC from terrorist list; imposes first set of sanctions on Venezuela
On November 13, 2017, the E.U. removed Colombian guerilla group FARC from its terrorism sanctions list following its disarmament and re-launch as a political party. Earlier, in September 2016, the E.U.had suspended its terrorism sanctions on FARC in recognition of the peace agreement signed between FARC and the Colombian government.
It is important to note that FARC still remains on the U.S. State Department’s Foreign Terrorist Organizations (FTO) list.
Despite this easing of sanctions against FARC, the E.U. also decided to impose an arms embargo on Colombia itself, and to introduce a legal framework for travel bans and assets freezes for those involved in human rights violations and non-respect for democracy or the rule of law.
- A prohibition to sell, supply, transfer or export, directly or indirectly, goods and technology listed in the E.U. Common Military List, as well as equipment which may be used for internal repression as listed in Annex I of Council Regulation (EU) 2017/2063. Related financial and technical assistance is also prohibited.
- A prohibition to sell, supply, transfer or export, directly or indirectly, equipment, technology or software, as listed in Annex II of Council Regulation (EU) 2017/2063. Related financial and technical assistance is also prohibited.
FinCEN Section 311 Measure against Bank of Dandong For Supporting North Korea Sanctions Violations
On November 2, 2017,the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued a final rule, pursuant to Section 311 of the USA PATRIOT Act,which cuts off China’s Bank of Dandong from the U.S. financial system. According to the rule, the Chinese bank acted as a conduit for illicit financial activity in North Korea. A draft of the rule was issued earlier, in June 2017.
FinCEN also issued an advisory to further alert financial institutions to schemes commonly used by North Korea to evade U.S. and U.N. sanctions, launder funds, and finance the North Korean regime’s weapons programs.
The rule, which becomes effective on December 8, 2017,prohibits covered financial institutions from opening or maintaining correspondent accounts for,or on behalf of, Bank of Dandong. Such accounts, a standard and legal practice in global banking, are used by foreign banks without offices in other countries as inter bank ties with U.S.financial institutions to facilitate American dollar money flows for their clients.
FinCEN found Bank of Dandong to be of “primary money laundering concern” by serving as a gateway for North Korea to access the U.S. and international financial systems despite U.S. and U.N. sanctions. Covered financial institutions are also required to apply special due diligence measures to their foreign correspondent accounts. These measures are designed to reasonably guard against such accounts being used to process transactions involving the Bank of Dandong.
Bank of Dandong is not currently included on the OFAC’s Specially Designated Nationals (SDN) list.
Yearly UN Vote on Cuba Embargo Singles out US and Israel
On November 1, 2017, the U.N. General Assembly adopted a resolution underlining the need to end the economic, commercial and financial embargo imposed by the U.S. against Cuba. This type of resolution with regard to Cuban sanctions is voted on by the U.N. annually.
The resolution enjoyed favorable votes from 191 of the 193 U.N. Member States. Only the U.S. and Israel opposed the text.
This was a change from last year’s vote, which saw the U.S. and Israel abstain from the vote – for the first time in the 25-year history of the annual review of the issue – rather than rejecting the text.
Despite efforts to ease sanctions against Cuba during the Obama Administration by amending the Cuban Asset Control Regulations (CACR), a move known as the ‘Cuban thaw’, the current U.S. Government has begun to reverse these actions. Since President Trump took office on January 20, 2017, his administration has curbed Cuban investment by banning business with 180 entities linked to the Cuban military (such as hotels, marinas, and stores) as well as restricted travel of U.S. persons.
OFAC Significantly Expands Russian Sanctions Following Enactment of CAATSA
On October 31, 2017, OFAC took a number of actions to implement the Countering America’s Adversaries Through Sanctions Act (CAATSA). The bill, which was originally signed into law by President Trump on August 2, 2017, codifies certain non-nuclear sanctions against Iran, adds to the sanctions against North Korea, and – most notably – significantly expands sanctions targeting Russia. The law also restricts the power of the Executive branch by including a congressional review mechanism that will allow Congress to potentially block the President from easing Russian sanctions.
Following the enactment of CAATSA, OFAC has amended Directive 4 under Executive Order 13662 with regards to prohibitions on supplying goods, services (except financial services) to Russian oil projects. The amended Directive now prohibits U.S. persons from directly or indirectly providing, exporting, or re-exporting goods, services (except for financial services), or technology in support of exploration or production for deep-water, Arctic offshore, or shale projects (save for gas projects) that meet the following three criteria:
- the project was initiated on or after January 29, 2018;
- the project has the potential to produce oil in any location; and
- Russian individuals or entities designated under Directive 4—individually or in the aggregate—either have a 33 % or greater ownership interest in the project or own a majority of the voting interests in the project.
N.b. the project does not have to be located in Russia.
The amended Directive becomes effective in January 2018.
OFAC also updated its Frequently Asked Question (FAQ) guidance regarding restrictions related to foreign financial institutions, facilitating transactions with SDNs, sanctions evasion, and investments in Russian state-owned assets.
For U.S. companies engaged in exploration or production on certain energy projects, the changes in Directive 4 may present significant compliance headaches, and companies should be prepared to undertake enhanced due diligence – even if the projects are not located in Russia. For non-U.S. companies and financial institutions, the restrictions on facilitating transactions with Russian SDNs will be of particular concern.
US Extends General License (Again) for Certain Belarus Entities
On October 24, 2017, in consultation and coordination with the Department of State, OFAC once again renewed Belarus’ general license for a 6-month period. This most recent renewal, made by General License 2D, replaces and supersedes General License 2C, and authorizes “transactions involving certain Belarusian entities blocked pursuant to”current Belarus Sanctions (Executive Order 13405).
The new General License 2D, similarly to the General License 2C, requires any U.S. person to report any transactions, or series of transactions, in excess of $50,000 to the U.S. Department of State, Office of Eastern European Affairs, no later than 30 days after their execution. It is important to note, however, that no new property has been unblocked by the new license.
General License 2D expires on April 30, 2018, unless it is once again extended, or revoked.
The E.U. permanently lifted most of its sanctions on Belarus in February 2016, after European Ministers agreed that the situation in the ex-Soviet Block country was showing a positive trend.
New UK Sanctions and AML Bill Could Shape Post-Brexit Britain
On 18 October 2017, the Sanctions and Anti-Money Laundering Bill (the “Bill“) was introduced by Lord Ahmad of the House of Lords – one of the two houses of U.K. Parliament. According the Government’s press release, the Bill “ensures that when the UK leaves the E.U., [it] can continue to impose, update, and lift sanctions and AML regimes.”
At present, U.K. authorities can, like their counterparts in other E.U. member states, only grant a license (to allow a business or person to do something which is otherwise prohibited by sanctions) where the relevant E.U. Regulation provides for this. This new Bill offers the prospect (though not the certainty) of OFSI and/or ECJU having a wider discretion as to the granting of licenses after Brexit.
If the Bill succeeds in passing through both houses of Parliament and receives ‘Royal Assent’, this piece of legislation will define how the U.K. plans to impose, implement and enforce sanctions once it leaves the E.U. in 2019.
The Bill was given a ‘second reading’ by the House of Lords on November 1st. The ‘committee stage’ is scheduled to begin on November 21st.
In order for a bill to become law in the U.K., three readings are required as well as a line-by line debate of the bill called the “committee stage” and a further stage of scrutiny called the “report stage”. If a bill passes through all these stages in the House of Lords, it will continue on to the House of Commons where it must pass through the same stages. If both Houses pass the bill, it is then given to the Queen for her “Royal Assent”. Only after all these stages does a bill become enforceable legislation (i.e. an Act of Parliament).
A link to the Bill is available here.
A link to the Explanatory Notes on the Bill is available here.
If you would like to track to the progress of the Bill, see here.
Trump Refuses to Certify Iran Deal; Causes Uncertain Future
On October 13, 2017, in a speech given at the White House, Trump announced that he would not be certifying the deal with Iran. The U.S. President has twice heeded the advice of his foreign policy advisors to certify the deal, but failed to follow this pattern for a third time.
The Iran nuclear deal, or Joint Comprehensive Plan of Action (JCPOA), was agreed on July 14, 2015 between the U.S., Russia, China, France, the UK, Germany (aka, the “P5+1”) and Iran. Under the JCPOA, the Iranian government has agreed to significantly scale back its nuclear program in exchange for the relative easing of U.N., E.U., and U.S. sanctions.
Unlike E.U.rope, the U.S. has a domestic legal requirement to ‘certify’ every 90 days that Iran is adhering to the nuclear deal. The legislation that contains this requirement is called the Iran Nuclear Agreement Review Act, or INARA.
By “decertification”, or declining to certify the stipulations set out in INARA, Trump is shifting responsibility over to Congress, who will have 60 days to decide how to respond. Basically, Congress can do one of three things:
- Re-impose Sanctions: some or all of the nuclear-related sanctions on Iran, which are currently eased under the JCPOA, could be re-instated.
- Nothing:In this scenario, the JCPOA remains intact, but if Trump decertifies again, Congress will have to re-examine the issue once again?
- Amend INARA: such as by removing the legal necessity for Trump to periodically issue certification of Iran’s compliance with the deal.
After Two Decades, U.S. Revokes Sudanese Sanctions
On October 12, 2017, after a long and arduous assessment and conciliation process, the U.S. has now lifted all economic sanctions against Sudan. The war-torn North African country had been keen to regain access to the global banking system in order to potentially unlock badly needed trade and foreign investment. Sudan first received sanctions in the 1990s over Khartoum’s perceived support of global terrorism and, later, its violent suppression of rebels in Darfur.
Effective October 12, 2017, U.S. persons will no longer be prohibited from engaging in transactions that were previously prohibited under the Sudanese Sanctions Regulations, 31 C.F.R. part 538 (SSR).
The Treasury’s Office of Foreign Assets Control (OFAC) also proceeded to remove a number of individuals and entities off its SDN List, and issued a “General License A”:
“Effective October 12, 2017, pursuant to section 906(a)(l) of TSRA (22 U.S.C. 7205), all exports and re-exports of agricultural commodities, medicine, or medical devices to the Government of Sudan or to any entity in Sudan or to any person in a third country purchasing specifically for resale to any of the foregoing are authorized, provided that the exports and re-exports are shipped within the 12-month period beginning on the date of the signing of the contract for export or re-export.”
It is important to note that, while OFAC has removed sanctions, U.S. persons and non-U.S. persons will still need to obtain any licenses required by the Department of Commerce’s Bureau of Industry and Security (BIS) to export or re-export to Sudan certain items (commodities, software, and technology) that are on BIS’ Commerce Control List (CCL). In limited circumstances, U.S. persons and non-U.S. persons may also need to obtain licenses from BIS to export or re-export to Sudan items that are subject to the EAR but not specifically listed on the CCL (“EAR99” items) if such transactions implicate certain end-use or end-user concerns (see 15 C.F.R. part 744).
The easing of sanctions against Sudan follows its removal in late September 2017 from the U.S. list of seven countries subject to travel restrictions due to terror concerns. Sudan, however, remains on the State Department’s state sponsors of terrorism list, alongside Iran and Syria.
As of October 2015, Sudan is no longer subject to the Financial Action Task Force’s monitoring process under its on-going global anti-money laundering/counter financing of terrorism (AML/CFT) compliance process.