Here are five things that happened this week in the world of economic sanctions that I think you should know about.
- The US Office of Foreign Assets Control (OFAC) marked International Anti-Corruption Day by naming seven individuals and eight entities in Angola, El Salvador, Guatemala, Liberia, South Sudan, and Ukraine as Specially Designated Nationals (SDNs) under the Global Magnitsky Sanctions program. Earlier in the week, OFAC sanctioned another 16 individuals and 24 entities in El Salvador and Kosovo linked to organized crime and corruption. OFAC also designated an individual in the Democratic Republic of the Congo and 12 related companies for providing material support to billionaire Dan Gertler, who is also sanctioned under the Global Magnitsky program. (For more on these developments, see my team’s blog post.)
- OFAC marked International Human Rights Day by naming 15 individuals and 10 entities in Bangladesh, China, Myanmar, and North Korea as SDNs under the Global Magnitsky Sanctions program. Earlier in the week, OFAC sanctioned 15 targets in Iran, Syria, and Uganda accused of repression and undermining democracy, ahead of the US government’s Summit for Democracy.
- OFAC added SenseTime Group Limited to the Non-SDN List of Chinese Military-Industrial Complex Companies (NS-CMIC List) under Executive Order 13959, ahead of the technology company’s (now postponed) initial public offering on the Hong Kong Stock Exchange. (More on this below.)
- OFAC issued a new General License №16 (GL-16) authorizing transactions related to non-commercial, personal remittances to Afghanistan that also involve the Taliban or the Haqqani Network that would otherwise be prohibited under OFAC’s terrorism-related sanctions regulations.
- OFAC announced a USD 133,860 settlement with an unnamed individual for violations of the Iranian Transactions Sanctions Regulations (ITSR). According to the OFAC settlement notice, the individual, who is in the United States, agreed to receive wire transfers on behalf of an Iranian company that was having trouble getting paid from a supplier in a third country.
Put down that eggnog. The end-of-year sanctions crush is upon us.
As discussed before, Executive Order 13959, as amended, prohibits US persons from purchasing or selling publicly traded securities of companies on the NS-CMIC List, as well as publicly traded securities that are derivative of, or designed to provide investment exposure to, such publicly traded securities. The restrictions apply only to companies whose names exactly match a name on the NS-CMIC List. OFAC’s 50 Percent Rule does not apply to the NS-CMIC List. A different SenseTime entity is on the Bureau of Industry and Security’s Entity List which applies to the export, reexport, and in-country transfer of items subject to the Export Administration Regulations (EAR). These are not SDNs.
The individual who settled with OFAC apparently agreed to receive the Iranian company’s payments because a family member worked there. Although the ITSR contain a general license for personal remittances, OFAC used the settlement to emphasize that it does not cover payments related to commercial activity, even if a family member is involved. On that note, the new Afghanistan-related GL-16 specifies that it does not cover “charitable donations of funds . . . or funds transfers for use in supporting or operating a business, including a family-owned business.”
Worried about new Russia/Ukraine-related sanctions? Now might be a good time to review the Menendez amendment to the National Defense Authorization Act for Fiscal Year 2022, which outlines the sanctions that could be applied if the military situation worsens.