Sanctions Top-5 for the week ending 11 December 2020

Here are five things that happened this week in the world of economic sanctions that I think you should know about.

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  1. After months of high anxiety, financial institutions in Hong Kong and elsewhere were relieved when the Office of Foreign Assets Control (OFAC) released its report under Section 5(b) of the Hong Kong Autonomy Act (HKAA) on Friday. The report stated that OFAC identified no foreign financial institutions that knowingly conducted significant transactions with 10 individuals identified by the State Department on 14 October 2020. In other words, OFAC will not impose secondary sanctions under the HKAA (yet). (More on this below.)
  2. In related news, the US State Department announced that 14 members of the PRC National People’s Congress Standing Committee were named as Specially Designated Nationals (SDNs) under Executive Order 13936 for promulgating the Hong Kong National Security Law (which led to the HKAA). In total, 29 individuals have been sanctioned under OFAC’s Hong Kong-related program since 7 August 2020.
  3. The European Council adopted a regulation and a decision creating a long-awaiting global human rights sanctions program targeting genocide, crimes against humanity, and other serious human rights violations or abuses. The regime, which is similar to the Magnitsky-style sanctions of the United States, United Kingdom, and Canada, includes travel bans, asset freezes, and prohibitions on making funds available to persons sanctioned under the program.
  4. The US Treasury and State Departments marked International Human Rights Day and International Anti-Corruption Day with a slew of SDN designations under Executive Order 13818 (Global Magnitsky) and visa bans under Section 7031(c) of the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2020. The targets, who are located in China, El Salvador, Haiti, Jamaica, Kyrgyzstan, Liberia, Russia, and Yemen, include Wan Kuok Koi a Macau-based Triad leader accused of bribery and other illicit activities in Southeast Asia (a.k.a. Broken Tooth).
  5. The Center for a New American Security (CNAS) released its fourth “Sanctions by the Numbers” report with a focus on the Trump administration’s China-related sanctions actions since 2017. The report, authored by CNAS’s Francis Shin, notes the majority of Chinese sanctions targets fall under the Iran and North Korea programs, with an uptick in sanctions against Chinese government officials in recent months, with an emphasis on human rights.

Comments

And the award for anti-climax of the year goes to . . . ! Despite reviewing “all sources of information, including classified and unclassified,” OFAC was unable to identify any financial institutions worthy of secondary sanctions under the HKAA. How to interpret this outcome? My take: it’s just not easy to find “significant transactions” involving individuals. It might have been different had the State Department identified an entity or two in its 5(a) report on 14 October. That said, OFAC can update its 5(b) report at any time. And the State Department can always add names to its 5(a) report. (For more, see my team’s blog post here.)

Up next: The Treasury Department is expected to issue guidance on Executive Order 13959 which will restrict investments by US persons in Chinese companies identified by the Department of Defense.

What was 2020 all about? Join FTI Consulting for a “US Sanctions, Export Controls & US-China Trade — Year-in-Review” webinar on Wednesday, 16 December, at 9:30 a.m. Hong Kong time. Featuring Rod Francis, Naresh Sakhrani, Sally Peng, Benjamin Kostrzewa and myself. Register here!

Did I miss something? Send me a message or comment on LinkedIn.

(The views expressed are my own and do not constitute legal advice. Photo from Vladislav Reshetnyak.)

US attorney in Hong Kong specializing in economic sanctions, financial crimes. Sign up for emails: http://eepurl.com/cVhTXf LinkedIn at: http://goo.gl/KX1jER

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Nicholas Turner

Nicholas Turner

US attorney in Hong Kong specializing in economic sanctions, financial crimes. Sign up for emails: http://eepurl.com/cVhTXf LinkedIn at: http://goo.gl/KX1jER

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