Sanctions Top-5 for the week ending 11 June 2021

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. China unveiled its much anticipated Anti-Foreign Sanctions Law. (Google Translate for English.) See below for a few thoughts on the new law.
  2. President Biden issued an Executive Order revoking three prior orders that sought to impose restrictions on US persons transacting with WeChat, TikTok, and eight other Chinese mobile apps. Instead, the Commerce Department will study the threat posed by foreign apps and may take further action later. (For more, see my team’s blog post here.)
  3. The US Office of Foreign Assets Control (OFAC) removed several individuals and entities from the List of Specially Designated Nationals (SDNs) sanctioned under the Iran program. The move may have been intended to nudge Iran to come to an agreement for the United States to reenter the Joint Comprehensive Plan of Action (JCPOA), according to reports.
  4. OFAC named four individuals in Nicaragua as SDNs for their actions in support of President Daniel Ortega. The targets include the president of the country’s central bank, who is responsible for implementing a law “which could obligate Nicaraguan financial institutions to do business with designated persons in Nicaragua at the risk of facilitating sanctionable transactions.” (Sounds like an anti-foreign sanctions law to me.)
  5. The White House issued Executive Order 14033 updating the Western Balkans Sanctions program and authorizing SDN designations for persons engaged in significant corruption and actions that “destabilize the region by undermining democratic institutions and the rule of law or by violating human rights,” including in Albania. In May 2021, the State Department announced a visa ban against former Albanian President Sali Berisha based on allegations of significant corruption. (Earlier this month, the White House published a “Memorandum on Establishing the Fight against Corruption as a Core US National Interest.”)

Comments

Remember back in March when I said the PRC Ministry of Foreign Affairs (MFA) didn’t have a clear legal or regulatory framework for announcing sanctions on individuals and groups in the United States, Canada, the EU, and the UK? Now it has one. The new Anti-Foreign Sanctions Law affirms and strengthens the legal foundation for actions taken by the MFA and the Ministry of Commerce (MOFCOM) in response to various foreign measures. It does not prohibit compliance with specific foreign sanctions.

The law’s passage drew lots of headlines. But the consequences outlined in Article 6 (visa bans, asset freezes, restrictions on doing business, etc.) were already on the table. The MFA announced exactly those things in March in response to Xinjiang-related US, EU, UK, and Canadian sanctions (see for yourself here, here, and here). And MOFCOM’s Provisions for the Unreliable Entity List — issued in September 2020 — has its own menu of sanctions for companies that act contrary to PRC interests.

In other words, it appears that the National People’s Congress (NPC) (and the Party) are validating the efforts of the MFA and MOFCOM while sending a clear political message. As I told the Financial Times: “The fact that the law was pushed out after last week’s [Biden administration] announcement of amendments to the securities trading ban is consistent with China’s recent pattern of making reciprocal sanctions announcements in response to foreign measures.”

With respect to Article 12, which authorizes legal suits for damages caused by compliance with foreign sanctions, my understanding is that there was a legal debate in China as to whether Article 9 of MOFCOM’s Order №1 (the Blocking Order) could authorize causes of action in PRC courts, or whether the NPC would need to authorize those. Article 12 of the new law appears to resolve that question. I wouldn’t be surprised to see MOFCOM issue a prohibition order under Order №1 or to make its first Unreliable Entity List update. The MFA is likely to continue to call out foreign officials and groups that it perceives as contributing to sanctions against China.

Like the Top-5? Contact me to talk about tailored sanctions briefings for your team. 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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