Here are five things that happened this week in the world of economic sanctions that I think you should know about.
This week’s briefing covers the weeks ending 5 and 12 November 2021.
- The US Office of Foreign Assets Control (OFAC) named Eritrea’s armed forces, the country’s ruling political party, two state-linked commercial entities, and two individuals as Specially Designated Nationals (SDNs) under Executive Order 14046 for their roles in the ongoing conflict in northern Ethiopia. OFAC also issued General License №4 authorizing the winding down of transactions with the commercial entities and several FAQs about the sanctions. Of special note, FAQ 936 states that OFAC’s “50 Percent Rule” does not apply to subsidiaries of the two companies. Humanitarian-related general licenses issued alongside the Executive Order in September 2021 may also apply to transactions involving the newly designated SDNs.
- OFAC named two Cambodian military officials as SDNs under the Global Magnitsky Sanctions program for corruption related to the construction of a naval base. The State Department issued visa bans against the individuals and several family members under Section under 7031(c) of the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2021. At the same time, the US Treasury Department issued a joint advisory with the US Departments of State and Commerce on “High-Risk Investments and Interactions” in Cambodia. The document warns about corruption and other illicit activities in Cambodia’s financial, real estate, casino, and infrastructure sectors.
- OFAC issued a finding of violation to a UAE-based bank under the (now defunct) Sudanese Sanctions Regulations. The action was part of a USD 100 million settlement and consent orders between the bank and the New York State Department of Financial Services and the Federal Reserve Board. According to the OFAC notice, the bank processed transactions through the US financial system that “related to” transfers outside the United States involving accounts of Sudanese banks.
- OFAC named five entities and two individuals as SDNs under Executive Order 13694 (cyber-related sanctions), including a cryptocurrency exchange, for allegedly facilitating ransomware payments and being linked to another exchange that was sanctioned in September 2021. Meanwhile, the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) updated its “Advisory on Ransomware and the Use of the Financial System to Facilitate Ransom Payments.”
- President Biden signed into law the Reinforcing Nicaragua’s Adherence to Conditions for Electoral Reform Act of 2021 (RENANCER Act). The Act calls for a raft of US sanctions measures against the Daniel Ortega government and “developing and implementing a coordinated sanctions strategy with diplomatic partners” that includes “targeted sanctions with respect to persons involved in human rights violations and the obstruction of free, fair, and transparent elections in Nicaragua.” (More on that next week.)
Things were a bit slow in the world of economic sanctions these past few weeks. It looks like they might be picking up again. The Ethiopia-related designations were more or less expected since the issuance of Executive Order 14046. Not only did the US government telegraph their intention to use sanctions well in advance, OFAC also preemptively issued humanitarian-related general licenses and several FAQs in mid-September aimed at mitigating unintended consequences from the sanctions.
Meanwhile, OFAC seems to be following through with its promise to target ransomware perpetrators and enablers. The latest designations come just a few weeks after the agency published its compliance guidance for virtual currency companies, updated its ransomware advisory, and sanctioned a Russian cryptocurrency exchange.
Greetings, everyone, from the always impressive Hamad International Airport in Doha. I am on my way to the United States for a much-needed visit after nearly two years (!) of being in Hong Kong. I will be publishing briefings on a weekly or biweekly basis depending on the volume of newsworthy events. (And if your US-based team is in need of a virtual sanctions training or an update on US-China/Hong Kong issues, now is the time to ask!)