Sanctions Top-5 for the week ending 14 January 2022

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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This week’s briefing covers the weeks ending 14 and 7 January 2022

1. The US State Department named one Russia-based North Korean national, a Russian national, and a Russian entity as Specially Designated Nationals (SDNs) under Executive Order 13382 for procuring items for use in North Korea’s weapons of mass destruction program. Meanwhile, the US Office of Foreign Assets Control (OFAC) named five North Korean individuals located in Russia and China as SDNs for their ties to North Korea’s Second Academy of Natural Sciences (SANS). The actions were a response to North Korea’s latest round of ballistic missile tests last week.
2. OFAC named six government officials in Nicaragua as SDNs in connection with the inauguration of Daniel Ortega and Rosario Murillo as Nicaragua’s president and vice president. According to a Treasury Department news release, the officials are responsible for acts of political violence and spreading disinformation (including through “troll” farms), among other things. Meanwhile, the EU Council adopted sanctions against seven individuals and three entities in Nicaragua for supporting human rights violations.
3. OFAC announced a USD 91,972 settlement with a US-based payment processor linked to a popular real estate booking platform for violations of the Cuban Assets Control Regulations (CACR). According to the OFAC settlement notice, the company processed payments that fell outside the CACR’s travel-related general licenses. OFAC also announced a USD 5,228,298 settlement with a Hong Kong-based subsidiary of a Japanese trading company for violations of the Iranian Transactions and Sanctions Regulations (ITSR). According to the settlement notice, “rogue” employees in the company made dozens of payments through the US financial system to pay for Iranian-origin goods via a Thai supplier and scrubbed references to Iran in transaction documents.
4. The Economic Community of West African States (ECOWAS) adopted a new package of Mali-related sanctions to call on ECOWAS members to close land borders with Mali, prohibit “all commercial and financial transactions” with Mali (with some broad humanitarian exceptions), and to freeze Republic of Mali funds held by ECOWAS banks, among other actions. According to an ECOWAS communiqué, the sanctions follow the transitional Malian government’s proposal to delay presidential elections beyond an agreed deadline.
5. The Iranian Foreign Ministry added 51 Americans to a list of US officials sanctioned in Iran in connection with the 2020 killing of General Qasem Soleimani (a copy of the full list is available here). US National Security Advisor Jake Sullivan issued a press statement denouncing the move. An Iranian spokesperson responded to the statement with a statement.

Comments

The ECOWAS Mali-related sanctions look tough on paper and have the potential to up the cost on the Malian government’s decision to delay post-coup elections originally planned for February 2022. The six-point package includes a recall of ambassadors, border closures, a partial trade embargo, asset freezes targeting the Republic of Mali, state-owned companies, and parastatals, and restrictions on multilateral development bank financing. (ECOWAS lifted an earlier sanctions package after the adoption of Mali’s Transition Charter in October 2020.) As to the trade and financial sanctions, the practical question is whether ECOWAS member states and their private sectors are prepared to administer and enforce the sanctions to achieve their political impact. I think it’s also worth noting how the ECOWAS response differs from ASEAN’s response to the February 2021 military coup in Myanmar.

OFAC’s trading company settlement highlights a big challenge for compliance officers: how to identify “rogue” employees who circumvent the company’s sanctions policies. (In 2019, OFAC designated one such employee as a Foreign Sanctions Evader after penalizing a company for violating the ITSR.) OFAC’s latest settlement notice recommends that companies implement risk-based controls, including testing and auditing, and exercise oversight of foreign subsidiaries. To that I would add whistle blower hotlines and lots of good training.

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