Sanctions Top-5 for the week ending 15 January 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. The White House amended Executive Order 13959 on so-called “Communist Chinese military companies” (CCMCs) to address a couple of major discrepancies in the original of 12 November 2020. Specifically, the definition of “transaction” now includes “sale,” and the order now makes clear that US persons are prohibited from possessing securities related to CCMCs after 11 November 2021 (or a later date, depending on when a CCMC was identified). Meanwhile, the Department of Defense identified an additional nine companies (including Xiaomi) as CCMCs. That brings the total number of CCMCs to 44.
  2. In related news, the Office of Foreign Assets Control (OFAC) issued General License №2 (GL-2), which more or less says that US exchanges can continue to handle securities of CCMCs through the relevant wind-down periods. OFAC also published four new FAQs about Executive Order 13959. (Visit this blog post for a rundown of actions under EO 13959 so far.)
  3. OFAC named another six PRC and Hong Kong officials as Specially Designated Nationals (SDNs) under Executive Order 13936 According to a State Department news release, the designations follow the mass arrests of pro-democracy figures in early January 2021. OFAC also issued its Hong Kong-Related Sanctions Regulations to formally implement Executive Order 13936.
  4. The US Commerce Department’s Bureau of Industry and Security (BIS) added Chinese National Offshore Oil Corporation (CNOOC) to the Entity List and China’s Skyrizon to the recently created Military End User (MEU) List. The US Department of Defense added CNOOC to the list of CCMCs on 3 December 2020.
  5. OFAC announced a USD 1,016,000 settlement with an Indonesian paper manufacturer for violations of the North Korea Sanctions Regulations. According to the OFAC settlement notice, the company received payments through the US financial system related to exports of cigarette papers to North Korea.

Comments

With just days left in the current administration, OFAC and other agencies have been pushing out actions to backstop some signature Trump-era policies. Not mentioned above: a raft of last-minute SDN designations related to Iran, Cuba, counter-terrorism, and foreign interference in US elections. No word yet on whether the State Department will update its 14 October 2020 report under Section 5(a) of the Hong Kong Autonomy Act (HKAA). There are still only 10 names on the report — and 35 SDNs under Executive Order 13936.

According to this report from The Wall Street Journal, we might also see an updated list of CCMCs including lots of subsidiaries. The industry wants a list to help sort out which names OFAC thinks “closely match” previously identified CCMCs. There’s no reason this has to happen before the inauguration on Wednesday. After multiple rounds of CCMC updates, there are now three wind-down periods ending in November 2021, December 2021, and January 2022, respectively, during which US persons are expected to divest securities related to the CCMCs. Mark your calendars.

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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