Here are five things that happened this week in the world of economic sanctions that I think you should know about.
- The Biden administration unveiled a package of Russia-related sanctions in response to the recent SolarWinds hack, US election interference, Crimea, and other “harmful foreign activities.” The measures include a new Executive Order 14024 authorizing blocking sanctions on a wide range of Russian targets, Directive 1 imposing new restrictions on Russian government debt, and sanctions on dozens of individuals and entities named as Specially Designated Nationals (SDNs). Russia announced countermeasures. (More on this below.)
- The US Office of Foreign Assets Control (OFAC) published updates to four FAQs to reflect the termination of most Sudan-related US sanctions since 2017. Importantly, FAQ 500 states that “no license from OFAC is required to export or reexport agricultural commodities, medicines, or medical devices to Sudan,” as of 14 December 2020. FAQ 836 summarizes OFAC’s (few) remaining Sudan-related sanctions.
- The European Council added eight individuals and three entities to the EU Sanctions List in response to violence against demonstrators in late 2019. The targets include Hossein Salami, the head of Iran’s Islamic Revolutionary Guard Corps.
- OFAC named a regional commander of the Mexico-based Cartel de Jalisco Nueva Generacion as a significant foreign narcotics trafficker (SFNK) under the Foreign Narcotics Kingpin Designation Act. Meanwhile, the US State Department announced a USD 5 million reward for information leading to his arrest or conviction.
- The US Commerce Department reported that it had issued a subpoena to an unnamed Chinese company “to support the review of transactions pursuant to Executive Order 13873” concerning information and communications technology and services. In March 2020, the Commerce Department announced subpoenas involving multiple Chinese companies operating in the United States.
Don’t confuse the new Directive 1 under Executive Order 14024 with Directive 1 under Executive Order 13662. The latter is part of OFAC’s sectoral sanctions program (also Russia-related). The former restricts US financial institutions from participating in the primary market for ruble or non-ruble denominated bonds issued by, or lending ruble or non-ruble denominated funds to, Russia’s Central Bank, National Wealth Fund, or Ministry of Finance. (Silly question: why not just say “bonds” and “funds”? And does the existence of Directive 1 imply a Directive 2?)
The new directive is patterned on the August 2019 CBW Act Directive, which imposed restrictions on non-ruble denominated bonds and lending to the “Russian sovereign.” (Let’s call the CBW Act Directive “Directive Zero” for fun.) The new directive focuses on three specific Russian entities, and, as clarified in newly issued FAQ 891, does not apply to entities owned 50 percent or more by them. The new directive also does not apply to the secondary market for bonds, as stated in newly issued FAQ 889.
Exciting stuff: Join us for ACI’s virtual Asia-Pacific Advanced Conference on Economic Sanctions Compliance and Enforcement on 27–28 May 2021 to learn about all things sanctions. Get more information and register at this link. (Ping me for the 10% discount code.)
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(The views expressed are my own and do not constitute legal advice. Photo from Vladislav Reshetnyak.)