Sanctions Top-5 for the week ending 19 March 2021

Here are five things that happened this week in the world of economic sanctions that I think you should know about.

Sign up here if you would like to receive these summaries by email. Click here for an index of past Sanctions Top-5 briefings.

  1. The US State Department published an update to its October 2020 report under Section 5(a) of the Hong Kong Autonomy Act (HKAA), identifying an additional 24 PRC and Hong Kong officials. (The October 2020 report identified 10 officials.) Under Section 5(b) of the HKAA, the US Treasury Department has 30 to 60 days to identify any foreign financial institution that knowingly engages in a “significant transaction” with one of the 24 individuals. (More on this below.)
  2. The US Office of Foreign Assets Control (OFAC) announced a USD 216,464 settlement with an Ohio-based manufacturer for violations of the Iranian Transactions and Sanctions Regulations (ITSR). According to the OFAC settlement notice, the company exported products to Europe with reason to know they would be re-exported to Iran.
  3. North Korea announced it was severing diplomatic relations with Malaysia following the extradition last week of a North Korean national from Malaysia to the United States. Earlier this month, Malaysia’s top court rejected the individuals’ request to block the extradition. According to the US Department of Justice (DOJ), the individual laundered funds through the US financial system in connection with the export of luxury goods from Singapore to North Korea.
  4. The US District Court for the Southern District of New York sentenced an individual to four-and-a-half years in prison for violating sanctions imposed on Venezuelan officials under the Foreign Narcotics Kingpin Designation Act. According to the DOJ, the individual organized chartered flights for the officials through his Florida-based company.
  5. The DOJ announced an indictment against 10 Iranian individuals for violating US sanctions as part of a USD 300 million scheme involving front companies in California, Canada, Hong Kong, and the United Arab Emirates. According to the DOJ, the individuals processed transactions through the US financial system over 20 years in connection with oil-related deals, including the purchase of two oil tankers.

Comments

The big news overnight: the adoption of coordinated Xinjiang-related sanctions by Canada, the EU, the UK, and the United States. The PRC Ministry of Foreign Affairs responded by announcing sanctions on ten EU individuals and four entities. More on this next week.

What’s important about the State Department’s Section 5(a) update? The individuals were previously sanctioned under Executive Order 13936 in November and December 2020 and January 2021. That means banks would have identified them months ago. By all accounts, the report was intended to send a message before the US-PRC summit in Alaska that the Biden administration means business. (Sent. And. Received.) What matters now is OFAC’s forthcoming Section 5(b) report in about 30 to 60 days. Recall that OFAC issued a null report the first time around. Get ready for round two.

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