Here are five things that happened this week in the world of economic sanctions that I think you should know about.
- The US Office of Foreign Assets Control (OFAC) issued another null report under Section 5(b) of the Hong Kong Autonomy Act (HKAA). According to the report, OFAC found no financial institutions that knowingly engaged in “significant transactions” with any of the 34 individuals identified by the State Department in October 2020 and March 2021. OFAC reached the same conclusion in its first Section 5(b) report in December 2020. This means no secondary sanctions under the HKAA for now.
- OFAC replaced General License №1A under Executive Order 13959 with a new General License №1B which authorizes US persons to continue to transact in publicly traded securities of companies whose names “closely match” the name of a previously identified Communist Chinese military company (CCMC) until 11 June 2021. General License №1A was due to expire on 27 May 2021.
- OFAC named Myanmar’s State Administrative Council (SAC) and 16 individuals in Myanmar as Specially Designated Nationals (SDNs) under Executive Order 14014. (No, OFAC did not accidentally sanction Myanmar’s Central Bank.) Meanwhile, the UK sanctioned Myanmar Gems Enterprise, and Canada sanctioned 16 individuals and 10 entities in Myanmar.
- The US State Department announced it would waive secondary sanctions against Nord Stream 2 AG and its CEO and corporate officers under the Protecting Europe’s Energy Security Act (PEESA). At the same time, the State Department announced secondary sanctions on four entities and 13 vessels involved in the construction of the Nord Stream 2 pipeline. OFAC added the entities and vessels to its recently created Non-SDN Menu-Based Sanctions List (one of the entities and two of the vessels also appear on the SDN List).
- The EU Parliament voted in favor of a resolution opposing any further consideration or ratification of the EU-China Comprehensive Agreement on Investment until China lifts sanctions against EU persons (including five members of the EU Parliament) announced by the PRC Ministry of Foreign Affairs in March 2021. (See my earlier comments on the PRC sanctions here.)
Last Wednesday was a public holiday here in Hong Kong, so you can imagine the relief when we received OFAC’s Section 5(b) report on Wednesday morning and saw zero new names in it. Thanks, OFAC! Secondary sanctions on Hong Kong financial institutions will always be a possibility as long as the HKAA is on the books, but the immediate risk seems to have passed.
There was another sigh of relief when OFAC issued General License 1B, giving us two more weeks to wonder what on earth a “closely matched” name is. My guess is that OFAC will issue an updated Non-SDN CCMC List with names of subsidiaries of previously identified CCMCs, as promised in FAQ 857. Hopefully that puts an end to the issue once and for all. Unfortunately, the license expires on a Friday evening in Hong Kong. (Hey, OFAC, any chance we can get that list a day or two early?)