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) named eight individuals and eight entities in Argentina, Colombia, Canada, the United Kingdom, and the Netherlands as Specially Designated Nationals (SDNs) pursuant to the Foreign Narcotics Kingpin Designation Act. The targets are accused of drug trafficking and money laundering as part of a criminal network associated with the Goldpharma online pharmacy.
- The Wall Street Journal reported the Trump administration is preparing to announce sanctions and criminal charges against individuals responsible for laundering money on behalf of corrupt Venezuelan officials, in part through a military-run emergency food program. Potential targets include Colombian magnate Alex Saab Morán and an associate whose companies are suspected of generating illicit revenues by overcharging the Venezuelan government for food through a Hong Kong-based distributor, Group Grand Ltd., according to the article.
- The US Commerce Department’s Bureau of Industry and Security (BIS) issued a temporary general license to allow Huawei Technologies Co. and 68 of its affiliates to continue to receive US-origin goods and technology for a period of 90 days. The license covers transactions for the continued operation of existing networks and equipment, support of existing handsets, cybersecurity research and vulnerability disclosure, and certain activities related to 5G standards development. As mentioned last week, BIS added Huawei and its affiliates to the Entity List effective 16 May 2019.
- The US State Department’s Bureau of International Security and Nonproliferation updated its list of foreign persons subject to measures under Section 3 of the Iran, North Korea, and Syria Nonproliferation Act (INKSNA). Additions include the Moscow Machine Building Plant Avangard, which produces missiles for Russia’s S-400 surface-to-air missile system. Entities on the INKSNA list are generally prohibited from US government procurement contracts, assistance, and export control licenses.
- Senators Marco Rubio and Ben Cardin revived the South China Sea and East China Sea Sanctions Act, which, if enacted, would authorize SDN designations and correspondent banking restrictions against Chinese persons and financial institutions in response to construction and other activities in disputed areas of the South China Sea and East China Sea.
Apropos the S-400-related INKSNA sanctions, Turkey’s defense minister told reporters last week the country was preparing for potential US sanctions under the Countering America’s Adversaries Through Sanctions Act (CAATSA) after deciding to purchase the S-400 system. Meanwhile, India’s Ambassador to the United States said India is hoping to shift some defense spending to US suppliers after the country signed its own deal to purchase the S-400 system from Russia last year. The CAATSA sanctions were previously used against a unit of the Chinese military and its director in September 2018.
The concept behind the South China Sea and East China Sea Sanctions Act reminds me of Executive Order 13685, which has been used to target companies involved in construction projects in Crimea. Are sanctions effective at halting development in disputed areas? Are they the right way to resolve territorial disputes? This is the third time the Act has been introduced in the Senate since 2016.
As described in The Wall Street Journal, the Venezuela case seems like a clear example of trade-based money laundering involving over-pricing of goods. Could make an excellent case study for your next AML training.
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(The views expressed are my own and do not constitute legal advice. Photo from Vladislav Reshetnyak.)