Sanctions Top-5 for the week ending 29 May 2020
Here are five things that happened this week in the world of economic sanctions that I think you should know about.
- The big news: Donald Trump held a news conference on Friday to announce his administration would “begin the process” of revoking Hong Kong’s separate status from mainland China under US laws. This could include imposing heightened export controls under the Export Administration Regulations (EAR) and other steps. Additionally, the United States is expected to impose sanctions against Chinese and Hong Kong officials responsible for the erosion of Hong Kong’s autonomy. (For more on this issue, see my team’s Client Advisory.)
- The US House of Representatives voted 413–1 to pass the Uyghur Human Rights Policy Act of 2020. The bill — now awaiting the president’s signature — calls for sanctions against foreign persons, including government officials, determined to be responsible for human rights abuses in the Xinjiang Uighur Autonomous Region (XUAR).
- The US Department of Justice (DOJ) unsealed an indictment against 28 North Korean and 5 Chinese nationals for laundering more than USD 2.5 billion through the global financial system on behalf of North Korea’s Foreign Trade Bank (FTB). The individuals are charged with operating an extensive network of front companies in Russia, Kuwait, Thailand, and other countries to procure goods and make payments related to North Korea. (The indictment is available here.)
- The US State Department announced it would not renew secondary sanctions waivers for companies providing services to Iran’s nuclear program under the Joint Comprehensive Plan of Action (JCPOA). The companies will have 60 days to wind down their activities, according to a press statement. At the same time, the State Department announced sanctions on two individuals in the Atomic Energy Organization of Iran.
- Justine Walker, the Global Head of Sanctions and Risk for the Association of Certified Anti-Money Laundering Specialists (ACAMS), published a long-awaited and really excellent paper entitled “Risk Management Principles Guide for Sending Humanitarian Funds into Syria and Similar High-Risk Jurisdictions,” with the support of the European Commission, Swiss Agency for Development and Cooperation, UK Department for International Development, the Graduate Institute of Geneva, and the World Bank.
Friday’s White House news conference was short on specifics about how US laws might change in respect of Hong Kong. Anything at this point is speculation. Of all of the topics mentioned, sanctions is the easiest to implement in the short term. What are the options? For blocking sanctions we have: Section 7 of the Hong Kong Human Rights and Democracy Act of 2019, the Global Magnitsky program, and the International Emergency Economic Powers Act (IEEPA). Visa bans are authorized under Section 7031(c) of the FY 2019 Department of State, Foreign Operations, and Related Programs Appropriations Act (or as we like to call it, FORPA2). There is also the Hong Kong Autonomy Act pending in the Senate, which, if passed, would authorize blocking sanctions as well as menu-based secondary sanctions against financial institutions. Stay tuned.
Dr. Walker’s report contains a lot of helpful information about the humanitarian landscape in Syria and practical advice for handling transactions under various US, UN, and EU regulatory licenses and exemptions. It’s a must-read for anyone with an interest in humanitarian aid for sanctioned territories. “The creation of transparent and safe humanitarian payment corridors into highly complex risk environments requires collective vision,” Dr. Walker told me by email. “These principles have stemmed from an extensive 5 year process involving many banks, humanitarian organisations, international bodies and government officials.” (The report is available here.)
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(The views expressed are my own and do not constitute legal advice. Photo from Vladislav Reshetnyak.)