Sanctions Top-5 for the week ending 3 April 2020

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

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(This week’s briefing covers the weeks ending 3 April 2020 and 27 March 2020.)

  1. The UK Office of Financial Sanctions Implementation (OFSI) announced two monetary penalties totaling GBP 20.47 million against Standard Chartered Bank (SCB) for violations of the UK’s Ukraine-related sectoral sanctions. According to the penalty notice, between 2015 and 2018, SCB issued numerous loans to Turkey-based Denizbank, a majority-owned subsidiary of Russia’s Sberbank, some of which violated the regulations.
  2. The US Department of Justice (DOJ) announced indictments against Venezuelan President Nicolás Maduro, numerous current and former Venezuelan government officials, and two leaders of the Fuerzas Armadas Revolucionarias de Colombia (FARC) on narco-terrorism, drug trafficking, and weapons charges. Meanwhile, the US State Department is offering up to USD 15 million for information leading to the apprehension of Maduro and four other individuals named in the indictments under the Narcotics Rewards Program.
  3. A few days after the indictments, the US State Department released a thirteen-point Democratic Transition Framework for Venezuela calling for a transitional government to administer presidential elections in the country. According to a US State Department news release, US “sanctions will remain in effect, and increase, until the Maduro regime accepts a genuine political transition.”
  4. Rosneft announced that it has terminated its operations in Venezuela and sold related assets to an entity owned by the Russian government. Following the announcement, US Special Representative for Venezuela Elliott Abrams and an unnamed official said the US could lift sanctions against two Rosneft subsidiaries sanctioned under Executive Order 13850 for operating in the Venezuelan oil sector.
  5. The US Office of Foreign Assets Control (OFAC) named 20 entities and individuals in Iran and Iraq as Specially Designated Nationals (SDNs) pursuant to Executive Order 13224 for acting on behalf of the Islamic Revolutionary Guards Corps-Qods Force (IRGC-QF). The designations coincided with the US State Department’s announcement of the renewal of a secondary sanctions waiver for the import of electricity from Iran to Iraq.

Comments

Like OFAC, the UK’s OFSI is using enforcement actions as an opportunity to educate the world on sanctions compliance best practices. The SCB penalty is especially interesting because some, but not all, of the bank’s loans to Denizbank violated the UK regulations. (Side note: Denizbank was excused from US sectoral sanctions against Sberbank under General License 3 of 20 March 2014.) As explained in OFSI’s penalty notice, the regulations contain an exemption for loans relating to EU trade. As a result, loans made to Denizbank that fell under the exemption were permissible. The lesson: banks offering trade facilities involving EU sectoral-sanctions targets should review the underlying activity on a transaction-by-transaction basis if needed. (Want to read more? Check out my colleagues’ post on the Steptoe International Regulation & Compliance (IRC) Blog.)

The European Union signaled its support for the US Democratic Transition Framework for Venezuela in a statement last week. (Note that both the US and EU statements link the political situation in Caracas to the ongoing coronavirus pandemic.) How about Russia? Point 3 of the framework demands the immediate departure of “[a]ll foreign security forces” from Venezuela, which would include Russian forces. Meanwhile, the Kremlin has found additional leverage by taking over Rosneft’s operations in the country. Stay tuned for more.

Having trouble finding an OFAC general license that might apply to your COVID-19-related transactions? My team put together a handy interactive chart covering Crimea, Cuba, Iran, North Korea, Syria, and Venezuela. Check it out here.

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.)

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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

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Nicholas Turner

Nicholas Turner

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

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