Sanctions Top-5 for the week ending 3 July 2020
Here are five things that happened this week in the world of economic sanctions that I think you should know about.
- Congress passed the Hong Kong Autonomy Act at light speed following the National People’s Congress Standing Committee’s unanimous adoption on 30 June 2020 of the Law of the People’s Republic of China on Safeguarding National Security in the Hong Kong Special Administrative Region. The Autonomy Act, which is awaiting the president’s signature, authorizes sanctions against foreign persons — including Chinese and Hong Kong officials — and financial institutions that engage in significant transactions with them.
- The US Departments of State, Treasury, Commerce, and Homeland Security jointly issued a Xinjiang Supply Chain Business Advisory highlighting sanctions and human rights risks involving products manufactured in China’s Xinjiang Uyghur Autonomous Region (XUAR). Meanwhile, US Customs and Border Protection (CBP) announced the detainment of a shipment of hair weaves believed to be produced by prison laborers in the XUAR.
- The European Union added 11 Venezuelan government officials to the EU Sanctions List for “their role in acts and decisions undermining democracy and the rule of law in Venezuela.” The targets include the Secretary-General of the National Defence Council, several members of the National Assembly, and judges involved in politically motivated prosecutions.
- The US Office of Foreign Assets Control (OFAC) lifted sanctions on two shipping companies based in the Marshall Islands and Greece that were sanctioned in June 2020 in connection with a scheme to deliver crude oil from Venezuela. OFAC also revoked General License 37 which had authorized US persons to wind down transactions with the companies and their vessels.
- The US Department of Justice (DOJ) issued a warrant and complaint seeking the seizure of Iranian-origin gasoil on board four vessels en route to Venezuela. According to the complaint, the shipments would fund the Islamic Revolutionary Guard Corps (IRGC), which is designated by the United States as a foreign terrorist organization. As mentioned last week, OFAC named five Iranian nationals as Specially Designated Nationals (SDNs) under Executive Order 13599 for captaining vessels delivering Iranian gasoline to Venezuela.
The Hong Kong Autonomy Act is currently awaiting Donald Trump’s signature and could become law within days. As I said to Reuters: “Financial institutions are concerned about the legislation principally because of uncertainty about how the sanctions will be used.” No word yet on who would be sanctioned or how the Treasury Department would define “significant transactions” for the purposes of the Act. Retail and private banking? Who knows. Adding to the complexity, the sanctions described are not the usual strict SDN or correspondent banking sanctions, meaning companies will need to watch for regulations or directives to be issued by the Treasury Department to understand restrictions, if any, on their customers and counterparties. (Drop me a line to receive separate Hong Kong-related updates by email.)
Thanks to Justine Walker, Global Head of Sanctions and Risk at the Association of Certified Anti-Money Laundering Specialists (ACAMS), for inviting me to contribute to this month’s Monthly Sanctions Compliance Update. We talked about Hong Kong sanctions and the US government’s power to obtain foreign bank records in sanctions investigations. Check out the recording here.
Looking for more? Check out the China Law Podcast hosted by Vincent Chow featuring Thomas S.T. So, Wendy Wysong, and me discussing Hong Kong’s national security law and the US response, available on Apple Podcasts.
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.)