Sanctions Top-5 for the week ending 31 July 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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  1. The US Office of Foreign Assets Control (OFAC) named two Chinese individuals and the Xinjiang Production and Construction Corps (XPCC) as Specially Designated Nationals (SDNs) under the Global Magnitsky Sanctions program for their involvement in human rights abuses in the Xinjiang Uyghur Autonomous Province (XUAR). The XPCC is linked to Chen Quanguo, a PRC government official sanctioned by OFAC in July 2020 for overseeing activities in the XUAR. OFAC also issued General License 2, authorizing US persons to wind down certain XPCC-related activities through 30 September 2020.

Comments

There’s always so much to learn from OFAC settlements. In the latest case, we are reminded (again) that non-US entities that are owned or controlled by US persons must comply with the ITSR. Unfortunately, an employee of the manufacturer (who, OFAC tells us, was not a sanctions expert) decided it was A-OK for the foreign subsidiaries to continue their Iranian sales as long as they worked through distributors. (Not so.) Several years and 74 violations later, the company’s management realized the mistake when OFAC issued now-defunct General License H, which permitted US companies’ foreign subsidiaries to do certain Iranian business. The good news: thanks to their cooperation with OFAC and compliance remediation, the company’s monetary penalty was reduced from a maximum of almost USD 20 million to a mere USD 824,314.

For the legal scholars out there: you might be interested in this analysis on the HKU Legal Scholarship Blog of the unsettled question of the application (or non-application) of Article 29(4) of the Hong Kong National Security Law to financial institutions and companies that are required to comply with foreign sanctions of their home jurisdictions. The authors are Professor Albert H.Y. Chen, a member of the Hong Kong Basic Law Committee of the National People’s Congress Standing Committee, and Professor Simon N.M. Young, both of the University of Hong Kong Faculty of Law.

Need an update on Hong Kong sanctions? Join Gem Conn, Vice President of Risk & Compliance Research at Dow Jones, and me for a webinar on “The Sanctions Implications of Recent Hong Kong Legislation” hosted by Dow Jones Risk & Compliance, today, 4 August, at 3:00 p.m. Hong Kong time. Registration is 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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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