UN adds 10 to ISIL & AL-Qaida sanctions

The UN has added 8 people and 2 entities to its sanctions against ISIL & AL-Qaida, by UN Security Council Resolution 2368. They are all listed for “participating in the financing, planning, facilitating, preparing, or perpetrating of acts or activities” involving ISIL.

The UK has implemented the listings, which will cease to apply in the UK on 20 August if the EU does not implement them. The UK’s notice is here.

EU Court upholds conflict diamonds CAR asset freeze

Companies buying and selling diamonds challenged the EU implementation of their UN sanctions listing in 2015 for “providing support for armed groups or criminal networks through the illicit exploitation or trade of natural resources in the Central African Republic”. Badica and Kardiam said the EU had not established that those grounds were correct, and that the EU had simply reproduced the UN Security Council’s reasoning, without performing its own analysis.  The EU General Court has rejected their claim, finding that even though there was insufficient evidence to establish support to armed groups through trade in goods, there was sufficient evidence that Badica and Kardiam had continued to buy diamonds from the CAR after the export ban imposed by the Kimberley process.  The judgment is here – Case T-619/15 Central African Republic Diamond Purchasing Office v Council and the Court’s press release is here.

ECJ clarifies rules on bringing sanctions cases on behalf of deceased applicants

The Court of Justice held this month in Case C-505/16 P Olga Yanukovych v Council & Commission that the General Court had been right to reject an application for annulment seeking to annul the re-listing of Viktor Yanukovych, son of the former President of Ukraine, on the EU’s Ukraine misappropriation sanctions, after he had died.  Viktor Yanukovych’s widow Olga Yanukovych had tried to continue the application for annulment on his behalf after his death but the ECJ held that she had not done so in the procedurally correct manner and the application was inadmissible.

UK expands sanctions reporting requirements

On 8 August, new regulations will come into force in the UK which will expand requirements to inform HM Treasury of known or suspected sanctions breaches.  Currently the requirements apply only to financial institutions, but the European Union Financial Sanctions (Amendment of Information Provisions) Regulations 2017 apply them to “certain businesses and professions” including “independent legal professionals”, law firms, accountants, estate agents and others. The businesses and professions included in the new regulations will commit an offence if they do not inform HMT if they know or have reasonable cause to suspect that a person has committed a sanctions offence or is a person who is the subject of an asset freeze.

The explanatory memorandum is here. The regulations have not been subject to consultation or parliamentary scrutiny or debate and have been passed by the negative resolution procedure without an impact assessment.

EU may retaliate if US puts further sanctions on Russia

The European Commission has cautioned the USA not to expand its sanctions on Russia unilaterally, saying that doing so could have “wide and…unintended consequences” on EU businesses including energy companies.

Over the weekend, Democrats and Republicans in the US Congress reached an agreement on legislation imposing wide-ranging new sanctions on Russia, Iran and N Korea (see previous blog), which will be voted on tomorrow.  A note prepared for the European Commission in advance of a meeting this week says that the EU “should stand ready to act within days” if the new sanctions are adopted without taking account of EU concerns.  Germany is reported to have warned of retaliation if the US sanctions German companies involved in the construction of Nord Stream 2, a new Baltic pipeline involving Russia.

OFAC fines AIG for US sanctions violations

At the end of last month, OFAC fined US insurance and financial services company AIG $148,698 for violating US sanctions on Cuba, Iran, and Sudan.  OFAC said that although AIG’s compliance programme included recommendations for when to use exclusion clauses in its insurance policies where US sanctions were involved, the scope of most of those exclusion clauses was too narrow. As a result, AIG provided insurance coverage to parties that were engaging in shipments to or from Cuba, Iran, and Sudan, primarily under global insurance policies.

OFAC’s enforcement notice is here.

Revised US Bill on Russia, Iran & DPRK sanctions now agreed

US Republicans and Democrats have reached agreement the Countering Iran’s Destabilising Activities Bill that allows new US sanctions on Russia, Iran and North Korea.

We reported in June that the US Senate had voted overwhelmingly in favour of the Bill, that it had been held up in the House of Representatives, and that the Senate had been sent a revised version. The new agreed version adds North Korea sanctions to the package. It requires the President to submit to Congress a report on proposed actions that would “significantly alter” US foreign policy in connection with Russia, including easing sanctions. Congress would have at least 30 days to hold hearings and then vote to uphold or reject the President’s proposed changes.  The House will vote on the Bill on Tuesday this week.

OFAC fines ExxonMobil $2,000,000 for sanctions violations

OFAC has fined US oil and gas company ExxonMobil $2,000,000 for violating US sanctions relating to the Ukraine crisis.  Between 14 May and 23 May 2014, the presidents of ExxonMobil’s US subsidiaries are said to have dealt with designated person Igor Sechin, president of Russian oil company Rosneft. Exxon signed 8 legal documents with Mr Sechin related to oil and gas projects in Russia, but has said that it believed the sanctions only prohibited doing business with Mr Sechin as an individual and not in his capacity as president of Rosneft. The deals were signed during US Secretary of State Rex Tillerson’s tenure as Exxon’s chief executive.

At the time the contracts were signed, there was a FAQ on the OFAC website stating that it was prohibited to enter into contracts signed by a SDN.  OFAC stated in its enforcement notice that although the guidance said that “different interpretations may exist among and between the sanctions programmes” OFAC administers, the FAQ clearly indicated that OFAC had in another sanctions programme involving SDNs viewed the signing of a contract with an SDN as prohibited, even if the company on whose behalf the SDN signed was not prohibited. Exxon disputes this, and has brought a lawsuit in the US attempting to stop the fine. It claims that OFAC is trying to retroactively apply a new interpretation of the sanctions that did not apply at the time the deals were signed.