UN & US terrorist designations

Terrorist.jpgLast week (9 August), the UN Security Council added Adnan Abou Walid al-Sahraoui to its ISIL (Da’esh) and Al-Qaida sanctions list. As a result, he will now be subject to a UN asset freeze, travel ban and arms embargo. See UN press release and narrative summary for listing. The EU implemented this UN listing yesterday, see Commission Implementing Regulation (EU) 2018/1138. UK OFSI Notice here.

Earlier this week (13 August), the US Department of State, in a separate action, designated Qassim Abdullah Ali Ahmed as a Specially Designated Global Terrorist (SDGT) under Section 1(b) of Executive Order 13224 (asset freeze imposed). According to the Department of State press release, “[Mr Ahmed] is an Iran-based leader of al-Ashtar Brigades (AAB), a U.S.-designated Foreign Terrorist Organization (FTO) and SDGT that seeks to overthrow the Bahraini government. [Mr Ahmed] has recruited terrorists in Bahrain, facilitated training on weapons and explosives for AAB members, and supplied AAB members with funding, weapons, and explosives to carry out attacks.” OFAC Notice here.

US sanctions 44 Chinese entities over national security threat

China-US.jpgLast week, the US Department of Commerce’s Bureau of Industry and Security (BIS) added 44 Chinese entities (8 entities and 36 subordinate institutions) to the Entity List for “acting contrary to the national security or foreign policy interests of the United States”. Some were specifically listed for their involvement in the “illicit procurement of [US-origin] commodities and technologies for unauthorized military end-use in China”.

For all 44 entities, BIS has imposed a licence requirement for all items subject to the Export Administration Regulations, and a licence review policy of presumption of denial. The licence requirements apply to any transaction in which items are to be exported, re-exported or transferred (in-country) to any of the 44 entities or in which such entities act as purchaser, intermediate consignee, ultimate consignee, or end-user. In addition, no licence exceptions will be available for exports, re-exports or transfers (in-country) to the entities. See Final Rule in the US Federal Register (contains the list of the 44 Chinese entities).

Saudi Arabia sanctions Canada over human rights criticism

Canada - Saudi Arabia.jpgLast week (2 August 2018), Canada’s Foreign Minister Chrystia Freeland tweeted her support for, and called for the release of, a prominent Saudi Arabian human rights activist, Samar Badawi, who was recently detained by the Gulf state (she has family links in Canada). In response to Ms Freeland’s remarks, Saudi Arabia has:

  • Begun selling its Canadian assets;
  • Expelled the Canadian Ambassador Dennis Horak (see Canadian response);
  • Frozen new trade and investment with Canada;
  • Suspended a student exchange programme to Canada;
  • Suspended all flights by state-owned Saudi Arabian Airlines to Canada;
  • Suspended all medical treatment programmes in Canada, and will be transferring all Saudi Arabian patients out of the country.

Yesterday, Saudi Arabia’s Foreign Minister Adel al-Jubeir said that new investment in Canada would continue to be on hold until the crisis had been resolved, but added that existing trade and investment would not be affected.

US puts chemical/biological weapons sanctions on Russia

US-Russia.jpgFollowing the use of a Novichok nerve agent on Sergei and Yulia Skripal, the US has determined under the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 that “the Russian government has used chemical or biological weapons in violation of international law or has used lethal chemical or biological weapons against its own nationals” – see Department of State press release. Consequently, after a 15-day Congressional notification period, mandatory sanctions under the Act will come into effect upon publication of a notice in the US Federal Register (expected on or around 22 August 2018).

The sanctions will impose (inter alia) a presumption of denial for all national security sensitive goods or technologies that are controlled by the US Commerce Department pursuant to the Export Administration Regulations. Those goods are currently subject to a licence (case-by-case licence determination), but all such licence applications will be presumptively denied once the sanctions come into effect.

The US will be making a number of carve-outs to the Act’s mandatory sanctions, including:

  • A waiver for the provision of foreign assistance to Russia and the Russian people;
  • A waiver of sanctions with respect to space flight activities (NB: the US is currently engaged with Russia in a number of space flight actions); and
  • A licence being available for national security sensitive goods or technologies used for the safety of commercial passenger aviation.

If the Russian government fails to meet a set of criteria within 90 days, then the US will have to consider whether a second round of sanctions should be imposed. The criteria: (i) that Russia is no longer using chemical or biological weapons in violation of international law or against its own nationals; (ii) that Russia has provided reliable assurances that it will not in the future engage in any such activities; and (iii) that Russia is willing to allow on-site inspections by UN observers or other similar internationally recognised bodies.

UN removes another Iraqi entity from sanctions list

UN2The UN Security Council has removed the ‘Directorate General of Geological Survey and Mineral Investigation’ from its Iraq sanctions list. As a result, it will no longer be subject to UN asset freezing measures. See UN press release and UK OFSI Notice.

This is the ninth entity to be delisted from the UN’s Iraq sanctions since June 2018 (see our previous blogs).

Updated EU Blocking Statute: authorisation criteria & guidance

EU2.jpgThe updated EU Blocking Statute came into force today (7 August 2018), see Commission Delegated Regulation (EU) 2018/1100 amending Council Regulation (EC) No 2271/96.

The Blocking Statute allows EU operators to recover damages arising from the extra-territorial sanctions within its scope from the persons causing them and nullifies the effect in the EU of any foreign court rulings based on them. It also forbids EU persons from complying with those sanctions, unless exceptionally authorised to do so by the European Commission in case non-compliance seriously damages their interests or the interests of the Union. The criteria for applying for an authorisation are contained in Commission Implementing Regulation (EU) 2018/1101. A template is available for authorisation applications. The Commission has stated that the “possibility to apply for an authorisation is foreseen as an exception in [the EU Blocking Statute], which does not create an individual right for the applicant to obtain an authorisation”. The Commission has published a Guidance Note.

Updated EU Blocking Statute in force tomorrow

EU6The European Commission announced today that the updated EU Blocking Statute (see previous blog) will enter into force on 7 August 2018 (tomorrow), in response to the re-imposition of US sanctions on Iran. They have also issued a document explaining its effect (EU Commission Q&As) which states that:

  1. The Blocking Statute aims at countering the effects of US sanctions on EU economic operators engaging in lawful activity with third countries.
  2. It applies with regard to specific legislation listed in its Annex. It forbids EU residents and companies from complying with the listed legislation unless they are exceptionally authorised to do so by the Commission, allows EU operators to recover damages arising from that legislation from the persons or entities causing them, and nullifies the effect in the EU of any foreign court rulings based on it.
  3. EU operators should inform the European Commission – within 30 days since they obtain the information – of any events arising from listed extra-territorial legislation that would affect their economic or financial interests.
  4. EU operators can recover “any damages, including legal costs, caused by the application of the laws specified in its Annex or by actions based thereon or resulting therefrom” from “the natural or legal person or any other entity causing the damages or from any person acting on its behalf or intermediary”. The action can be brought before the courts of the Member States and the recovery can take the form of seizure and sale of the assets of the person causing the damage, its representatives or intermediaries.
  5. Implementation of the Blocking Statute, including deciding on effective, proportionate and dissuasive penalties for possible breaches is the competence of Member States. It is also for Member States to enforce those penalties.
  6. The European Commission gathers information from EU operators on possible cases of application of the listed extra-territorial legislation, liaises with national authorities from EU Member states concerning such cases in their jurisdiction and receives notification from and shares information with Member States on measures taken under the Blocking Statute and other relevant aspects.
  7. The Commission can also, in exceptional cases, authorise an EU operator to fully or partially comply with the listed extra-territorial legislation if non-compliance would seriously jeopardise the interests of the operator or of the European Union. The Implementing Regulation containing the criteria on the basis of which the Commission will assess such requests for authorisation will also be published tomorrow.

New US Executive Order reimposing Iran sanctions

Trump5.jpg

In light of the US decision to cease participation in the JCPOA and to reimpose all nuclear-related sanctions lifted or waived in connection with the deal, President Donald Trump has issued today a new Executive Order reimposing certain sanctions on Iran.

On 7 August 2018, sanctions will be reimposed on:

  • The purchase or acquisition of US bank notes by the Government of Iran.
  • Iran’s trade in gold and other precious metals.
  • Graphite, aluminium, steel, coal, and software used in industrial processes.
  • Transactions related to the Iranian rial.
  • Activities relating to Iran’s issuance of sovereign debt.
  • Iran’s automotive sector.

On 5 November 2018, the remaining sanctions will be reimposed, including sanctions on:

  • Iran’s port operators and energy, shipping, and shipbuilding sectors.
  • Iran’s petroleum-related transactions.
  • Transactions by foreign financial institutions with the Central Bank of Iran.

The US Administration will also relist hundreds of individuals, entities, vessels, and aircraft that were previously included on sanctions lists. See Statement from the President, Text of a Letter from the President, and White House Fact Sheet. The Fact Sheet states that the “Trump Administration intends to fully enforce the sanctions reimposed against Iran, and those who fail to wind down activities with Iran risk severe consequences”.

In addition, OFAC has published new FAQs relating to today’s Executive Order and updated existing FAQs. See OFAC Notice.