US sanctions on North Korea to remain until complete denuclearisation attained

North Korea Flag and MissilesAt yesterday’s summit in Singapore between US President Donald Trump and North Korean leader Kim Jong-un, a joint statement was signed to reach (inter alia) the “complete denuclearization of the Korean Peninsula”.

In a press conference following the summit, President Trump stated that “[i]n the meantime, the [US] sanctions will remain in effect”, and that they “will come off when we are sure that the nukes are no longer a factor”.

However, China’s Foreign Ministry has stated that the international community ought to consider lifting UN sanctions on North Korea given the “efforts of current diplomatic talks towards denuclearising the Korean peninsula”.

China’s ZTE agrees $1.4bn settlement to lift 7-year denial of US export privileges

ZTEOn 16 April 2018, the US Department of Commerce announced that it had activated a 7-year denial of export privileges order in respect of Chinese telecoms company ZTE (Zhongxing Telecommunications Equipment Corporation and ZTE Kangxun Telecommunications Ltd) (previous blog).

On 13 May 2018, President Trump tweeted that, following talks with President Xi of China, he had instructed the Department of Commerce to get ZTE “back into business” (previous blog).

Today (7 June 2018), the Department of Commerce has announced that ZTE has agreed to “severe additional penalties and compliance measures” to replace the 7-year denial order. Under the new agreement, ZTE must pay $1 billion and place an additional $400 million in suspended penalty money in escrow before it can be removed from the Denied Persons List (these penalties are in addition to the $892 million in penalties ZTE had already paid to the US government under the March 2017 settlement agreement – see previous blog). Under the new agreement, ZTE will also be required to retain a team of special compliance coordinators for a period of 10 years, whose function will be to monitor on a real-time basis ZTE’s compliance with US export control laws. ZTE will also be required to replace its entire board of directors and senior leadership for both entities. Finally, as before, the new agreement imposes a suspended denial order (this time for 10 years), which the Department of Commerce can activate in the event of additional violations during the 10-year probationary period. Collectively, these are the “most severe penalty” the US Department of Commerce has ever imposed on a company.

President Trump tries to lift sanctions on China’s ZTE

ZTE2.jpgOn 16 April 2018, the US Department of Commerce announced that it had activated a 7-year denial of exports privileges order in respect of Chinese telecoms company ZTE (previous blog here).

Yesterday (13 May 2018), President Trump tweeted that, following talks with President Xi of China, he has instructed the US Department of Commerce to get ZTE “back into business”. ZTE previously announced in a filing to the Hong Kong Stock Exchange (9 May 2018) that as a result of the 7-year denial of exports privileges order, the company had ceased its “major operating activities”.

OFAC sanctions Chinese “fentanyl trafficking network”

US Treasury BuildingToday, OFAC designated Chinese national Jian Zhang as a Significant Foreign Narcotics Trafficker, pursuant to the US Kingpin Act, for operating a “fentanyl trafficking network”. In addition, OFAC designated 4 further Chinese nationals for “acting on behalf of Jian Zhang”, as well as a Hong Kong registered entity (Zaron Bio-Tech (Asia) Limited) for being “owned or controlled by Jian Zhang”. As a result, all will be subject to asset freezing measures. Links to OFAC Notice and US Treasury press release.

US investigates China’s Huawei Technologies over Iran sanctions violations

Huawei.jpgChinese tech company Huawei Technologies is reportedly being investigated by the US Department of Justice for violating sanctions on Iran; namely, for shipping US-origin products to Iran and other countries in violation of US export and sanctions laws.

China’s ZTE denied US export privileges for 7 years

ZTE.jpgIn March 2017, we reported that Chinese telecoms company ZTE (Zhongxing Telecommunications Equipment Corporation and ZTE Kangxun Telecommunications Ltd) had agreed to a combined civil and criminal penalty and forfeiture of $1.19bn after shipping telecommunications equipment to Iran and North Korea in violation of US sanctions, making false statements, and obstructing justice including through preventing disclosure to and misleading the US Government. In addition to those monetary penalties, ZTE also agreed a 7-year suspended denial of export privileges, which could be activated if any aspect of the agreement was not complied with.

Yesterday (16 April 2018), the US Department of Commerce announced that it had activated ZTE’s 7-year denial of export privileges order on the basis that the company had made false statements to the Department during settlement negotiations in 2016, and during the probationary period in 2017. Those statements had only been reported to the US Government after the Department had requested certain information from ZTE.

OFAC targets Zhao Wei Transnational Criminal Organisation

OFAC3OFAC has designated the Zhao Wei Transnational Criminal Organisation pursuant to Executive Order 13581. Based in the Golden Triangle Special Economic Zone of Laos, the organisation is alleged to have exploited that region by “engaging in drug trafficking, human trafficking, money laundering, bribery, and wildlife trafficking”.

In conjunction, OFAC has also designated a network of 4 individuals and 3 entities across 3 jurisdictions (Laos, Thailand and China), for “materially assisting, sponsoring, or providing financial, material, or technological support for, or goods or services to or in support of, the Zhao Wei TCO, or for being owned or controlled by persons designated as part of this action”. Furthermore, the Kings Romans Casino (Laos) is alleged to be the main facilitator of the illicit activity in question. Links here for OFAC Notice and US Treasury press release.

Further OFAC designations to N Korea sanctions list

OFAC2.jpgOFAC has designated 16 people, 9 entities and 6 North Korean vessels in response to “North Korea’s ongoing development of weapons of mass destruction (WMD) and continued violations of United Nations Security Council Resolutions” (asset freezes imposed).

Of the 16-designated people, 1 is alleged to be an official of the Workers’ Party of Korea, 10 are alleged to be representatives of the Korea Ryonbong General Corporation, which was previously designated by the UN and the US (note: 8 of the 10 Ryonbong representatives are stated as being located in Chinese offices near the China-North Korean border), and the remaining 5 people are alleged to be linked to North Korean financial networks (said to be North Korean financial representatives located in China or Russia).

Of the 9 entities designated, 5 are North Korean shipping companies (note: the 6-designated vessels were sanctioned as being property in which those companies have an interest) and 2 are Chinese companies, which were listed for having allegedly exported over $68m worth of goods to North Korea and for having imported more than $19m worth of goods from North Korea (cumulative figures). The 2 remaining entities are ‘Ministry of Crude Oil Industry’, which “handles crude oil for North Korea”, and a North Korean electronics company operating in the manufacturing industry. Links to OFAC Notice and US Treasury press release.