US revokes Sudan sanctions

Sudan 1On 6 October, the US decided to revoke long-standing economic sanctions against Sudan, in recognition of its progress towards maintaining a cessation of hostilities in Sudanese conflict areas, improving humanitarian access throughout Sudan, and maintaining cooperation with the US on addressing regional conflicts and the threat of terrorism. Although not a condition for revoking the sanctions, the US also secured a commitment from Sudan not to pursue arms deals with North Korea. The revocation is set to take effect on 12 October 2017.

Sudan, however, will continue to remain on the US list of State Sponsors of Terrorism – alongside Iran and Syria – which carries, among other things, a ban on weapon sales and restrictions on US foreign assistance.

The US State Department has issued a press statement and a report with respect to this revocation of sanctions. OFAC has also published frequently asked questions, as well as a new general licence authorising certain transactions.

White Birch settlement with OFAC for violating Sudan sanctions

BD White Birch Investment LLC (White Birch USA), a company headquartered in Greenwich, Connecticut, has agreed to pay OFAC $372,465 to settle allegations that it violated the Sudanese Sanctions Regulations by having facilitated the sale and shipment of 543.952 metric tons of Canadian-origin paper from Canada to Sudan with a value of $354,602.26 in April and December 2013.

The enforcement action reinforces certain compliance obligations for US persons, including US parent corporations that maintain subsidiaries located outside of the United States, and their US person employees. For the full enforcement information, released on 5 October 2017, click here.

US expected to lift its sanctions on Sudan

In July, the US delayed its decision on whether to lift its sanctions on Sudan for 3 months (see previous blog).  President Trump is now expected lift the sanctions before a deadline of 12 October next week, following reports of a series of successful bilateral meetings between the two countries.

The sanctions were eased under the previous administration in recognition of Sudan’s improved cooperation with the US, including on counter-terrorism, improvements to humanitarian access, and the reduction in its military activity in conflict areas such as Darfur, but their full revocation was linked to Sudan’s continued progress on these issues (see previous blog). Since that time, Sudan is also reported to have agreed to cut its ties with North Korea.

President Trump is said to have delayed his decision for fear of appearing soft on a country widely accused of numerous human rights violations, and due to a lack of crucial Africa-related appointments in several US government departments.  In a possible precursor to the sanctions being lifted, last week President Trump removed Sudan from the list of countries subject to a general ban on travel to the US (see previous blog).

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.

US delays decision on lifting Sudan sanctions for 3 months

The US has extended the deadline for deciding whether to revoke its sanctions on Sudan for 3 months.  They were due to expire on 12 July, if not prevented by the White House. The Obama Administration eased US sanctions on Sudan in January, in recognition of Sudan’s improved cooperation with the US including on counter-terrorism, improvements to humanitarian access, and the reduction in its military activity in conflict areas such as Darfur (see previous blog). The full lifting of the sanctions is contingent on Sudan continuing to address these areas, but the current administration decided that it needed more time to “ensure that, given the scope and gravity of this decision, we reached the proper outcome”.

Senior administration officials gave a press briefing on US sanctions on Sudan on Wednesday (link here).

US on the way to lifting sanctions on Sudan

president-obama-3President Obama has eased US sanctions on Sudan, in recognition of Sudan’s improved cooperation with the US including on counter-terrorism, improvements to humanitarian access, and the reduction in its military activity in conflict areas such as Darfur.  Under a new general licence published by the US Treasury, several prohibited transactions have been authorised, including transactions involving persons in Sudan, transactions involving property in which the Government of Sudan has an interest, and imports to and from Sudan. The relevant sanctions provisions will be fully revoked on 12 July 2017 provided that the government of Sudan sustains this conduct.

OFAC has published a fact sheet and a new set of FAQs, which note that this action does not authorise transactions prohibited under US sanctions on Darfur or South Sudan.  The details and FAQ are here.

OFAC fines National Oilwell Varco for sanctions violations

OFAC has fined US firm National Oilwell Varco (NOV), and its subsidiaries Dreco and Elmar, $5,976,028 in settlement of their civil liability for allegedly violating US sanctions on Iran, Cuba, and Sudan.  The settlement is concurrent with a settlement agreement between NOV and the Department of Commerce, and a Non-Prosecution Agreement (NPA) with the US Attorney’s Office for the Southern District of Texas.  NOV’s settlement with OFAC will be deemed satisfied by its payment of $25,000,000 under the NPA.

OFAC determined that, between around 2002 and 2009, NOV repeatedly engaged in transactions involving the sale and export of goods to Iran, Cuba, and Sudan.  NOV is said to have wilfully blinded itself to Dreco’s deliberate non-identification of Iran in its communications with NOV.  It found NOV’s conduct to have been aggravated by, among other factors, the fact that it did not voluntarily disclose the violations, that senior management knew or had reason to know that several of the transactions were benefitting Iran, and that it is a large and sophisticated company involved in regions of high sanctions risk that had a wholly inadequate compliance programme in place.  OFAC found NOV’s conduct to have been mitigated by its cooperation with the investigation into its conduct, and its efforts to remediate its compliance programme.

OFAC’s penalty notice is here.

US Treasury report on OFAC licensing

The US Treasury has published reports on OFAC’s licensing activities under the Trade Sanctions Reform and Export Enhancement Act 2000 for the 2nd-4th quarters of 2015 (available here).  Under that legislation, OFAC processes licence applications requesting authorisation to export agricultural commodities, medicine, and medical devices to Iran and Sudan.

The reports indicate that over the reporting period the average processing time for TSRA applications increased from 71 to 88 business days, not including still unprocessed applications. 328 applications (over half of all applications filed during the reporting period) were still unprocessed at the end of the period.  No licence applications were denied during the reporting period.