Standard Chartered agrees to 5-month extension of US DPA

Standard Chartered.jpgLast week (27 July), Standard Chartered announced that it has agreed to a further extension of its US Deferred Prosecution Agreement (DPA) until 31 December 2018.

The bank entered into the DPA with the US Department of Justice and the New York County District Attorney’s Office in December 2012 over breaches of sanctions against Iran and other countries.

In the announcement, the bank states that it has “taken a number of steps and made significant progress toward compliance with the requirements of the DPA and enhancing its sanctions compliance programme, but that the programme has not yet reached the standard required by the DPA”. Furthermore, that the bank will continue to cooperate with an ongoing US sanctions-related investigation, namely, whether it had continued to breach sanctions by processing US dollar transactions for Iranian entities even after the DPA was signed in 2012.

UK Government response to Moscow’s Gold report

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We summarised in May the recommendations of the House of Commons Foreign Affairs Committee report Moscow’s Gold: Russian Corruption in the UK.  The Government has now published its response, which (inter alia):

  • Emphasises the Government’s commitment to counter Russia’s “malign activity” and “tackling illicit finance” including using sanctions and Unexplained Wealth Orders.
  • Explains (in response to the committee’s question as to how EN+ could float on the London Stock Exchange given Russia sanctions) that EN+ was not sanctioned when listed, the Financial Conduct Authority had concluded there would be no sanctions breach, and the US designation under CAATSA in April 2018 was not something to which the UK was party.
  • States that it has “established several multilateral working groups on specific sanctions regimes, including one on Russia”, will publish the names of people to be sanctioned by the UK for gross human rights violations under the new Sanctions & AML Act 2018, and undertakes that when it reports to Parliament each year on its sanctions regulations it will highlight and respond to recommendations made by Parliamentary committees.
  • Responds in detail to the report’s suggestion that it limit the issuance of Russian debt on global markets and prohibit the purchase of bonds in which a sanctioned entity has acted as bookrunner.
  • Reports on progress on registers of beneficial ownership in overseas territories.

UK provides for expanded EU arms embargo against Burma

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In April 2018, the EU adopted Council Decision (CFSP) 2018/655 and Council Regulation (EU) 2018/647, which (inter alia) expanded the EU’s arms embargo on Burma/Myanmar to include:

  1. A prohibition on the export of dual-use goods for use by the military and border guard police;
  1. Restrictions on the export of equipment for monitoring communications that might be used for internal repression; and
  1. A prohibition on the provision of military training to, and military cooperation with, the Burma/Myanmar army (see previous blog).

The UK has made provision for this expanded EU arms embargo by adopting the Export Control (Burma Sanctions) (No. 2) Order 2018 (SI 2018/894), which comes into force on 14 August 2018. As a result, the Export Control (Burma Sanctions) Order 2013 (SI 2013/1964) has been revoked.

UK updates 12 general licences to clarify security provisions

ECOThe UK’s Export Control Joint Unit (ECJU) has amended 12 military and dual-use Open General Export Licences (OGELs) to confirm, where applicable, that the requirement for a written letter of clearance to comply with the security conditions and requirements of the OGEL can be fulfilled by holding an approved F1686. The F1686 procedure itself and actions required to obtain one have not changed. See ECJU Notice here (includes the list of OGELs updated).

Statement from Joint Commission of JCPOA

Iran-US.jpgToday, the Joint Commission of the JCPOA (the body responsible for overseeing the implementation of the JCPOA) held a ministerial level meeting in Vienna to discuss the continued implementation of the Iran nuclear deal in light of the recent US decision to withdraw from the agreement and to reimpose sanctions on Iran. Statement here.

The meeting was chaired by EU High Representative Federica Mogherini and was attended by representatives from China, France, Germany, Russia, UK and Iran. They all reconfirmed their commitment to the full and effective implementation of the nuclear deal, and affirmed their commitment regarding the following objectives:

·         The maintenance and promotion of wider economic and sectoral relations with Iran;

·         The preservation and maintenance of effective financial channels with Iran;

·         The continuation of Iran’s export of oil and gas condensate, petroleum products and petrochemicals;

·         The continuation of sea (including shipping and insurance), land, air and rail transportation relations;

·         The promotion of export credit cover;

·         Clear and effective support for economic operators trading with Iran, particularly SMEs;

·         The encouragement of further investments in Iran;

·         The protection of economic operators for their investment and other commercial and financial activities in or in relation to Iran;

·         The bringing together of private and public-sector experts, including through the promotion of Business Councils;

·         The practical support for trade with and investment in Iran; and

·     The protection of companies from the extraterritorial effects of US sanctions (see previous blog on the updating of the EU Blocking Statute).

Parliamentary committee concerned about lack of clarity re EU Blocking Regulation

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The House of Commons European Scrutiny Committee has made a number of comments in its 33rd Report (3 July 2018) about the EU Blocking Regulation being extended to Iran sanctions (see previous blog). In particular it notes that:

1.      The practical impact of the EU Blocking Regulation is not clear, because “its enforcement in the 1990s in response to the extraterritorial effects of previous US sanctions—targeting commercial links with Iran, Libya and Cuba—was fragmented at best.”

2.      If the US administration is not responsive to “the pressure exerted by the reactivation of the Statute, it puts EU and UK companies in the position of having to choose between risking enforcement measures at home (if they choose to comply with the American sanctions) or in the US (if they abide by the Blocking Statute and ignore the US legislation).”

3.      It is good that the UK is “pressing” the European Commission for guidance, “given the potential commercial ramifications of being shut out of the American market.”

4.      The European Investment Bank has already expressed concern about being asked to provide investment support for Iran to compensate for restrictions on private investment because it requires access to US capital markets for its general operations, and “similar concerns are likely to abound in the private sector as well”.

On 18 June 2018, the UK Secretary of State for International Trade Liam Fox published an Explanatory Memorandum saying the UK supports the EU proposal and intends to “uphold the policy intent of this regulation in our statute book once we have left the EU, so that we can mitigate the impact of extra-territorial sanctions on [UK] trading interests”. The UK “will be engaging at a national level and EU level to ensure that business gets as much clarity and guidance as possible” on how to comply with the amended Regulation.