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.

New US Iran ballistic designations

The USA yesterday designated 14 people and entities for supporting “illicit Iranian actors or transnational criminal activity”. The new listings target Iran’s military, Revolutionary Guard Corps, and ballistic missile programme; 3 networks are said to have provided support through the development of unmanned aerial vehicles and military equipment, the production and maintenance of fast attack boats, or the procurement of electronic components.

The US has also designated Iran-based Ajily Software Procurement Group as a Transnational Criminal Organisation, along with 3 connected people, for stealing engineering software programmes from the US and other Western countries, some of which it sold to the Iranian military and government.

Details of all the new listings are here, and the State Department’s statement is here.  On Monday the US administration certified that Iran was complying with its obligations under the JCPOA nuclear deal. However, it has been highly critical of Iran’s continued development of ballistic missiles and some of its activities in the Middle East, and promised new sanctions to “hold Iran accountable”. The Iranian Foreign Ministry said it will reciprocate by sanctioning US persons (link to statement here).

US considers new sanctions on Venezuela

President Trump has said that the US will impose “strong and swift” sanctions on Venezuela if its president Nicolás Maduro carries out his plan to create a “constituent assembly”, which could rewrite the country’s constitution. It is reported that the White House is considering a number of possible new sanctions, including banning imports of Venezuelan oil, listing more government officials, and cutting diplomatic ties.

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 to seize Manhattan skyscraper for sanctions violations

The US has said it may seize a Manhattan skyscraper 60% owned by Iranian-American charity Alavi Foundation, which is said to have been involved in violating sanctions against Iran.  The other 40% is said to be owned by a partner of the charity using the property to channel millions of dollars to Iran in violation of US sanctions. Alavi says that it had no knowledge of the partner’s activities.

US sanctions Chinese entities for assisting N Korea

The US Treasury’s Financial Crimes Enforcement Network (FinCEN) has determined that China-based Bank of Dandong is serving as a gateway for North Korea to access the US and international financial systems, in circumvention of sanctions. It has proposed introducing a rule under the US PATRIOT Act that would require US banks to ensure that Bank of Dandong does not access the US financial system directly or indirectly through other foreign banks. The proposed rule is available here, with a 60-day comment period.

In addition, OFAC has designated Chinese citizens Sun Wei and Li Hong Ri. Sun Wei is said to have been closely aligned with US-designated Foreign Trade Bank, North Korea’s primary foreign exchange bank, in establishing and running a cover company on its behalf. Li Hong Ri is said to have cooperated with US-designated person Ri Song Hyok, official for designated Koryo Bank, to create front companies used to procure items and conduct financial transactions on behalf of North Korea. It has also designated Dalian Global Unity Shipping Co., a large freight company operating in North Korea, for smuggling luxury goods in violation of UN sanctions. The details of the listings are here.

Delayed US sanctions bill on Iran & Russia resumes passage through House

Earlier this month, the US Senate voted in favour of new sanctions on Iran and Russia set out in the Countering Iran’s Destabilising Activities Bill (see previous blog).  The US constitutional requirement that any bill that raises revenue for the government originates in the House delayed its passage, but the Senate has now sent a revised version to the House that resolves this issue. Because of the delay, the House will not vote on the bill until after the G20 summit on 7-9 July.

The bill mandates the imposition of sanctions against people and entities who materially contribute to Iran’s ballistic missile programme (the President currently has a discretion to impose those sanctions by executive order).  This provision includes the imposition of secondary sanctions, which apply to non-US people and entities. It also authorises the President to impose asset freezes and travel bans for human rights violations in Iran, and asset freezes on people and entities associated with Iran’s Revolutionary Guard Corps or anyone that knowingly contributes to the sale or transfer of arms or related services to Iran. In addition, it requires the President to account for any discrepancies between US and EU sanctions on Iran in a report to Congress every 180 days.

The bill would expand existing sanctions on Russian people involved in human rights abuses, impose sanctions on people conducting cyberattacks on behalf of the Russian government, supplying weapons to Syria’s government or who interfered in the 2016 US elections, and consolidate sanctions on Russia’s energy and financial sectors currently imposed by executive order. It would also restrict the US President’s ability to ease sanctions on Russia without Congressional approval.