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Export Controls & Sanction Watch - Edition 14-24

Edition 14 - 2024 - 15 of your blog-style export controls & sanctions update for EC&S community members. Watch period: 10.04.2024 - 17.04.2024




Feature Article:


EU Sanctions Against Russia: 14th Package

As the EU prepares to roll out its 14th sanctions package against Russia, it faces challenges in maintaining the efficacy of its measures while countering Russian circumvention tactics. This blog entry delves into the potential impact of the upcoming sanctions, strategies for enforcement, and the broader implications for the ongoing conflict in Ukraine. Read here


PREMIUM REPORT


EU Council Approves Directive Criminalizing Sanctions Violations

On April 12, 2024, the EU Council granted its ultimate endorsement to a directive aimed at criminalizing violations of sanctions. This significant move paves the way for heightened enforcement measures across EU member states. The directive is slated to come into effect on the 20th day following its publication in the Official Journal of the EU. Subsequently, member states will have a grace period of 12 months to integrate the provisions outlined in the directive into their respective national legislations.

For an exhaustive overview of the directive's provisions, encompassing delineations of sanctions violations, stipulated minimum penalties, and other pertinent requirements, kindly refer to our prior publication.




UPDATES


UK updates guidance on reporting export control breaches

If you've encountered breaches of export control and trade sanctions legislation, it's crucial to take immediate action. Whether you've inadvertently exported strategic goods without proper licensing, imported goods under sanctions, or received recommendations from the Export Control Joint Unit (ECJU), reporting the irregularity to HMRC is paramount. Submit a voluntary disclosure promptly, including comprehensive details of the breach, relevant documents, and steps taken to prevent recurrence. Reach out to HMRC via email or courier, ensuring copies are sent to the designated address. Be thorough in your communication, as HMRC will review the case and may request further information. For confidential reporting, consider using HMRC's online reporting tool. Stay proactive in compliance efforts to uphold regulatory standards and mitigate potential repercussions. REad more


EC: FAQs on the reporting of outbound transfers

The EU Commission has published 16 FAQs (available alongside other FAQs on our EU guidance page and our Russia page) on the obligation of Russian-owned entities and EU credit and financial institutions to report transfers from Russian-owned entities out of the EU (Article 5r of Council Regulation 833/2014).

Key points:

  • Article 5r applies to financial assets and benefits of every kind;

  • Article 5r covers funds held in a branch of an EU financial institution located outside the EU but not subsidiaries of EU operators located outside the EU;

  • Article 5r applies to entities directly or indirectly owned 40% or more by Russian entities & individuals, where “indirect ownership” means ownership via a chain of intermediaries (the criterion of “control” is not relevant to Article 5r);

  • EU credit and financial institutions must report transfers even if the Russian-owned entity has already reported; and


The UK lists companies financing the conflict in Sudan.

The UK has designated (notice) 3 businesses allegedly supporting the activities of the Sudanese Armed Forces (SAF) and the Rapid Support Forces (RSF), the military groups engaged in conflict in Sudan:

  • Sudan-based Alkhaleej Bank, a financial institution which has allegedly been key to financing RSF operations and controlling key elements of the Sudanese economy;

  • Sudan-based Al-Fakher Advanced Works, a holding company allegedly used by the RSF to export gold; and

  • Sudan-based Red Rock Mining, a mining and exploration company which is a subsidiary of Sudan Master Technology, which the UK has already designated and provides funds to the SAF.


Metal Ban (imports & trading) imposed UK

From 13 April 2024, the UK has prohibited the London Metal Exchange (LME) from trading new aluminium, copper, and nickel produced by Russia.  The UK prohibited the import of Russian aluminium, copper, and nickel in December 2023.

The UK trade Licence for acquisition of metals, according to the LME guidance and notice, divides Russian metal warrants into two types:

  • Type 1 Russian warrants – Russian metals warrants in existence before 23:59 on 12 April 2024 can be re-warranted at the same warehouse and the metal can be moved between warehouses;

  • Type 2 Russian warrants – UK members and clients cannot withdraw Russian metals warrants issued on or after 13 April 2024 for their own account or change the location of the metal to which the warrant is related. UK members can cancel or withdraw the metal underlying type 2 warrants for the accounts of non-UK clients.


Metal Ban (imports & trading) imposed US

From 13 April 2024, the US has prohibited the import of Russian aluminium, copper, and nickel (US determination 1) and prohibited the Chicago Mercantile Exchange from trading new aluminium, copper, and nickel produced by Russia (US determination 2).

The US issued 5 FAQs on these measures outlining:

  • the US prohibition does not impose any prohibitions on services related to aluminium, copper, or nickel of Russian origin that was produced prior to 13 April 2024;

  • banks are not prohibited from acting as intermediaries for payments related to Russian metals; and

  • the prohibitions do not apply to aluminium, copper, and nickel incorporated into other products outside of Russia


The US designates officials from Hamas involved in cyber activities and unmanned aerial vehicles (UAVs)

OFAC has designated (notice) 4 Hamas officials as Specially Designated Global Terrorists under Executive Order 13224 (see our counter-terrorism sanctions page):

  • Hudhayfa Samir ‘Abdallah al-Kahlut, the spokesman and leader of the cyber influence department for the Izz al-Din al-Qassam Brigades, the military wing of Hamas in Gaza;

  • William Abu Shanab, the commander of the Lebanon-based al-Shimali unit, which is supported by Hamas’s Construction Bureau in Lebanon and has operations across Lebanon and manages Hamas’s UAV production;

  • Bara’a Hasan Farhat, the assistant to Abu Shanab; and

  • Khalil Muhammad ‘Azzam, an intelligence official in the al-Shimali unit


The EU lists entities linked to the Hamas terrorist attacks on October 7th.

The EU has designated 3 entities under its Global Human Rights Sanctions Regime for their alleged responsibilities in the terrorist attacks that occurred across Israel on 7 October 2023 (decision, implementing regulation):

  • Al-Quds Brigades, the armed wing of the EU-designated terrorist organisation Palestinian Islamic Jihad;

  • Nukhba Force, a special forces unit of the EU-designated terrorist organisation Hamas; and

  • the Qassam Brigades, the military wing of Hamas.


Treasury/OFAC: Publication of Russia-related Determinations; Issuance of Russia-related General License and Frequently Asked Questions

 

The Department of the Treasury's Office of Foreign Assets Control (OFAC) is publishing a Determination for Prohibitions Related to Imports of Aluminum, Copper, and Nickel of Russian Federation Origin, and a Determination for Prohibitions on Certain Services for the Acquisition of Aluminum, Copper, or Nickel of Russian Federation Origin.



OFAC is also issuing five new, Russia-related Frequently Asked Questions (FAQs 1168 - 1172) and amending two Russia-related Frequently Asked Questions (FAQs 1019 and 1128).



:Details for OFSI General licence INT/2024/4576632 – Active and Beks Ships Transit to Port and Wind Down

Change made:General licence – INT/2024/4576632 amended on 10 April 2024 to remove the language prohibiting funds or economic resources from being made available for the benefit of any designated person.


UK General licence – INT/2024/4576632

Amended on 10 April 2024 to remove the language prohibiting funds or economic resources from being made available for the benefit of any designated person.


Upcoming Export Control and Sanctions Training


Learn the essentials of sanctions, dual-use products and export limits to avoid expensive fines. Our training will be advantageous to any US and non-US firm engaging in international trade, especially concerning items of US origin. Our training helps prevent expensive export control and sanctions fines. It imparts essential knowledge that personnel responsible for export controls and sanctions compliance must grasp.


Sanctions

This course develops professionals' competencies to deal with all key compliance aspects of sanctions laws and policies. Using examples from the EU, the UK and the U.S., we will explore how to check entities, individuals, and organisations against sanctions lists, set up an effective restricted party screening programme, and identify economic trade sanctions and how your products may be affected by it. We will determine due diligence requirements and how you can locate attempts for circumvention. We will discuss applying for a sanction’s exemption licence, a licence exception / general licence. Includes a discussion around red flags and how to set up a sanctions policy and programme. Special feature: Participants will workshop through real sanctions’ case studies and explain the action they would take to ensure compliance.


Dates (Click To Book)


Export Controls

This course develops the competencies that professionals need to deal with the four fundamental aspects of export controls: Product, Destination, End-User and End-Use Controls. Using examples from the EU, the UK and the U.S., we will explore how to determine if an item is subject to export controls and detail the steps to acquire an export control licence and/to apply for a licence exception / general licence. Includes a discussion around red flags and Internal Export Compliance Programmes (ICP/ECP). Special feature: A hands-on workshop where you get to determine the export control rating of your product by yourself (supported by your expert instructor).


Dates (Click To Book)


U.S. Export Controls

This course focuses on U.S. Export Controls, the EAR and ITAR.  Discover how an item can be subject to the EAR or ITAR, how to verify items against the CCL or the USML, how to determine licence requirements and licence exceptions, how to make a licence application, check Export Controls specific restrictive lists and more. We cover

  • The enforcement authority of the Bureau of Industry and Security (BIS) extends overseas.

  • Key US law on export restrictions and importance for non-US firms.

  • Concepts and definitions related to dual-use products.

  • the many categories of EAR bans for non-US companies.

  • The many export classifications and categories, including dual use.

  • The Commerce Control List: An Introduction (CCL).

  • the primary dangers associated with doing business with US companies.

  • Fines and penalties.

  • Vigilance and warning signs.

  • How to create an export compliance programme (ECP) that works?

  • How BIS licences are applied for.


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Special feature: A close look at the extraterritorial application of U.S. Export Controls De Minimis, Foreign Direct Product Rule, Second Incorporation Principle and more

Dates (Click To Book)



What if I have a question regarding these updates


We invite you to use the chat function available on www.customsmanager.org to ask any questions related to this update. Our skilled team of export control and sanctions managers will be happy to provide you with the information you need within 24 hours.

Sources


EU

  • Official Journal of the EU

  • DG TRADE Website

  • Social Media (LinkedIn, Twitter, etc).

  • Information on the National Export Control & Sanctions Website of Member States

  • Social Media Postings


U.S.

  • Bureau of Industry and Security (BIS)

  • Department of Commerce

  • Office of Foreign Asset Control (OFAC)

  • Social Media (LinkedIn, Twitter, etc).


UK

  • Information on gov.uk

  • Information on legislation.gov.uk

  • Department of Business and Trade

  • Social Media (LinkedIn, Twitter, etc).


Other

  • United Nations (Sanctions)

  • Social Media (LinkedIn, Twitter, etc).



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