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Export Controls & Sanction Watch - Edition 19-24

Edition 19 - 2024 of your blog-style export controls & sanctions update for EC&S community members. Watch period: 19.05.2024- 26.05.2024



EU Implements Criminal Sanctions for Violating EU Sanctions


New EU legislation, effective as of this week, has made sanctions violations a criminal offense within the European Union. The European Commission emphasized that Member States are now required to ensure that breaches of EU sanctions are met with effective and proportionate criminal penalties. The legislation outlines specific criminal offenses related to sanctions violations, such as failure to freeze assets, breaching travel bans and arms embargoes, and providing prohibited financial services. These rules establish uniform standards for penalties across all Member States, aiming to close legal loopholes and enhance deterrence against sanctions violations. Additionally, the legislation includes provisions for enhanced freezing and confiscation of assets subject to EU sanctions. Member States have a 12-month period to integrate these regulations into their national legislation.



Commission Welcomes Council Decision on Immobilised Russian Assets for Ukraine

The European Commission commends the recent Council decision regarding the utilization of proceeds from immobilized Russian assets for Ukraine's benefit. Refer to Council Regulation (EU) 2024/1469, Council Decision (CFSP) 2024/1470, and the accompanying Notice for detailed information.


Consolidated FAQs on Sanctions Against Russia and Belarus

The Commission releases a consolidated version of frequently asked questions (FAQs) pertaining to sanctions implemented following Russia's military aggression against Ukraine and Belarus' involvement. This document aims to provide clarity and guidance on the sanctions' framework.

  • Consolidated version of the FAQs concerning sanctions adopted following Russia’s military aggression against Ukraine and Belarus' involvement in it


FAQs Focus on Article 2f of Council Regulation (EU) No 833/2014 - Media

Specific FAQs addressing sanctions against Russia and Belarus are released, with a particular focus on Article 2f of Council Regulation (EU) No 833/2014 concerning media-related provisions. These FAQs offer insights into the regulatory landscape governing media activities in the context of sanctions.

  • FAQs on sanctions against Russia and Belarus, with focus on the following provision: Article 2f of Council Regulation (EU) No 833/2014 - Media


Russian Oil Price Cap Compliance Alert

A compliance alert is issued regarding the Russian Oil Price Cap (OPC) under Article 3n of Council Regulation (EU) 833/2014. This alert pertains to fluctuations in Urals and ESPO crude rates and highlights obligations under the regulation for maintaining compliance.

  • Russian Oil Price Cap (OPC) Compliance Alert - Article 3n - Council Regulation (EU) 833/2104 - Fluctuating Urals and ESPO crudes rates

U.S. Commerce Department Issues Advisory on Turkey's Antiboycott Compliance

On May 15, 2024, the Bureau of Industry and Security (BIS) released a statement addressing the Turkish government's decision to halt all imports and exports with Israel until the Israeli government allows for a continuous flow of humanitarian aid into Gaza. BIS emphasized that all individuals and entities classified as "U.S. persons" under the antiboycott regulations of the Export Administration Regulations (EAR) are prohibited from supporting unsanctioned foreign boycotts in U.S. commerce. These entities are required to report any receipt of such requests. Despite Turkey's historical stance not aligning with the Arab League's boycott of Israel and its absence from the U.S. Department of Treasury's list of countries requiring participation in international boycotts, BIS expects U.S. companies to report and reject any boycott-related requests concerning Turkey. It's crucial for companies engaged in import or export activities with Turkey to scrutinize business documents for any prohibited or reportable requests under Part 760 of the EAR. Such requests may necessitate reporting to BIS, and companies should evaluate them under the EAR to determine appropriate responses.



China Targets Former U.S. Lawmaker and Companies Over Taiwan Support and Trade

24 May 2024


In a significant move under its Anti-Foreign Sanctions Law, China has taken action against a former U.S. lawmaker and several American companies due to their support and trade activities related to Taiwan. Mike Gallagher, a former U.S. lawmaker known for his critical stance on China and strong support for Taiwan, has been added to China's countermeasures list.


Additionally, China has imposed sanctions on 12 U.S. military-linked companies and 10 executives involved in arms sales to Taiwan. The targeted companies include major defense contractors such as Lockheed Martin, Raytheon, and General Dynamics. These measures reflect China's ongoing efforts to counteract foreign entities it perceives as threatening its sovereignty and security, particularly in relation to Taiwan, which China considers a breakaway province.



UK Parliament Debates Effectiveness and Evasion of Russia Sanctions

24 May 2024


The UK House of Lords and House of Commons recently engaged in a comprehensive discussion about the effectiveness and evasion of sanctions imposed on Russia. Key highlights from the debate include:


- The UK Foreign Secretary, Lord Cameron, will bring up the issue of the "shadow fleet" and the evasion of the oil price cap at the European Political Community meeting scheduled for July 2024.

- The G7's primary proposal regarding the seizure of Russian assets involves allocating the windfall interest on Russian state assets to Ukraine. Nonetheless, the UK has not dismissed the possibility of eventually utilizing the principal assets themselves.

- The initial financial penalties from the Office of Financial Sanctions Implementation (OFSI) are anticipated to be imposed later this year.



U.S. Sanctions Former Bangladeshi Army General for Corruption

24 May 2024

The U.S. Department of State has sanctioned former General Aziz Ahmed, who previously served as the Chief of Staff of the Bangladesh Army, citing his alleged involvement in significant corruption. According to the State Department, Aziz Ahmed colluded with his brother to improperly award military contracts and accepted bribes in exchange for government appointments for personal gain.



UN adds individuals to Al-Shabaab sanctions list

The UN has designated 3 individuals for supporting Al-Shabaab and engaging in acts that threaten the peace and security of Somalia (implemented by the UK – notice):

  • Mohamed Abdikadir, senior Al-Shabaab leader;

  • Mohamud Mohamed, member of Shura (executive council) of Al-Shabaab; and

  • Omar Mohamed, Wali (leader) of the Al-Shabaab group in Diinsor.eet


UK Revises Guidance for Russian Diamond Sanctions

24 May 2024

The UK has revised its guidance on sanctions related to Russian diamonds, incorporating a new example of documentation to verify the supply chain history of diamonds processed in third countries. This includes the provision of a verification certificate issued by the Federal Public Service Economy at the Diamond Office in Antwerp, Belgium.



UK Ruling on Russian Anti-Suit Injunction and Sanctions – Magomedov v. Transneft

In the case of Magomedov and Port Petrovsk (a British Virgin Islands company owned by Mr. Magomedov) against Transneft, proceedings were initiated in England over an alleged conspiracy to eliminate Mr. Magomedov's stake in PJSC Novorossiysk Commercial Sea Port. The Moscow court, invoking Article 248 of the Russian Arbitration Procedural Code, issued an anti-suit injunction to halt these proceedings, arguing that US and UK sanctions on Transneft hindered its ability to obtain justice in an English court. In response, Mr. Magomedov sought the continuation of an anti-anti-suit injunction to counteract the Moscow court's decision.


Judgment:

The High Court's ruling includes the following points:

  • Article 248 of the Russian Arbitration Procedural Code was implemented to address the issue of Russian entities being denied access to justice due to the impact of sanctions.

  • Despite Transneft not being subject to a UK asset freeze, US and EU sanctions pose a significant risk to its ability to compensate its English legal team. Transneft's original lawyers remain unpaid, and their current team has not received payment for four months. Since the payment issue is not a result of UK sanctions, it cannot be resolved by issuing a UK license.

  • Justice Bright extended the anti-anti-suit injunction until the English court determines whether England is the appropriate forum with jurisdiction over the underlying dispute. The court also deemed the potential $7.5 million penalty for non-compliance with the Moscow anti-suit injunction as disproportionate.


UK Issues Guidance on Russia Sanctions Regarding Sales of Oil Tankers to Third Countries

23 May 2024

The UK has issued detailed guidance to help businesses comply with Russia sanctions when selling or brokering oil tankers to third countries. Key points from the guidance include:

  • Regulation 29 of the Russia Sanctions Regulations prohibits brokering services for arrangements that result in certain vessels, listed in Part 7 of Schedule 2A, being made available in third countries for eventual delivery to Russia.

  • Due Diligence: Businesses should conduct thorough due diligence, including obtaining the contact details, source of funds, and identification documents of the buyer’s beneficial owner. This information should be verified against third-party databases, media, and market intelligence to ensure the buyer is the true end-user or ultimate beneficial owner.

  • Red Flags System: Ship brokers are advised to incorporate a system of 'red flags' into their due diligence processes.

  • List of Red Flags: The guidance includes 19 potential red flags, such as:

  • The vessel involved in the transaction is over 15 years old.

  • The purchase price is significantly above market value.

  • The potential buyer is engaged in the sale of restricted goods to high-risk destinations.

  • The shipment route deviates from typical trade patterns.th

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OFAC Releases Updated List of Authorized Export Items to Iran

22 May 2024

The Office of Foreign Assets Control (OFAC) has released an updated list of items permitted for export or reexport to Iran under the Iranian Transactions and Sanctions Regulations. The newly authorized items include:

  • Mobile and satellite phones

  • Consumer modems, routers, radio equipment, and Wi-Fi access points designed for up to 50 concurrent users

  • Laptops, tablets, and personal computing devices

  • Anti-virus, anti-malware, anti-tracking, anti-censorship, and VPN client softwareou

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Treasury Sanctions Facilitators of Illicit Arms Transfers Between DPRK and Russia

May 16, 2024

The U.S. Treasury's Office of Foreign Assets Control (OFAC) has sanctioned two Russian individuals, Rafael Anatolyevich Gazaryan and Aleksey Budnev, and three Russia-based entities, for facilitating arms transfers between North Korea and Russia. These sanctions aim to disrupt the growing military cooperation between the DPRK and Russia, which includes the transfer and testing of ballistic missiles for use against Ukraine. This action highlights the U.S. commitment to holding accountable those who support Russia's illegal aggression and North Korea's military activities. be fou



UK: Update - Approved Companies for Maritime Anti-Piracy Trade Control Licence

The list of companies authorized to utilize the Open General Trade Control Licence for maritime anti-piracy operations has been updated. Open Ocean Services Ltd (OOS) has been added to the list of registered companies, while Protection Vessels International Limited and Solace Global Maritime Limited have been removed. This revision reflects adjustments to ensure compliance and effectiveness in the supply, transfer, or delivery of controlled goods in maritime security operations.

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UK: Russian Oil Services Ban

The Office of Financial Sanctions Implementation (OFSI) has made updates to the guidance, general licences, and reporting forms regarding the Russian Oil Services ban, specifically in relation to the Maritime Services Ban and Oil Price Cap Exception. OFSI has revised the Oil Price Cap General Licence - INT/2024/4423859 and its associated publication notice. Notably, these updates exclude the supply or delivery of Russian oil by, or provision of relevant services to, "specified ships." Additionally, OFSI has updated the Oil Price Cap Guidance, focusing on ship specification in Sections 4.1 and 4.2, and addressing extraordinary situations in Section 4.4. These revisions reflect ongoing efforts to enforce sanctions effectively and ensure compliance with regulatory measures.



Update: Financial Sanctions - Somalia

Somalia remains subject to UK financial sanctions, and this document contains the updated list of designated persons. A recent addition includes the HM Treasury Notice dated May 22, 2024, pertaining to Somalia. This update reflects ongoing efforts to enforce financial sanctions and ensure compliance with regulatory requirements concerning Somalia.


JPMorgan Settles for $100 Million Over CFTC Trade Reporting Violations

JPMorgan Chase & Co has agreed to pay $100 million and admit to breaking U.S. Commodity Futures Trading Commission (CFTC) rules due to trade reporting lapses, as announced by the regulator on Thursday. The bank disclosed significant gaps in its trading data and order surveillance to the agency in June 2021, with some issues dating back to 2013. Despite JPMorgan's self-reporting of the violation and claims of no misconduct or customer harm, the admission marks a victory for the CFTC, which has been advocating for admissions of guilt in settlements. Democratic CFTC Commissioners and enforcement officials stress the significance of such admissions in fostering accountability, even though financial firms often resist them due to potential implications for private litigation costs.



Justice Prevails: Ringleader and Insider Plead Guilty to Biochemical Company Fraud

Summary:

The U.S. Department of Justice has announced the guilty pleas of Pen Yu, also known as Ben Yu, and Gregory Muñoz, for their involvement in a wire fraud conspiracy. The scheme aimed to fraudulently obtain discounted products from Massachusetts biochemical company Sigma-Aldrich Inc., doing business as MilliporeSigma, and export them to China using falsified export documents. While Yu and Muñoz face legal consequences, the Justice Department has decided not to prosecute MilliporeSigma, citing factors outlined in the Department’s Principles of Federal Prosecution of Business Organizations and the National Security Division Enforcement Policy. This marks the first instance of the Justice Department declining prosecution of a company under the NSD Enforcement Policy.




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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