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Last week's major developments in sanctions - Dec. 28, 2020 to Jan. 1, 2021.

Updated: Jan 10, 2021

Monday, December 28th:

- OFAC announced a settlement with the National Commercial Bank, a bank headquartered in Jeddah, Saudi Arabia. The apparent violations stem from 13 USD transactions related to Syria and Sudan. (Link)

- OFAC published five FAQs and a new list related to sanctions imposed against Communist Chinese Military Companies (Executive Order 13959).

  • FAQ 857 provides some explanations regarding the subsidiaries of companies identified by the Department of Defense as Communist Chinese Military Companies. In a nutshell, OFAC may (at it intends to) add certain subsidiaries of such companies to the ND-CCMC list (see below). Yet, as it is stated in the FAQ, an act of listing by the Treasury is required for the restrictions to be applicable to a subsidiary. I believe the phrase "publicly listed" appearing in the FAQ might lead to some confusions. The FAQ, as I read it, talks about getting listed by the Treasury on the new list (non-SDN CCMC) in a public manner so everyone knows about the addition to the list and it is not about the fact that whether a subsidiary itself is publicly listed on a stock exchange or not.

  • FAQ 858 talks about the identification of companies targeted by the recent sanctions. Interestingly, OFAC stated that"an entity with a name that exactly or closely matches the name of an entity" will be considered as a target.

  • FAQ 859 reminded that OFAC has a very broad definition for publicly traded securities.

  • FAQ 860 provided a number of examples of financial instruments targeted by these new sanctions.

  • FAQ 861 clarified that U.S. person will not be allowed to have (new) exposure to the securities issued by the targeted companies regardless of the jurisdiction, and indirectness of such exposure.

  • The recently published non-SDN list of Communist Chinese Military Companies ("NS-CCMC") is a list where OFAC will keeps track of all companies identified by the Dept. of Defense pursuant to section 1237 of NDAA of 1999 as well as those qualifying subsidiaries of such companies identified by the Treasury.

As a consequence, on January 1st, we saw the news that NYSE is planning on delisting China Mobile, China Telecom, China Unicom, all of them identified as CCMCs. This move, as alleged by Bloomberg, is more symbolic considering that the primary listings of such companies took place in Hong Kong Stock Exchange. (Link)

Tuesday, December 29th: - There was no major development on this day.

Wednesday, December 30th:

- OFAC designated a Venezuelan judge and a prosecutor who were involved in the sentencing of 6 U.S. person Citgo executives. The trial in question resulted in fines and imprisonments up to 13 years. (Link)

- OFAC announced its first crypto asset-related settlement with BitGo. Based on the announcement, BitGo, a California-based company, provided wallet services to individuals apparently located in different sanctioned jurisdictions. In addition to its importance as the first crypto asset related settlement, this action reminded the importance of paying attention to the IP addresses of users/clients. (Link)

Thursday, December 31st:

- There was no major development on this day.

Friday, December January 1st:

- At midnight (CET), the United Kingdom's left the EU. As a result, UK has now its autonomous sanctions framework. OFSI published 51 notices to address the changes. (Link) (You can sing up for alerts here.)

Interesting Item of the week:

The spoke-person of Iran's Food and Drug Administration announced that Iran and Cuba are working together on a COVID-19 vaccine. He added that the two countries are now at the second trial stage. (Link) It will be interesting to see how sanctions will affect the ability of the two countries in case they find third-country buyers for their potential vaccine. OFAC's General Licenses currently in place do not cover such activity.

Happy New Year!


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