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Last week's major developments in sanctions - Jan. 4 to Jan. 8, 2021.

Updated: Jan 11, 2021

Monday, January 4th:

- OFSI published a guidance about its sanctions against Libya. (Here)

- As a response to the results of the 2020 Venezuelan parliamentary elections, OFAC issued General License 31A in the Venezuela program. The new license replaced General License 31 of August 5, 2019. The new General License made some changes to the language of the previous one and is now explicitly mentioning that the authorizations are related to the transactions related to the IV National Assembly (and not any other term). (Link)

- OFAC announced a settlement with Union de Banques Arabes et Françaises in amount of $8,572,500 for apparent violations resulted from 127 transactions related to Syria. A very interesting point here is that the transactions in questions happened up to April 2013. EU imposed sanctions against Syria on May of that year. So, considering what OFAC published publicly and the fact that this bank is an EU person, it seems no EU law was breached as a result of those transactions at the time. (Even if those transaction occurred after the implantation of EU Syria regime, one would need to asses the permissibility of those transactions separately under the relevant EU regulations.) (Link)

- OFAC published a new FAQ related to sanctions imposed against Communist Chinese military companies (Executive Order 13959).

  • FAQ 862 clarified that the U.S. persons does not need to divest immediately from targeted securities. Divestment must be completed by November 11, 2021.

Tuesday, January 5th: - Eight people came out of French list of designated persons.

- OFAC and the Department of State designated a number of entities and an individuals related to the metal industry of Iran. The designations were made pursuant to the executive order 13871 and Iran Freedom and Counter-Proliferation Act of 2012. One of the designated entities was a China-based company which engaged in a sanctionable activity pursuant to both executive order 13871 and Iran Freedom and Counter-Proliferation Act of 2012.

- OFAC published two new FAQs and amended two FAQs related to the Non-SDN Menu-base sanctions list which came out in December (see this post). The new FAQs are:

  • FAQ 869 which explains that the OFAC 50% rule does not apply to those entities listed on NS-MBS list of OFAC, and;

  • FAQ 870 which explains the meaning on the limits on financings above 10 million dollars over a period of 12 months.

In this order President prohibited (with a 45-day grace period) transactions, identified by the Secretary of Commerce, with persons that develop or control the following Chinese connected software applications, or with their subsidiaries. The executive ordered listed Alipay, CamScanner, QQ Wallet, SHAREit, Tencent QQ, VMate, WeChat Pay, and WPS Office and empowered the Department of Commerce to identify more targets. It is too early at this stage to state what the prohibited transactions would be, yet I expect the restrictions to be similar to those issued by the Department of Commerce pursuant to executive orders 13942 and 13943.

Wednesday, January 6th:

- OFAC added three new FAQs related to the recent sanctions against Communist Chinese military companies (Executive Order 13959).

  • FAQ 863: It clarified that the support services (such as clearing, execution, settlement, custody, transfer agency, back-end services, etc.) are not prohibited as long as they are not related to a prohibited transactions.

  • FAQ 864: This one is a tricky one and is probably the reason why the New York Stock Exchange again decided to delist a number subsidiaries of Chinese military companies after changing its decision to keep them listed earlier this week. (Link) OFAC reiterated that transactions in the securities of any Communist Chinese military company subsidiary (whether expressly listed or not) are prohibited if the subsidiary’s name exactly or closely matches the name of these or any other entities identified on the CCMC list. OFAC provided some examples of such close matches as well. (See below information about a General License which was issued with this regard.)

  • FAQ 865: U.S. persons may engage in transactions to facilitate divestments of such securities up to November 11, 2021. (This FAQ came out around 8pm ET on Wednesday when there was a lot going on in Washington D.C.. This is another example proving how serious OFAC is when it comes to the United States sanctions.)

Thursday, January 7th:

- There was no major development on this day.

Friday, January 8th:

- The United States Department of State had announced in early January that it would add Banco Financiero International S.A. to the Cuba restricted list. The list was accordingly updated on Friday with the addition of this entity. As a reminder, U.S. persons may not engage in a direct financial transaction with those listed on this list.

- OFAC designated former national security advisor to the Iraqi Prime Minister to its SDN list under the Global Magnitsky program. (Link)

- OFAC also updated its Non-SDN Communist Chinese Military Companies List. (No new name was added yet OFAC identified CNOOC Limited as an issuer for China National Offshore Oil Corp.) (Link)

- The week ended with an issuance of a General License by OFAC which authorized transactions related to the securities of non-listed entities whose names closely matches the name of a Communist Chinese military company that would have been prohibited by the from 9:30 a.m. (ET) of Jan. 11, 2020. This authorization is valid through 9:30 a.m. (ET) of Jan. 28, 2020. This, in my opinion, is an indication that OFAC will soon (before Jan. 28th) add more names to the CCMC list. (Link)

Saturday, January 9th:

- The Ministry of Commerce of People's Republic of China, published an ordered entitled "Rules on Counteracting Unjustified Extraterritorial Application of Foreign Legislation and Other Measures." The order, among other things, in article 7 empowers the competent department of commerce of the State Council to issue Prohibition Orders. The order, in article 9, afforded an aggrieved citizen, legal person or other organization of China a right of action against whom by complying with a foreign law contrary to a Prohibition Order stated in article 7 caused damages to the aggrieved party.

Recommendation of the week:

- This week I would like to recommend an informative podcast about recent restrictions against China imposed by the United States. This episode of China Law podcast provides an overall overview about several of the recent developments. (Link)


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