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Last week's major developments in sanctions - May 17th to May 21st, 2021

Updated: May 31, 2021

Monday, May 17th

- The United States' Treasury added three individuals and one entity to the the SDN list under the Global Counter Terrorism program of the U.S. (Treasury press release, Department of State press release) Concurrently, the Treasury added sixteen individuals and one entity to the SDN list under the newly-created Burma program of the U.S. (Here, Burma-related Treasury press release, Burma-related Department of State press release)


- OFSI added Myanmar Gems Enterprise to its list of sanctions targets. (Here) This entity was already sanctioned by OFAC on April 8, 2020.


- In a rather administrative action, the EU Council decided to prolong the framework for restrictive measures against cyber-attacks threatening the EU or its member states for another year, until 18 May 2022. (Here)

Tuesday, May 18th - There was another sigh of relief for Foreign Financial Institutions, as the Department of Treasury submitted an updated report to the Congress pursuant to section 5(b) of Hong Kong Autonomy Act ("HKAA") in which it did not identify any Foreign Financial Institution that knowingly conducted a significant transaction with a foreign person identified by the Secretary of State in pursuant to the Section 5(a) of HKAA. (Here)


- OFAC replaced General License 1A with 1B in the context of Communist Chinese Military Companies. The new license authorized otherwise prohibited transactions related to securities of an entity whose name closely matches, but does not exactly match, the name of a Communist Chinese military company till June 11, 2021. (Here) It is noteworthy that this time, OFAC only authorized such transactions for a short period of time compared to the previous General License which authorized such transactions for four months. So, I believe it is reasonable to expect that this will be the last time OFAC extends this General License.


Wednesday, May 19th

- The U.S. Department of State imposed travel bans (a type sanctions) on a former president of Albania and his family members under Section 7031(c) of the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2021. (Here)


- In line with a number of housekeeping actions OFAC has taken recently in updating the regulations issued by the agency, OFAC updated the Terrorism List Governments Sanctions Regulations, 31 CFR part 596, to implement the rescission of the designation of Sudan as a State Sponsor of Terrorism. (Here)


- In a major development, as required by Protecting Europe’s Energy Security Act of 2019 (PEESA), the U.S. Secretary of State identified four vessels, five entities, and one individual involved (Matthias Warnig) in construction of the Nord Stream 2 pipeline. As a result of this action, nine additional vessels owned or controlled by the Federal State Budgetary Institution Marine Rescue Service that are involved in the Nord Stream 2 pipeline’s construction, were also affected. However, at the same time, the Secretary of State used the authority provided under paragraph (f) of sec. 7503 of FY2020 NDAA as amended in order to waive sanctions that should have been otherwise imposed on Nord Stream 2 AG, its CEO Matthias Warnig, and Nord Stream 2 AG’s corporate officers. (Here) Note that there were still some sanctions imposed as a result of these actions and the waiver was only applicable to a portion of those involved in Nord Stream 2 project. You can see more on this below.


Thursday, May 20th

- Ten individuals came off the French list of sanctions as their six-month long designation period ended.


- OFAC added two high-ranked Houthis officials to the SDN under its Global Counter Terrorisms program. (Here, Treasury press release, Dept. of State press release)


Friday, May 21st

- OFSI updated it Counter-Terrorism Licensing Policy. (Here)


- Following the Department of State's actions on May 19th, OFAC took the following actions:

  1. OFAC added three entities to the Non-SDN Menu-Based Sanctions List. The imposed sanction measure against these three entities is blocking property and interests in property, except importation of goods. (Here)

  2. Similarly, OFAC added eleven vessels to the Non-SDN Menu-Based Sanctions List. The imposed sanction measure against these three entities is blocking property and interests in property, except importation of goods. (Here)

  3. OFAC added two vessels to its SDN list under the authority granted by PEESA. (Here)

  4. Added some identifying information and a [PEESA] tag to an already-existing entry on the SDN list. (Here)

  5. Issued General License 1 authorizing all transactions and activities prohibited by PEESA, involving Federal State Budgetary Institution Marine Rescue Service (MRS), or any entity in which MRS owns, directly or indirectly, a 50 percent or greater interest, that are not related to the construction of the Nord Stream 2 pipeline project, the TurkStream pipeline project, or any project that is a successor to either such project, are authorized. (Here)

  6. Published two FAQs explaining General License 1 and the prohibited activities when engaging with persons sanctioned solely pursuant to PEESA. (FAQs 894 and 895)

I would like to add two points about the recent PEESA related actions. First, the "except importation of goods" exception is coming from paragraph (e) (5) of sec. 7503 of FY2020 NDAA as amended. Second, if the Secretary of State did not use the waiver authority granted under PEESA, we would have sanctions against Nord Stream 2 AG, its CEO Matthias Warnig, and Nord Stream 2 AG’s corporate officers.


Recommendation of the week

- This week I would like to recommend a great discussion about "Sanctions and Crypto" by TRM Labs. You can register here to get access to the recording of the conversation.

 

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