Sanctions as an Anti-Corruption Tool: South Sudanese Corrupt PEPs Slapped with OFAC Designations
September 18, 2017
On September 6, 2017, pursuant to Executive Order (E.O.) 13664, OFAC added three South Sudanese officials, Malek Reuben Riak Rengu, Michael Makuei Lueth, and Paul Malong Awan, in addition to three companies owned or controlled by Riak Rengu, to the Specially Designated Nationals (SDN) List for their roles in the continued undermining of the peace, security, and stability of the country. As a result of these actions, all of the aforementioned individuals’ and entities’ assets within U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with them.
On the same day, the Financial Crimes Enforcement Network (FinCEN) issued an advisory, alerting U.S. financial institutions to their potential exposure to anti-money laundering risks caused by certain South Sudanese senior political figures attempting to use the U.S. financial system to move or hide proceeds of crime or corruption. FinCEN’s Advisory reminds financial institutions of their due diligence and suspicious activity report (SAR) filing obligations related to senior foreign political figures, also called Politically Exposed Persons (PEPs).
It is not the first time that foreign officials, suspected of corruption have been slapped with sanctions. Other examples include sanctions against Venezuelan officials (E.O. 13692 of 2015 and 13808 of August 24, 2017);Syria: E.O. 13460 of 2008), Zimbabwe (2008, E.O. 13469); and Myanmar (several E.O.’s from 1997 to 2016). For more on this, see our article on How U.S. Sanctions Combat Foreign Corruption.
Latest UN Sanctions Against North Korea Impose Restrictions on Textiles, Oil.
On September 11, 2017, the United Nations Security Council unanimously adopted a U.S.-drafted resolution to impose new sanctions on North Korea, a move that comes just one week after Pyongyang carried out its sixth and largest nuclear test.
The latest sanctions seek to further cripple the North Korean economy by banning the export of textiles and also capping imports of oil and refined products.
The many rounds of sanctions against North Korea may already be bearing fruit. According to Reuters, the country’s economy is already showing signs it is feeling the squeeze from the ongoing clampdown on trade, including a curb on fuel sales by China.
Russian Sanctions will be “Phased Out”, says Germany
According to German Foreign Minister Sigmar Gabriel, European sanctions imposed on Russia over its role in the Ukraine crisis will be phased out gradually, but only if Russia fully maintains its current ceasefire agreement. “Only if there is 100 percent peace, then we’ll lift 100 percent of the sanctions,” Gabriel said during a panel discussion organized by German business daily Handelsblatt in Berlin last week.
Gabriel is a senior member of Germany’s Social Democrats (SPD), partners in Chancellor Angela Merkel’s ruling coalition. Merkel, on the other hand, has insisted that European sanctions against Russia will only be lifted if the Minsk peace deal is fully implemented – not only the ceasefire agreement which is one part of the broader Minsk peace plan.
As it stands, the expectation of complete peace between Russia and Ukraine is still considered optimistic.
UK Requires Frozen Assets To Be Reported to OFSI by October
Every year,the U.K. carries out a review to update their records to reflect any changes to frozen assets during the reporting period. As part of this review, the Treasury requires all persons that hold or control funds or economic resources belonging to, owned, held, or controlled by a designated person, to provide a report with the details of these assets.
The deadline to report them to the Treasury’s recently appointed sanctions watchdog – the Office of Financial Sanctions Implementation (OFSI), is October 13th2017.
Not doing will be considered a criminal offence, which may result in a criminal prosecution or a monetary penalty.
For the official OFSI Notice, click here.
Metallurgical Company Executive Sentenced to 57 Months in Prison for Illegal Export of Specialty Metals to Iran via Turkey
On September 7, 2017, Erdal Kuyumcu, CEO of metallurgical company, Global Metallurgy LLC, was sentenced in Brooklyn federal court to nearly five years in prison for illegally exporting specialty metals to Iran in violation of the International Emergency Economic Powers Act (IEEPA). Mr. Kuyumcu was sentenced for attempting to export metallic powders to Iran, through Turkey, without obtaining the required licenses from OFAC.
According to court documents, Kuyumcu, a naturalized U.S. citizen from Turkey, conspired to export more than 1,000 pounds of metallic powder primarily composed of cobalt and nickel from the U.S. to Iran. Such metallic powder has potential military and nuclear applications and is regulated by the U.S. Department of Commerce to combat nuclear proliferation and terrorism.
To hide the true destination of the goods from the supplier, Kuyumcu first shipped the metallic powder to Turkey and then to Iran and took pains to use coded language when discussing shipment of the powder, such as referring to Iran as the “neighbor.”