Wake Up To Sanctions: SanctionsAlert.com Sanctions Round Up

October 6, 2017

US Substantially Increases Sanctions against North Korea to include Non-U.S. Persons

On September 20, 2017, the U.S. President signed Executive Order (E.O.) 13810 imposing additional sanctions against North Korea targeting trade and financial transactions.This move closely compliments the September 11 resolution by the United Nations Security Council on imposing sanctions on North Korea’s textile and oil industry.

These latest U.S. sanctions seek to block an even wider variety of business dealings, most notably regardless of whether those dealings are done by U.S. or non-U.S. persons. These new ‘secondary sanctions’ block the property and interests in property of any person determined:

  • to operate in North Korean construction, energy, financial services, fishing, information technology, manufacturing, medical, mining, textiles, or transportation industries;
  • to own, control, or operate any port in North Korea, including any seaport, airport, or land port of entry;
  • to have engaged in at least one significant importation from or exportation to North Korea of any goods, services, or technology;
  • to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any person whose property and interests in property are blocked pursuant to E.O. 13810; or
  • to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to E.O. 13810.

The new sanctions also authorize the Secretary of the Treasury to impose secondary sanctions restrictions on foreign financial institutions if they “knowingly conducted or facilitated any significant transaction” on behalf of a North Korea-related sanctioned individual or entity, or in connection with trade with North Korea. As such, a foreign bank that engages in a transfer with a U.S. bank – even with very few U.S. connections – can still potentially be liable if they are engaged in activities covered by E.O.13810.

Further, on September 26, 2017, OFAC designated eight North Korean banks and 26 individuals linked to North Korean financial networks under E.O. 13810, several of these being offices in China. All 26 individuals are representatives of North Korean banks who are operating outside of North Korea – in China, Russia, Libya, and the United Arab Emirates.

UK Bans Extremist Groups Scottish Dawn and NS131 as Terrorist Organizations

As of September 29, 2017,an order laid out by the U.K Parliament proscribing self-proclaimed ‘patriotic societies’ Scottish Dawn and the National Socialist Anti-Capitalist Action (NS131) as terrorist organizations will take effect. This will make it a criminal offense in the U.K, carrying a sentence of up to 10 years’ imprisonment, to be a member – or to invite support for – these organizations.

The neo-Nazi group National Action, for which the above organizations have been found to be aliases, was banned last year following an assessment that it was ‘concerned in terrorism.’ The order laid today means that National Action can no longer operate under the names Scottish Dawn or NS131.

Home Secretary, Amber Rudd, said: “National Action is a vile racist, homophobic and anti-semitic group which glorifies violence and stirs up hatred while promoting their poisonous ideology and I will not allow them to masquerade under different names”. She continued by saying that the priority of the U.K. government will be “to maintain the safety and security of families and communities across the United Kingdom and we will continue to identify and ban any terrorist group which threatens this, whatever their ideology.

Venezuelan Sanctions: OFAC Publishes FAQs on Definition of “Profit”

On October 3, 2017, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) released a further FAQ with regard to its sanctions on Venezuela. The U.S. government recently announced new sanctions against the South American country on August 24, which impacted all Venezuelan government entities as well as oil company Petroleos de Venezuela (PdVSA) and the Central Bank of Venezuela through E.O 13808.

The E.O, among other things,prohibited transactionsby a U.S. person or within the U.S related to dividend payments or other distributions of profits to the Government of Venezuela from any entity owned or controlled, directly or indirectly, by the Government of Venezuela.

The new FAQ states: “For purposes of Subsection 1(a)(iv) of E.O. 13808, “profit” is net income after taxes. For a business, this is generally total sales minus total costs and expenses”. OFAC goes on to explain that, “transactions involving the Government of Venezuela, including PDVSA, related to payments for goods and services, taxes, or royalties are not considered “profit.” Similarly, principal and interest payments related to bonds and promissory notes are not considered “distributions of profit… and so that subsection does not prohibit U.S. persons from making such payments”.

OFAC FAQs have been vital in understanding how to interpret these new and intricate rules when dealing with Venezuelan transactions. Any misinterpretations of the law could carry a hefty fine.

OFAC Settles with Connecticut Paper Supplier, White Birch, for $372K over Apparent Violations of the SSR

On October 5, 2017, OFAC announced a $372,465 settlement with paper product supplier – BD White Birch Investment LLC (White Birch USA) – headquartered in Greenwich, Connecticut, to settle White Birch USA’s civil liability for three alleged violations of 31 C.F.R. part 538 of the Sudanese Sanctions Regulations(SSR). White Birch appears to have violated the SSR when it facilitated the sale and shipment of over 543 metric tons of Canadian-origin paper from Canada to Sudan in April and December 2013. The paper shipment had a value of $354,602.26.  Various personnel within White Birch USA and its Canadian subsidiary – White Birch Paper Canada Company (White Birch Canada) – were actively involved in discussing, arranging, and executing the export transactions to Sudan.  OFAC determined that White Birch USA did not voluntarily self-disclose the apparent violations to OFAC, but that the apparent violations constitute a non-egregious case.

Sanctions against Sudan were first imposed over Khartoum’s perceived support of global terrorism in 1993 and, later in 1996, for its violent suppression of rebels in Darfur. Though Sudan still remains on Washington’s list of state sponsors of terrorism,the U.S. recently dropped Sudan from its list of seven countries subject to travel restrictions due to terror concerns, and all signs point to Sudanese sanctions soon being significantly eased.

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