Sanctions and Export Controls News Digest – April 2024
SYSTEMIC CHANGES
European Parliament Adopts New Laws Strengthening Anti-Money Laundering Powers
On 24 April 2024 the EU Parliament adopted new laws which strengthen its anti-money laundering powers. A new authority will be established in Frankfurt to supervise implementation of the new rules. The new rules include allowing journalists, media professionals, civil society organisations, competent authorities, and supervisory bodies, to have access to beneficial ownership information held in national registries and at EU level. These registries will hold data for at least five years.
EU Adopts Directive Establishing Rules for Defining Criminal Offences and Penalties Relating to Sanctions Violations
On 24 April 2024, the EU adopted Directive (EU) 2024/1126 which establishes common minimum rules for Member States concerning the definition of criminal offences and penalties for the violation of those Union restrictive measures. These rules are adopted in recognition of the need to harmonise definitions of criminal conduct in order to ensure effective implementation of sanctions.
European Parliament Adopts New Corporate Due Diligence Directive
On 24 April 2024, a majority of MEPs approved a new corporate due diligence directive which will require firms, and their supply chains, to prevent, end or mitigate their adverse impact on human rights and the environment. Notably, Member states will be required to create or designate a supervisory authority to investigate and impose penalties on non-complying firms. Once the directive has been formally endorsed by the Council and published in the EU Official Journal, Member states will have two years to legislate on the new rules domestically.
EU Council Adopts Resolution Supporting Reconstruction of Ukraine Using Seized Russian Capital
On 16 April 2024, the EU Council adopted Resolution 2539 (2024) calling for the creation of an international commission to examine international claims recorded in the Register of Damage (established under the auspices of the EU Council). To this end, the Resolution encourages Member States and eligible Non-Member States to join the Register of Damage, and to co-operate in the transfer of frozen Russian assets to the international commission, once established, so that the funds can be used for the compensation to and the reconstruction of Ukraine.
US Congress Broadens Sanctions and Export Controls
In force from 24 April 2024, US National Security Supplemental H.R. 815 extends the statute of limitations – specifically, the time for commencing proceedings for sanctions and export control violations - from five years to 10 years from the latest date of the violation.
DESIGNATIONS AND DESIGNATION CHALLENGES
US Sanctions Updates
On 19 April 2024, SCG Plastics Co., Ltd. (“SCG”) agreed to settle with OFAC for 20 million USD for its potential civil liability for violating the Iranian sanctions regulations. SCG, headquartered in Thailand, sells plastic resins including high-density polyethylene resin (“HDPE”). Between 2017-2018 SCG engaged in transactions amounting to 467 apparent violations of the US’ Iranian sanctions regime.
UK Sanctions Updates
On 30 April 2024 the UK designated three Ugandan public officials under the Global Anti-Corruption Sanctions Regulations 2021 for their involvement in or facilitation of serious corruption. They will now be subject to the freezing of their funds and other economic resources in the UK and will appear on the consolidated list.
On 18 and 25 April 2024, the UK made a total of 19 designations (six entities and 13 individuals) under the Iran sanctions regime. The designations target individuals and companies involved in Iranian drone and missile industries following Iran’s use of these goods against Israel on 13 April 2024.
EU Sanctions Updates
The EU is currently preparing its 14th sanctions package against Russia, to be adopted in Spring. According to EU Trade Commissioner Valdis Dombrovskis, this package will largely focus on anti-circumvention - in particular, with respect to the oil price cap and Russia’s shadow fleet.
On 10 April 2024, Russian oligarchs Petr Aven and Mikhail Fridman were removed from the EU’s sanctions list after the Court of Justice of the EU found that the EU Council had failed to present sufficient evidence that the men were involved in activities that “undermine or threaten the territorial integrity, sovereignty and independence of Ukraine”. Aven and Fridman are primarily involved in the oil, banking and retail industries.
EXPORT CONTROLS
On 10 April 2024 the UK updated its guidance on breaches of export control and trade sanctions legislation. Now, if an exporter identifies any irregularities during a compliance audit – whether that be carried out independently, or by the Export Control Joint Unit – they should report these to HM Revenue and Customs as soon as possible. Notifications should include: details of the export; including dates; any relevant documents, such as export documentation and commercial invoices; and details of how the breach was discovered, why it occurred and what steps you have put in place to ensure it does not happen again.
