Sanctions and Export Controls News Digest - December 2024
SYSTEMIC CHANGES
EU Adopts 15th Sanctions Package against Russia
On 16 December 2024, the EU adopted its 15th sanctions package against Russia for its war on Ukraine. The package primarily concerns Russia's shadow fleet, the Russian military-industrial complex, and combating sanctions' circumvention. The package also increases the legal protection of EU Central Securities Depositories (EU CSDs), introducing two key amendments; a loss recovery derogation, which allows for the release of cash balances held by EU CSDs, and a no liability clause for EU CSDs, which clarifies that EU CSDs are not liable to pay interest or any other form of compensation to the Central Bank of Russia, beyond interest contractually due.
U.S. Federal District Court Finds Corporate Transparency Act likely unconstitutional
On 3 December 2024, in Texas Top Cop Shop, Inc. vs. Garland a U.S. Federal District Court found the Corporate Transparency Act (CTA) is likely unconstitutional, and issued a nationwide injunction prohibiting enforcement of the CTA and the associated beneficial ownership information (BOI) reporting deadline of 1 January 2025.
UK Updates Financial Sanctions General Guidance
From 5 December 2024, for non-UN designated persons only, OFSI permits payments to be made from or on behalf of designated persons to the following UK public bodies without a licence: Companies House, HMRC, the Welsh Revenue Authority, Revenue Scotland, the Financial Conduct Authority, local authorities, and the Department of Finance in Northern Ireland.
DESIGNATIONS AND DESIGNATION CHALLENGES
US
In December 2024, the US Government made the following designations (among others):
· On 31 December 2024, pursuant to Executive Order (E.O.) 13848, a subordinate organization of Iran’s Islamic Revolutionary Guard Corps (IRGC), and a Moscow-based affiliate organization of the Russian Main Intelligence Directorate (GRU) and its director. These actors allegedly aimed to stoke socio-political tensions and influence the U.S. electorate during the 2024 U.S. election.
· Also on 31 December 2024, pursuant to E.O. 13818 (Global Magnitsky), a Russian judge for his role in the arbitrary detention of Moscow city councilor and human rights defender, Alexei Gorinov.
· On 19 December 2024, pursuant to E.O. 13818, two Georgian officials from Georgia’s Ministry of Internal Affairs responsible for brutal crackdowns on media members, opposition figures, and protesters — including during demonstrations throughout 2024.
· On 3 December 2024, pursuant to E.O. 13902, 35 entities and vessels that play a critical role in transporting illicit Iranian petroleum to foreign markets.
· On 2 December 2024, pursuant to E.O. 13818, three former Government of Uzbekistan officials who were involved in human trafficking and gender-based violence, including physical and sexual violence against children at a state-run orphanage in Urgench, Uzbekistan.
On 18 December 2024, a U.S. person agreed to pay 45,179 USD to settle their potential civil liability for six apparent violations of the Global Magnitsky Sanctions Regulations. The person provided professional services, including managing legal, financial, and administrative affairs, to a U.S. company in the equine industry. The only other employee was its U.S.-designated CEO (SDN). The six apparently violative payments included (i) three payments to the SDN for their duties as CEO, by way of payments for certain travel and educational expenses of the SDN’s minor child; and (ii) three payments that facilitated the operations of an affiliated entity managed by the SDN in the United Arab Emirates, where the SDN was not subject to sanctions. OFAC considers the apparent violations were intended to confer a benefit to the SDN.
UK
In December 2024, the UK Government made the following designations (among others):
· On 19 December 2024, five Georgian individuals under the Global Human Rights Sanctions regime, responsible for activity which amounts to a serious violation of the right of individuals not to be subjected to cruel, inhuman or degrading treatment or punishment. Specifically, violence by the state during the protests that occurred after the passage of the foreign influence law.
· On 17 December 2024, 20 shadow fleet ships alleged to be carrying illicit Russian oil. The UK Government has now sanctioned over 100 ships for transporting Russian energy, including 93 oil tankers.
· On 9 December 2024, one individual who, through his involvement in the global gold market and the illicit trade of gold, is or has been involved in contributing to serious human rights violations and obstructing or undermining respect for democracy, the rule of law and good governance in the DRC.
EU
On 16 December 2024, the EU Council adopted its 15th sanctions package against Russia. Within this package the EU Council targeted 84 persons, comprising 54 persons and 30 entities, responsible for actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine. The targeted individuals include (among others) the military unit involved in missile strikes on Okhmadyt children hospital in Kyiv, persons involved in the energy sector, or responsible for children deportation, propaganda and circumvention. Targeted entities are primarily Russian defence companies, as well as shipping companies responsible for the seaborne transportation of crude oil and oil products.
IMPORT AND EXPORT CONTROLS
In December 2024:
· UK customs announced the conviction of a company on three counts of exporting controlled military goods - military flight simulators - without the appropriate licence. The company was fined 89,359.80 GBP, including costs.
· German customs have reportedly initiated an investigation into Jörg Dornau, MP in the Saxon state parliament, whose company allegedly arranged for the export of machinery to Belarus, via Kazakhstan, in breach of EU trade sanctions.
· A Belarusian businessman residing in Latvia is being prosecuted for allegedly exporting sanctioned machinery to Belarus. Reportedly, the prosecution is seeking a two-year custodial sentence, a fine of 225,000 EUR, confiscation of 30,000 EUR, as well as confiscation of the shares of his company.
SANCTIONS ENFORCEMENT
In December 2024:
· In Estonia, on 18 December 2024 a 65-year-old woman suspected of violating international sanctions was detained. The Estonian Internal Security Service suspects the woman has managed funds from the EU-designated “Foundation for the Support and Protection of the Rights of Compatriots Living Abroad”. The foundation is designated because it is financed by the Russian Federation, and was established to serve the foreign policy objectives of the Russian government.
In Helsinki, a Lithuanian-registered private plane headed for Russia was detained for potential sanctions evasion. The plane’s indirect route from Lithuania to Russia, via Finland, raised suspicion. The pilot is reported to have previously been involved in another sanctions evasion scheme.
