Sanctions and Export Controls News Digest – July 2024
SYSTEMIC CHANGES
US Introduces New Reporting Requirement for Financial Institutions That Hold Russian Sovereign Assets
On 23 July 2024, implementing the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act (“REPO Act”), OFAC announced a new reporting requirement for financial institutions. Any financial institutions holding Russian sovereign assets has to report those assets to OFAC no later than 2 August 2024 or within 10 days of the detection of such assets. This reporting requirement does not result in automatic seizure of the assets.
OFAC Issues Guidance on Extension of Statute of Limitations
In April 2024, the US increased the statute of limitations for commencing proceedings for sanctions and export controls violations from five years to 10 years from the latest date of the violation. On 22 July 2024, OFAC issued a guidance relating to this extension, addressing questions raised by the new legislation.
OFSI Adds FAQs to UK Financial Sanctions Guidance Relating to Trust Services Sanctions
On 19 July 2024, OFSI added additional FAQs to its guidance on the UK financial sanctions regime. In particular, it published FAQs on Trust Services Sanctions, which clarify the prohibition on providing trust services to or for the benefit of a person connected with Russia, and to designated persons.
OFSI Amends Russia Financial Sanctions Guidance
Earlier, on 16 July 2024, OFSI had amended the Russia financial sanctions guidance to allow itself to issue licences under the trust services restrictions for, among others, humanitarian assistance activity, medical goods or services, and diplomatic missions.
DESIGNATIONS AND DESIGNATION CHALLENGES
EU
On 26 July 2024, the EU Council imposed restrictive measures on nine individuals and one entity for their involvement in serious human rights violations and abuses in the Democratic Republic of the Congo (“DRC”), and for sustaining the armed conflict, instability and insecurity in the Eastern DRC.
On 22 July 2024, the EU Council renewed the EU restrictive measures against Russia, first introduced in 2014, in light of the Russian Federation’s continuing actions destabilising the situation in Ukraine. The measures are in place for a further 6 months, until 31 January 2025.
On 22 July 2024, the EU Council imposed additional restrictive measures against four persons and two entities under the EU Global Human Rights Sanctions Regime. The range of violations include torture and systematic and widespread sexual and gender-based violence. The individuals are from, respectively, the Syrian army, the State Security of the Democratic People’s Republic of Korea (“DPRK”), and the Russian “penitentiary service” in occupied Kherson oblast in Ukraine. The entities comprise a Haitian gang and a Detention Centre in DPRK.
US
In July 2024 the US Government made the following designations (among others):
- On 31 July, pursuant to Executive Order 13224 as amended by Executive Order 13886, two individuals and four entities as counter terrorism actions.
- On 25 July, pursuant to Executive Order 13581 as amended by Executive Order 13863, the Lopez Human Smuggling Organization based in Guatemala. A transnational criminal organisation which attempted to smuggle thousands of migrants into the United States.
- On 11 July, pursuant to Executive Order 14115, three individuals and six entities contributing to violence against Palestinians and instability in the West Bank.
- On 1 July, pursuant to Executive Order 14059 and as furthers efforts by the US Treasury’s Counter-Fentanyl Strike Force, three individuals involved money laundering and trafficking of illicit drugs into the United States.
UK
In July 2024, two law firms were reported to OFSI by the UK’s Solicitors Regulation Authority. The law firms were allegedly facilitating financial transactions valued at more than £300,000.
On 29 July 2024, under the Proceed of Crimes Act 2002, the UK’s National Crime Agency completed its confiscation of funds related to designated Russian oligarch Petr Aven. The Agency reportedly confiscated £750,000 from bank accounts held in the name of Petr Aven’s wife and others.
Australia
On 25 July 2024, the Australian Minister for Foreign Affairs announced that the Australian Government will impose Magnitsky-style targeted financial sanctions and travel bans against seven Israeli individuals and one entity respectively, for their involvement in settler violence against Palestinians in the West Bank. This follows similar action by the US and the UK in February 2024.
IMPORT AND EXPORT CONTROLS
On 29 July 2024, the Bureau of Industry and Security (“BIS”) proposed a rule to extend the Export Administration Regulations (“EAR”) restrictions relating to US person “support” activities. The rule would expand BIS’ authority to take certain actions against “support” by US persons to “foreign security end-users”. It also proposes to add two new unilateral item controls on facial recognition to the Commerce Control List.
