Sanctions and Export Controls News Digest - June 2024
SYSTEMIC CHANGES
European Council Introduces New Restrictive Measures Targeting Belarusian Economy
On 29 June 2024 the EU Council adopted restrictive measures against Belarus aimed at alignment with restrictive measures against Russia. The measures are intended to affect the trade, services, transport and anti-circumvention sectors of the Belarusian economy. It is now prohibited to provide certain services to Belarus including, among others, accounting, IT consultancy, architectural and advertising services. The measures also include various anti-circumvention and due diligence mechanisms, including a “no-Belarus clause” which requires EU exporters to contractually prohibit in future contracts any re-exportation to Belarus, and a supervision requirement whereby EU parent companies must take best efforts to ensure their third-country subsidiaries do not participate in any circumvention activities.
US Issues New Executive Order Allowing OFAC to Target Financial Institutions Engaging in Certain Transactions
On 12 June 2024, President Biden issued Executive Order 14114 which amends Executive Order 14024, and allows OFAC to designate any foreign financial institutions that engage in significant transactions or provide services involving Russia’s military-industrial complex.
US Amends Definition of “Russia’s military-industrial base” to Include All Persons Blocked Under Executive Order 14024
On 12 June 2024, the US updated its definition of “Russia’s military-industrial base”, so that foreign financial institutions who engage in transactions or provide services to persons designated under Executive Order 14024 will be at risk of designation, pursuant to the new Executive Order 14114. Exceptions to this criterion include, broadly speaking, transactions related to food, agriculture, medicine, energy and telecommunications.
DESIGNATIONS AND DESIGNATION CHALLENGES
EU
On 24 June 2024 the EU Council released its 14th sanctions package against Russia. The EU Council designated 116 individuals and entities determined to be responsible for actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine. The package includes, among many other measures, a ban on Russian LNG re-exports from EU ports, anti-circumvention mechanisms including requiring EU parent companies to ensure their third-country subsidiaries do not participate in any circumvention activities. The package also aims to disrupt malign election interference by Russia, prohibiting relevant EU stakeholders from accepting funding from the Russia Federation and its proxies. The measures are set out in Council Implementing Regulation (EU) 2024/1746 of 24 June 2024 implementing Regulation (EU) No 269/2014.
US
In June 2024 the US Government made the following designations (among others):
· On 27 June, pursuant to Executive Order 13846, three entities and 11 vessels involved in Iranian petroleum or petrochemical products trade.
· On 21 June, pursuant to Executive Order 13873, 12 individuals with executive roles in AO Kaspersky Lab who cooperates with Russian military and intelligence authorities in support of the Russian government’s cyber intelligence objectives, and owing to cybersecurity risks it presents to the US.
· On 18 June, pursuant to Executive Order 14033, two individuals and seven entities connected to US-designated Milorad Dodik who exercised control over senior Bosnia and Herzegovina government officials to manipulate the state budget, efforts which “erode the institutions that have ensured peace and stability for Bosnia and Herzegovina and the region”.
· On 14 June, pursuant to Executive Order 14115, an Israeli extremist group which has been blocking, harassing, and damaging convoys carrying humanitarian assistance to Palestinian civilians in Gaza.
· On 11 June, pursuant to Executive Order 13818, three entities and three individuals who are involved in a corruption network exploiting Guyana’s gold industry.
UK
On 13 June 2024, under the Russia (Sanctions) (EU Exit) Regulations 2019, the UK Government designated 50 new targets comprising six shadow fleet vessels, 37 entities, and six individuals. The designations target the Russian LNG sector, weapons, munitions, machine tools and microelectronics suppliers and transporters to Russia, financial actors, and persons operating in key sectors of the Russian economy. The measures are intended to “bear down on Russia’s ability to fund and equip its war machine”.
IMPORT AND EXPORT CONTROLS
On 29 June 2024, the EU Council’s additional restrictive measures against Belarus includes an extension to the export ban on dual-use/advanced goods and technologies, and on goods which could contribute to Belarus’ domestic military-industrial capabilities. Export of maritime navigation goods and technologies, and luxury goods, are also restricted. Finally, it is prohibited to import from Belarus gold, diamonds, helium, coal and mineral products including crude oil.
