Sanctions and Export Controls News Digest: March 2024
SYSTEMIC CHANGES
US Adds New End-User Controls to the Export Administration Regulations
The Bureau of Industry and Security (BIS) has added new and expanded existing end-user controls to the Export Administration Regulations (EAR). These changes impose license requirements for export, re-export, or in-country transfers of items subject to EAR to Specially Designated Nationals and Blocked Persons (SDN List) across 11 sanctions programs administered by OFAC including, for example, Russia and counter-narcotics sanctions programs.
US Federal Court Rules that New Company Reporting Law is Unconstitutional
The Corporate Transparency Act (CTA), which came into effect in January 2024, has been found unconstitutional by the Federal Court of the Northern District of Alabama, Northeastern Division. The CTA requires certain companies to report ultimate beneficial owners to the US Treasury’s Financial Crimes Enforcement Network (FinCEN). While the ruling bars the US Treasury from enforcing the CTA against the Plaintiffs, it does not apply to enforcement against others.
UK Treasury Committee Conducts Inquiry into Effectiveness of UK’s Financial Sanctions Against Russia
A UK Treasury Committee has been established to consider the effectiveness of the UK’s financial sanctions against Russia, in order to ensure the UK Treasury’s Office of Financial Sanctions Implementation (OFSI) properly implements and enforces the UK’s financial sanctions on Russia. The Committee has received submissions and evidence from external parties on i) whether sanctions are complete and effective in terms of the entities that have been designated, and the entities which have to comply with the rules; ii) whether assets frozen as part of the UK’s financial sanctions on Russia should be confiscated, and whether there are legal precedents for such a move; iii) whether financial sanctions imposed by the UK should be widened to include those who purchase Russian oil and gas; and iv) the effectiveness of OFSI’s work.
UK Publishes a Post-Legislative Scrutiny Memorandum on the Functioning of Sanctions and Anti-Money Laundering Act 2018 and Related UK Sanctions Regimes
On 4 March 2024 the UK Foreign, Commonwealth and Development Office (FCDO) published a Post-Legislative Scrutiny Memorandum which assesses the functioning of the Sanctions and Anti-Money Laundering Act 2018 (SAMLA) in the context of its post-Brexit independent sanctions framework. The Memorandum explains that this review and assessment is timely, as it follows SAMLA’s increased usage in 2022 and 2023 in response to Russia’s full-scale invasion of Ukraine.
EU Member States Advocate for New Russia Sanctions Instrument Following Alexei Navalny’s Death
In a letter addressed to the EU’s top diplomat dated 28 February 2024, eight EU Member States - Czechia, Estonia, Finland, Latvia, Lithuania, Poland, Romania and Sweden – have called for an additional Russia-specific sanctions regime, separate to the existing two regimes (EU Regulations No. 269/2014 of 17 March 2014 and 833/2014 of 31 July 2014), designed to address domestic repression in Russia. The proposal comes after anti-corruption activist and opposition leader Alexei Navalny died in Russian custody on 16 February 2024.
DESIGNATIONS AND DESIGNATION CHALLENGES
US Sanctions Updates
On 20 March 2024 the US designated two individuals and two entities pursuant to Executive Order 14024 “Blocking Property With Respect To Specified Harmful Foreign Activities of the Government of the Russian Federation”, as amended, for providing services to the government of Russia in connection with a foreign malign influence campaign. These designations expose Russia’s efforts to mislead audiences through state-directed deception campaigns, part of the US’ ongoing efforts to deter and disrupt the Kremlin’s repeated attempts to undermine democracy.
On 27 March 2024 the US designated six individuals and two entities based in Russia, China, and the United Arab Emirates for generating revenue and facilitating financial transactions for the Democratic People’s Republic of Korea (DPRK), which ultimately support the DPRK’s weapons of mass destruction (WMD) programs. On the same date, it also added two new designations under the Counter-Terrorism sanctions regime.
On 25 March 2024 the US designated three persons - China-linked hackers - under the Cyber sanctions regime for their roles in malicious cyber operations targeting US entities which operate within US critical infrastructure sectors, directly endangering US national security.
On 5 March 2024 the US delisted an individual designated under the Global Magnitsky sanctions program. Angel Rondon Rijo is a politically connected businessman and lobbyist in the Dominican Republic who funneled money from Odebrecht, a Brazilian construction company, to Dominican officials. The reasons for his delisting are not published.
UK Sanctions Updates
On 25 March 2024, in line with US designations, the UK designated three persons – China-linked hackers - under the Cyber sanctions regime.
On 5 March 2024, the UK revoked Igor Viktorovich Makarov’s designation. Makarov was designated as an involved person primarily for carrying on business in the Russian energy sector – a sector of strategic significance to the Russian Government. In light of his delisting, he is no longer subject to an asset freeze or trust services sanctions.
EU Sanctions Updates
On 22 March 2024 the EU designated 33 persons and two entities linked to the death of Alexei Navalny, pursuant to the European Union's Global Human Rights Sanctions Regime. The EU has expressed great concern about the continuing deterioration of the human rights situation in Russia, and these designations are in line with its policy to counter Russia’s domestic and international violations of freedom of opinion and expression.
EXPORT CONTROLS
UK Amends Export Controls, Introduces Community Regime Export Control (Amendment) Regulations 2024 for Control of Exports, Transfer, Broker and Transit of Dual-Use Items
On 12 March 2024 the UK’s Export Control Joint Unit (ECJU) amended Export Control Order 2008 and Council Regulation (EC) No 428/2009 of 5 May 2009, establishing a Community regime that controls exports, transfer, brokering and transit of dual-use items. The Export Control (Amendment) Regulations 2024 (SI 2024 No. 346) came into force on 1 April 2024.
