Sanctions and Export Controls News Digest - May 2024
SYSTEMIC CHANGES
EU Issues New Sanctions Regime Focusing on Internal Repression in Russia
On 27 May 2024, the EU issued Council Regulation (EU) 2024/1485 which prohibits the sale, supply, transfer or export, directly or indirectly, of equipment which might be used for internal repression in Russia. According to the EU Council, the regulation is in response to the deterioration and gravity of the situation in Russia, namely the continued detention of political prisoners and persecution of political opposition.
US Extends Statute of Limitations for Sanctions and Export Controls
On 24 April 2024, pursuant to National Security Act Supplemental H.R. 815, the statute of limitations for commencing proceedings for sanctions and export controls violations has increased from five years to 10 years from the latest date of the violation. The law does not state whether the new statute of limitations will apply to investigations which commenced prior to its enactment.
US Increases National Agency Reporting Requirements Relating to Sensitive Technologies Used by China
Under the National Security Act Supplemental H.R. 815, the Secretary of Defense and Secretary of State, and other Federal departments and agencies they deem appropriate, will report annually on critical or emerging technological developments involving China. Reporting requirements include US direct or indirect supply of technology or components, especially any which are controlled under US regulations.
UK Expands Russia Designation Criteria, Targets Financial Supporters
On 28 May 2024, the UK expanded the designation criteria under Regulation 6 of the Russia (Sanctions) Regulations 2019 to allow for designation of individuals or entities who own or control and/or provide financial support to designated entities.
UK Debates New Sanctions Regulations
On 24 May 2024, the UK Parliament debated the Sanctions (EU Exit) (Miscellaneous Amendments and Revocations) Regulations 2024, which were presented to the House of Commons on 15 May 2024. According to the FCDO’s Minister, these regulations would enable the UK Government to issue licences to persons to allow them to undertake activity that is otherwise prohibited. They would also clarify the sanctions enforcement remit of HMRC, which has become unclear owing to the scope of trade sanctions increasing beyond import and export prohibitions.
DESIGNATIONS AND DESIGNATION CHALLENGES
EU
On 31 May 2024 the EU Council designated six individuals and three entities under Council Decision (CFSP) 2023/1532 which concerns Iran’s military support to Russia’s war of aggression against Ukraine and to armed groups and entities in the Middle East and the Red Sea region. The persons were designated for their involvement in Iran’s UAV programme, and their roles in the transfer of UAVs to Russia and to armed groups and entities undermining peace and security in the Middle East and the Red Sea region.
The EU Council has delisted one leading Russian businessperson designated under Council Regulation (EU) 269/2014, Mr Farkhad Akhmedov, following the General Court’s decision on 30 May 2024 to annul his designation. The Court found that the EU Council had made a factual error regarding one of his occupational roles, that entities in which he currently has interest are too small to conclude he is a “leading businessperson”, that the other occupational roles and interests on which his designation was based were not contemporaneous, and that a close connection to the Kremlin alone is not sufficient justification for designation on these grounds. On the same date, the Court upheld another leading businessperson’s designation, finding that the EU was justified in its conclusion that Mr Alexander Vinokurov has sufficient business interests in food retail, pharmaceuticals, agriculture and infrastructure. The Court also remarked that the EU Council had met its obligations in terms of stating designation reasons, proportionality, and effective judicial protection.
At the beginning of May, EU ambassadors commenced discussions on the EU Council’s upcoming 14th sanctions package. Reportedly, the latest package will focus on, broadly speaking, LNG, shipping operations supporting Russia’s war effort, circumvention and sanctions violations, imports of chemicals, diamonds and other materials, Russia’s air transportation sector, and Russia’s financing of political parties, foundations, think tanks and media providers.
US
On 30 May 2024, the US designated two entities linked to Wagner Group for facilitating its security operations, as well as illicit mining endeavours, in the Central African Republic. They were designated pursuant to Executive Order 14024 respectively for acting for or on behalf of the Wagner Group, and for providing financial, material, or technological support for goods or services to or in support of another blocked entity involved in the mining operations.
On 14 May 2024, the US designated one Russian individual and three Russia-based companies found to be operating a sanctions evasion scheme. If successful, the companies could have unfrozen over 1.5 billion USD worth of shares belonging to designated Russian oligarch Oleg Vladimirovich Deripaska. The companies were designated pursuant to E.O. 14024 for operating or having operated in the financial services sector of the Russian Federation economy.
UK
On 22 May 2024, the UK designated three individuals under the Somalia sanctions regime for their participation in activities on behalf of Al-Shabaab.
On 7 May 2024 the UK designated a Russian software and IT actor under the Cyber sanctions regime for his leadership in the LockBit ransomware group - responsible for ransomware attacks against thousands of individuals globally, including in the UK.
On 3 May 2024, the UK designated four individuals and two entities from Israel under the Global Human Rights sanctions regime for violence against Palestinian individuals in Israel, the West Bank, and the Occupied Palestinian Territories.
EXPORT CONTROLS
French Authorities Shut Down Sanctions Evasion Scheme
On 12 May 2024, the French National Directorate of Intelligence and Customs Investigations (La Direction Nationale du Renseignement et des Enquêtes Douanières) issued a press release stating that following investigations it had shut down a company coordinating a large-scale sanctions evasion scheme. Investigations uncovered hundreds of false customs declarations across a number of different exporters, worth tens of millions of Euros. Notably, investigations were supported by reports from other EU countries highlighting statistical anomalies in exports to third countries bordering Russia.
UK Investigates Oil Price Cap Violations
Until 28 March 2024, a UK Treasury Committee was receiving evidence on whether the UK’s financial sanctions on Russia working. HM Treasury submitted evidence in which it stated it is currently undertaking a number of investigations into suspected breaches of the oil price cap.
