In October 2020, several Dutch ministers answered parliamentary questions regarding sanctions and export control related matters, such as the supply of military goods to Taiwan and the Dutch arms export policy in relation to the United Arab Emirates. In the European Union (“EU”), to improve transparency, the European External Action Service announced the launch of an online database that gives insight into the data on Member States’ arms exports. In the United States of America (“US”), the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) sanctioned a Russian government research institution connected to the Triton malware, which targets and manipulates industrial safety systems. China’s Foreign Ministry Spokesperson, Zhao Lijian, announced that sanctions will be imposed on certain US companies such as Lockheed Martin, Boeing Defence and Raytheon for their participation in the arms sales to Taiwan. Other news: the Financial Action Task Force (“FATF”), an inter-governmental body which sets international standards that aim to prevent global money laundering and terrorist financing, adopted amendments to recommendations 1 and 2 and their interpretive notes. This, and more, in this newsletter.
- The Netherlands
- On 26 October 2020, Minister Grapperhaus (Minister of Justice and Security) answered parliamentary questions in response to a report concluding that 80% of reports of money laundering to the Dutch Financial Intelligence Unit (“FIU”) disappear in a drawer. The Dutch FIU has been appointed as the authority where unusual transactions are to be reported. The minister notes that the FIU uses a risk-based approach for the analysis of report of unusual transactions, which is also prescribed by the Financial Action Task Force. The minister reports that the Dutch FIU indicated that it does not acknowledge the conclusion of journalists that FIU does not act on 80% of the reports of unusual transactions from banks. The Dutch FIU notes that all reports of unusual transactions are screened with the data files of investigation services and the Central Judicial Collection Agency. In addition, reports of unusual transactions are screened on the basis of priority themes selected for analysis.
- On 27 October 2020, Ministers Kaag (Minister of Foreign Trade and Development Cooperation) and Blok (Minister of Foreign Affairs) sent a letter to the Dutch Parliament about a license that was recently issued for the export of military equipment to the Pakistan Marine via Turkey. In this letter the ministers note and elaborate on the assessment of the application against the eight criteria set out in the EU’s common position on arms exports (CFSP/944/2008).
- On 27 October 2020, Ministers Kaag and Blok answered parliamentary questions in response to the general consultation on arms export policy of 7 October 2020 (see link provided). The questions relate as to how other EU countries deal with the supply of military goods to Taiwan; how the Dutch arms export policy in relation to the United Arab Emirates differs from other EU countries; to what extent the Dutch assessment of applications sets additional requirements in addition to those set out in the EU Common Position; what the average time is until an application for an export license is granted etc.
- On 28 October 2020, Minister Hoekstra (Minister of Finance) sent a letter to Parliament with answers to questions about the fear of the European Banking Auhtority (“EBA”) that the anti-money laundering and terrorism rules overrun its goal. The minister explains that the study of the EBA focuses on situations where institutions choose to avoid risks, for example by deciding in advance not to provide services to certain customers or sectors, which is referred to as ‘de-risking’. If de-risking occurs on a large scale, it could lead to the exclusion of certain groups. The minister notes that he is known with signals of de-risking by banks and that the phenomenon has been raised in discussions at the Dutch Banking Association.
2. European Union & United Kingdom
A. European Union
- On 22 October 2020, the Council of the EU imposed sanctions on 2 individuals and 1 entity for their involvement in the cyber-attack on the German Parliament in April and May 2015. During this attack a significant amount of data was stolen and the email accounts of several members of parliament were affected. The individuals are members of the Russian military intelligence unit, who are said to have carried out the attack with the 85th Main Centre for Special Services, a cyber-espionage unit in the Russian military intelligence unit.
- On 26 October 2020, to improve transparency, the European External Action Service announced the launch of an online database that gives insight into the data on Member States’ arms exports. “The database contains information on the value, destination and type of arms export licenses and actual export from Member States, covering the years 2013-2019” and will be updated un an annual basis.
B. United Kingdom
- On 16 October 2020, the Department of International Trade of the United Kingdom (“UK”) and the Export Control Joint Unit of the UK issued a Notice. In this Notice exporters are advised to check whether they need to register for a new open general export licence (“OGEL”). “This OGEL will be required if you are exporting dual-use items in Annex 1 of EU Regulation 428/2009 to any EU member state from 1 January 2021. This licence also covers exports to the Channel Islands“, the Notice says.
3. United States of America
A. US – Russia relations
- On 23 October 2020, the US Department of the Treasury’s OFAC sanctioned a Russian government research institution connected to the Triton malware, which targets and manipulates industrial safety systems which “provide for an emergency shutdown of industrial processes at critical infrastructure facilities in order to protect human life”. The institution was designated pursuant to Section 224 of the Countering America’s Adversaries Through Sanctions Act (“CAATSA”).
B. US – Cuba relations
- On 26 October 2020, OFAC amended the Cuban assets Control Regulations by removing Cuba’s military-run entities from the remittance process, thereby prohibiting the processing of remittances to / from Cuba involving entities under control by the Cuban military. According to the OFAC, “this actions is intended to restrict such entities’ and sub entities’ access to fees, commissions, or other funds obtained in connection with remittance-related activities. As a result of these changes, persons subject to US jurisdiction will no longer be authorized to process remittances to or from Cuba through FINCIMEX or any other entity or sub entity on the State Department’s Cuba Restricted List”. Secretary Steven T. Mnuchin noted that Cuba’s military-run institutions such as FINCIMEX take advantage of Cubans who rely on remittances, by extracting fees for their own benefit. According to the Secretary, it is important that the Cuban people should have the freedom to decide what to do with their own money, without any such interference.
- On 28 October 2020, Cuba’s Foreign Ministry announced that Western Union will close its 407 offices in Cuba due to the new sanctions implemented by the US, which prevent it from working with FINCIMEX (as described above). Cuba’s Foreign Ministry noted in response to this event that “for more than 20 years, [FINCIMEX] has guaranteed commercial relations with companies from the US and elsewhere in the world to manage remittances to Cuba. In all these years, never has this company had to account for a single sent missing”. “The recently announced measures are a direct attack against family remittances. Washington spokespersons are lying when trying to pretend that the aforementioned restrictions will only affect one specific entity. FINCIMEX, which is part of the Cuban financial system, is the entity designated by a sovereign decision of the Cuban government, to guarantee the remittances to Cuba from the United States, which will be completely discontinued”.
C. US – China relations
- On 26 October 2020, China’s Foreign Ministry Spokesperson, Zhao Lijian, announced that sanctions will be imposed on certain US companies such as Lockheed Martin, Boeing Defence and Raytheon for their participation in the arms sales to Taiwan. Lijian noted that the US sales of weapons and equipment to Taiwan “seriously violate the one-China principle […] and seriously damage China’s sovereignty and security interests”.
D. US – Iran relations
- On 26 October 2020, OFAC sanctioned the Iranian Ministry of Petroleum, the National Iranian Oil Company and the National Iranian Tanker Company for their alleged financial support and the supply of oil to Iran’s Islamic Revolutionary Guard Corps-Qods Force. Besides this, OFAC also designated several entities and individuals associated with the aforementioned sanctioned entities.
E. US – Turkey relations
- On 23 October 2020, Wall Street Journal posted an article about the US government accusing Turkey of compromising NATO security after Turkey confirmed that its military recently conducted a missile-fire exercise with an advanced air-defence system it had procured from Russia. The article notes that “the US and European members of the North Atlantic Treaty Organization have heavily criticized Mr. Erdogan over the purchasing of the Russian weapons system, saying it could undermine unity at a time when the military alliance is trying to deter Moscow”. The issue deteriorated relations between Turkey and the US, with the Trump administration blocking delivery of US jet fighters ordered by Turkey and being triggered to enforce sanctions.
4. Around the globe
- On 23 October 2020, the FATF, an inter-governmental body which sets international standards that aim to prevent global money laundering and terrorist financing, adopted amendments to recommendations 1 and 2 and their interpretive notes. These amendments recommendations require “countries and the private sector to identify, and assess the risks of potential breaches, non-implementation or evasion of the targeted financial sanctions related to proliferation financing […] and to take action to mitigate these risks, as well as to enhance domestic co-ordination”.
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