In June and July 2021, the Dutch Central Bank recognized the need to move towards a more risk-based approach to compliance with the Sanctions Act 1977, following an objection procedure requested by crypto service provider Bitonic. Furthermore, a renewed EU-US summit statement was published by the European Union (“EU”) and the United States (“US”), stating their intent to establish an EU-US Trade and Technology Council and to cooperate more closely on the use of sanctions, as part of their respective diplomatic efforts to protect national security interests and fight threats to international peace, security and democracy. Also, Ukraine has expanded its sanctions against Russia, targeting companies and individuals within the inner circle of Putin. This, and more, in our newsletter.
1. The Netherlands
- Netherlands – On 5 July 2021, the central bank of the Netherlands, De Nederlandsche Bank (“DNB”), published a press release with regard to the risk-based interpretation of compliance with the Dutch Sanctions Act 1977. Following a ruling on an objection, the DNB re-examined an earlier decision regarding compliance with the Sanctions Act of crypto service provider Bitonic. In this case, Bitonic objected to the registration requirement imposed by the DNB, entailing that for each bitcoin transaction, it had to be verified that the use of the crypto address was by the customer. Although this concerned a single specific case, DNB recognizes scope, partly in the light of recent case law, to apply a more risk-based approach to compliance with the Sanctions Act in terms of establishing that the declared person is actually the recipient or sender of a crypto concerned.
- Netherlands – On 30 June 2021, the Dutch government published the Wet veiligheidstoets investeringen, fusies en overnames, translated as “Investment Screening Bill” (“ISB”), and tabled it for discussion in and approval by Parliament. The proposed law introduces an ex-ante investment screening mechanism for investments, mergers and acquisitions that may pose a risk to national security. The screening mechanism applies to two categories of companies in the Netherlands: companies involved in vital processes and providers of sensitive technologies. The second category concerns companies that possess (knowledge of) sensitive technology, such as suppliers of technology that may be sued in military applications. The mechanism will apply to investments, mergers and acquisitions from all third countries. Investors in vital companies and companies with critical technologies, as well as these companies themselves, must report changes of ownership to the Dutch “Investment Review Agency” (“Bureau Toetsing Investeringen” or “BTI”) of the Ministry of Economic Affairs and Climate. The BTI assesses whether the investment poses a risk to national security. In case the planned investment in fact poses a risk, BTI can impose certain conditions for the investment and, in serious cases, the investment may even be prohibited.
- Netherlands – In June 2021, GLOBE, a Dutch magazine for international business, published an article about compliance software. In this article Sebastiaan Bennink, partner at BenninkAmar, sheds light on his experiences regarding software that can be used for sanction screenings and also for screening in relation to anti-money laundering compliance. He namely highlights that there are several providers of screening software to choose from and several of the advantages and disadvantages to working with screening software. An advantage is that screening software allows you to collect and link all available sanction lists and information on corruption and bribery within one single program, whereas a disadvantage is that the program depends on the information that is uploaded into the system. Please reach out to BenninkAmar to read the article in full or for more information on what to look for when using a software tool.
2. European Union & United Kingdom
A. European Union
- EU – On 8 July 2021, the European Parliament adopted a resolution on the European Union Global Human Rights Sanctions Regime (“EU GHRSR”). The resolution welcomes the EU GHRSR, while calling inter alia for corruption to be included as a punishable offence. In the resolution, it is stated that corruption can have a devastating impact on the state of human rights, and often undermines the functioning and legitimacy of institutions and the rule of law. Unlike similar schemes around the world, such as the US Global Magnitsky Act, the current EU GHRSR does not include corruption in connection with human rights violations as an offence punishable by restrictive measures. Parliament therefore urges the European Commission to come forward with a legislative proposal that extends the scope of the EU GHRSR to cover corruption, and otherwise adopt a stand-alone EU anti-corruption sanctions regime to complement the EU GHRSR. Additionally, the resolution regrets that the European Parliament has no institutional role in the process of adopting sanctions under the current EU GHRSR. To this end, Members of the European Parliament call for an enhanced role for the European Parliament in proposing cases of serious human rights violations.
- EU / US – On 15 June 2021, the European Council published a renewed “EU-US summit statement”, after EU and US leaders met to renew the Transatlantic partnership. Earlier negotiations for a proposed trade agreement in the form of a Transatlantic Trade and Investment Partnership were halted by the former president of the US, Donald Trump. The first and second part of the EU-US summit statement covers the need to update rules to protect human health and end the COVID-19 pandemic, and the need to protect our planet by tackling climate change and fostering green growth. The third part focuses on strengthening cooperation in the field of trade, investment and technological developments. Furthermore, the statement notes that an EU-US Trade and Technology Council (“TTC”) will be established to strengthen cooperation to grow bilateral trade, to avoid unnecessary technical trade barriers and to enable regulatory policy and enforcement collaboration. The EU and the US further declared their intention to cooperate more closely in implementing international sanctions, which can serve as a political tool to pursue shared foreign policy and security objectives. The fourth part addresses the goal towards a more democratic, peaceful and secure world, by protecting each country’s sovereignty and territorial integrity, upholding the rule of law and democratic values, and promoting human rights. Examples include the shared intention to continue consultation and cooperation regarding the multifaceted approach in relation to China, the intent to establish an EU-US dialogue on Russia in response to actions undermining the sovereignty of Ukraine, Georgia and the Republic of Moldova and the shared efforts to counter the proliferation of weapons of mass destructions and renew global arms control efforts, by supporting the return of the US to the Joint Comprehensive Plan of Action (“JCPOA”) and the latter’s full implementation.
B. United Kingdom
- UK – On 23 June 2021, HM Treasury’s Office of Financial Sanctions Implementation (“OFSI”) published updated guidance on the financial and investment restrictions set out in the Russia (Sanctions) (EU Exit) Regulations 2019 (“Russia regulations”). The Russia regulations came fully in effect on 31 December 2020, intending that sanctions relating to Russia continue to operate effectively after Brexit. While there are different sanctions outlined in the Russia regulations, the new guidance focuses on financial and investment restrictions, such as asset freezes and prohibitions on dealing in money market instruments and transferable securities. These unique measures can be imposed to prevent access to capital markets for financial institutions that are (partly) owned by Russia. In addition to guidance on how to comply with asset freezes under the Regulations, the guidance also provides advice on compliance with measures that seek to prevent access to capital markets for Russian state-owned financial institutions and measures that restrict investments in relation to the Republic of Crimea and the city of Sevastopol. The guidance furthermore contains new Frequently Asked Questions (“FAQs”) to clarify interpretation of the Russia regulations. Some of these FAQs reflect guidance outlined by the European Commission in relation to the interpretation of the EU Russia Sanctions (Council Regulation (EU) 833/2014). The FAQs relate to, inter alia, transactions involving a loan or credit arrangement with a targeted entity, the application of sanctions to derivatives transactions and the interpretation of the exception for the financing of non-restricted trade.
3. United States of America
- US –On 2 July 2021, the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) designated 22 individuals connected to Myanmar’s military regime. On the same date, the US Department of Commerce’s Bureau of Industry and Security (“BIS”) added four entities to the Entity List for involvement in the military coup in Myanmar. The “Entity List” is a tool utilized by BIS to restrict the export, reexport, and transfer (in-country) of items subject to the EAR to entities (individuals, organizations, companies) reasonably believed to be involved in activities contrary to the national security or foreign policy interests of the US. Seven of the individuals sanctioned by OFAC are members of Myanmar’s military. The other 15 are adult relatives of previously designated military officials. OFAC designated these individuals pursuant to Executive Order 14014, “Blocking Property with Respect to the Situation in Burma”. By means of these sanctions, all property and interests in property of the designated individuals in the US are blocked and must be reported to OFAC. Complementary to OFAC’s designations, BIS has added four entities to the Entity List for supporting the military in Myanmar. The listed entities are “King Royal Technologies Co., Ltd.”, a telecommunications company providing satellite communication services to the military of Myanmar, and “Wanbao Mining” and its two subsidiaries., which are involved in copper mining operations. As a result, the export, re-export and transfer of items subject to the Export Administration Regulations (“EAR”) to these entities are restricted.
- US – On 24 June 2021, the BIS added five Chinese entities to the Entity List for participating in China’s alleged campaign of forced labour against Muslims in Xinjiang. According to the Department of Commerce, the listings target their ability to access commodities, software, and technology subject to the EAR, and is part of a US Government-wide effort to take strong action against China’s ongoing alleged campaign of repression against the Uyghurs. “Hoshine Silicon Industry (Shanshan) Co., Ltd” and “Xinjiang Daqo New Energy Co., Ltd” are amongst the entities listed by BIS.
- US – On 2 July 2021, OFAC issued a final rule to remove the International Criminal Court-related Sanctions Regulations, which became effective on 6 July 2021. OFAC took this action because the national emergency declared in Executive Order 13928, “Blocking Property of Certain Persons Associated with the International Criminal Court”, was terminated by President Biden on 1 April 2021, when he issued Executive Order 14022, “Termination of Emergency With Respect to the International Criminal Court”. In accordance with Section 202(a) of the National Emergencies Act, the termination of the national emergency declared in Executive Order 13928 shall not affect any pending action or proceeding that was not concluded before 1 April 2021, or any action or proceeding based on acts committed prior to 1 April 2021, or any penalties incurred prior to 1 April 2021.
4. Around the Globe
- Ukraine – On 24 June 2021, the President of Ukraine, Zelensky, signed two Decrees (“Decree 264/2021” and “Decree 266/2021”), expanding and extending Ukrainian sanctions against Russia. Decree 264/2021 sanctions 55 banks from Russia and from separatist regions in eastern Ukraine. Decree 266/2021 expands and extends sanctions against 538 Russian individuals and 540 entities. On 27 June 2021, the Atlantic Council published an article in which it writes that the updated list includes “companies controlled by sanctioned persons as well as Aeroflot and other Russian aerospace companies, numerous military entities and armaments industry companies” as well as “all big state banks”. Furthermore, the list reportedly targets individuals within Putin’s inner circle.
Should you wish to receive more information about one of the topics described in this newsletter, please contact BenninkAmar Advocaten via e-mail at firstname.lastname@example.org or via telephone at +31203085918.
 M. Elissen, “Check je klant. Compliance met sanctiewetgeving”, GLOBE Magazine voor Internationaal Ondernemen – Juni 2021, pp. 14-16.