In the Netherlands, the Dutch State is ordered to stop the further export of F-35 aircraft parts to Israel by the Court of Appeal of The Hague. At a European level, EU members approved the thirteenth (13th) package of sanctions against Russia. Also in Europe, steps have been taken by the EU Council to set aside profits made on frozen Russian Central Banks assets. In the US, the existing sanctions regime against Russia and Belarus has been expanded and clarified by the BIS. This, and more, in this newsletter.
- The Netherlands
- Netherlands – Payment service provider failed to conduct CDD, PEP screenings and sanctions screenings – On 15 January 2024, a ruling of the District Court of Rotterdam dated 21 December 2022 was published. In this case, the Court ruled that De Nederlandsche Bank (“DNB”) was correct in stating that a payment service provider failed to comply with the Anti-Money Laundering and Anti-Terrorist Financing Act (Wet ter voorkoming van witwassen en het financieren van terrorisme) and the Sanctions Act 1977 (Sanctiewet 1977) by hardly conducting any customer due diligence, PEP screenings, and screening against sanctions lists. As a result, DNB was justified in imposing an administrative fine. However, unlike DNB, the Court ruled that there was no reason to assume that the violations were particularly serious. Although the law does not allow for much differentiation between different types of payment service providers, the Court considered that the gatekeeper role assigned to her by DNB was too heavy, given the circumstances outlined by the plaintiff. As such, the Court did not maintain the 12.5% increase in fines.
- Netherlands – Dutch State ordered to stop the further export of F-35 parts to Israel – On 12 February 2024, the Court of Appeal of The Hague rendered a judgement in summary proceedings initiated by three NGOs, including Oxfam Novib, and ordered the Dutch State to stop the further export of F-35 aircraft parts to Israel within seven (7) days. The Court concluded that the State acts wrongfully by not interfering in the general licence AV009 and by continuing to allow the export and transit of F-35 parts to Israel. The Court found that there is a clear risk that Israel is committing serious violations of the law of war in the Gaza Strip by means of F-35 fighter jets. Under various international regulations to which the Netherlands is a party, the Netherlands must prohibit the export of military goods if there is a clear risk of serious violations of the humanitarian law of war. The Court found that in her decision not to intervene in the general export licence, the Minister wrongly failed to comply with these international obligations. The Dutch State announced that it will go into cassation.
- European Union & United Kingdom
- European Union
- EU – European Council establishes new sanctions framework in relation to Hamas and the PIJ – On 19 January 2024, the EU Council decided upon a new framework of restrictive measures against those who support, facilitate or enable violent actions by Hamas and the Palestinian Islamic Jihad (“PIJ”). The established framework complements the prior restrictions imposed under Common Position 2001/93/CFSP, the EU terrorist List. Pursuant to this new framework, the EU Counsil has listed six (6) individuals that are tied to funding Hamas. Those listed under the sanctions regime are subject to an asset freeze and a travel ban to the EU.
- EU – European Council takes steps to set aside profits made on frozen Russian Central Bank assets – On 12 February 2024, the European Council adopted a decision and a regulation clarifying the obligations of Central Securities Depositories (“CSDs”) holding assets and reserves of the Central Bank of Russia (“CBR”) that are frozen due to EU restrictive measures imposed in view of Russia’s invasion of Ukraine. This, more specifically, relates to Article 5a, paragraph 4, of Regulation 833/2014 which prohibits transactions related to the management of reserves as well as of assets of the CBR, including transactions with any legal person, entity or body acting on behalf of, or at the direction of, the CBR, such as the Russian National Wealth Fund. The Council decided that CSDs holding more than EUR 1 million of CBR’s assets must account extraordinary cash balances accumulating due to EU sanctions separately and must keep corresponding revenues separate. In addition CSDs shall be prohibited from disposing of the ensuing net profits. This decision paves the way for the Council to decide on using the profits to finance the reconstruction of Ukraine at a later stage.
- EU – European Council adopts 13th sanctions package against Russia – On 23 February 2024, the EU adopted the thirteenth (13th) package of sanctions against Russia relating to the ongoing war in Ukraine. With this new package of sanctions, almost 200 additional individuals and entities are listed. The new listings target Russia’s military and defense sector and individuals and entities involved in the forced transfer, deportation and military indoctrination of Ukrainian children. Furthermore, the new listings aim to send a strong signal against trading partners that support Russia’s war machine, by targeting several entities and individuals from third countries providing support to the Russian armed forces.
- EU – European Commission updates sanctions FAQs on software – On 6 February 2024, the European Commission updated its frequently asked questions (“FAQs”) on the implementation of Regulation 833/2014 by publishing FAQs on the restrictions on software embedded in Article 5n(2b). As of 18 December 2023, it is prohibited, by means of this provision, to sell, supply, transfer, export, or provide, directly or indirectly, software for the management of enterprises and software for design and manufacture, as listed in Annex XXXIX, to the Government of Russia or to legal persons, entities or bodies established in Russia. The FAQs, inter alia, specifies what types of software are covered by the prohibition. For example, “software” includes both software in tangible form and in intangible form and software updates also fall within the scope of the prohibition provision.
- EU – European Commission updates sanctions FAQs on “No re-export to Russia” clause – On 22 February 2024, the European Commission updated its FAQs on the implementation of Regulation 833/2014 by publishing FAQs on the “No re-export to Russia” clause contained in Article 12g of Regulation 833/2014. As of 18 December 2023, this provision is included in the Regulation and provides that when selling, supplying, transferring or exporting certain sensitive items to a third country, exporters shall, as of 20 March 2024, contractually prohibit re-exportation to Russia and re-exportation for use in Russia. Following paragraph 3, the clause must contain adequate remedies to be activated in case of its breach. It follows from the FAQs that this can include, for instance, termination of the contract and the payment of a penalty. The FAQs also note that operators are free to choose the appropriate wording of the clause. Nevertheless, a template is provided by the Commission which can be considered as meeting the obligation of the provision. The FAQs furthermore stipulate that, independently of the obligation established by Article 12g, operators should have in place strong due diligence frameworks to ensure sanctions compliance.
- United Kingdom
- UK – The UK NCA has issued a warning of potential criminal exploitation of artwork storage facilities – In January 2024, The United Kingdom’s National Crime Agency (“NCA”) working in conjunction with the Joint Money Laundering Intelligent Taskforce (“JMLIT”) has issued an Amber Alert on financial sanctions evasion, money laundering and cultural property trafficking through the art storage sector. The NCA hereby stresses the importance of artwork storage facilities to conduct regular due diligence checks on their clients and recommends paying attention to changes in client circumstances, attempts to transfer artwork or cultural property ownership to close contacts, attempts to sell artwork or cultural property quickly or move it to another jurisdiction and to look out for companies where the Ultimate beneficial Owner is unclear.
- United States of America
- US – OFAC sanctions a procurement network linked to the Central Bank of Iran – On 14 February 2024, the Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) imposed sanctioned on three (3) individuals and four (4) entities connected to the illegal acquisition of US technology by the Central Bank of Iran (“CBI”), which is designated for its role in providing financial support to the Islamic Revolutionary Guard Corps-Qods Force and Hizballah. Among those sanctioned are Iran-based Informatics Services Corporation (“ISC”), a CBI subsidiary that is generally agreed as the organization’s technology division and UAE-based Advance Banking Solution Trading DMCC (“ABS”), a front firm for ISC that bought technology and intellectual items from more than two dozen US corporations subsequent to fabricating the claim that it was the product’s final user.
- US – BIS implements additional sanctions against Russia and Belarus under the EAR – On 23 January 2024, the United States Bureau of Industry and Security (“BIS”) strengthened the existing sanctions regime against Russia and Belarus by expanding the scope of the Russian and Belarusian industry sector sanctions. As part of the additional sanctions, 94 additional Harmonised Tariff Schedule (“HTS“)-6 codes have been added to the list of goods covered by the Industry Sector Sanctions against Belarus and Russia in § 746.5(a)(1)(ii) of the EAR and included in Supplement No. 4 to Part 746. In addition, BIS released various clarifications and amendments to enhance the internal coherence of several EAR provisions pertaining to exports, reexports, and in-country transfers to or from Russia and Belarus.
Questions?
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