In the Netherlands, Dutch Minister of Foreign Affairs Kaag has responded to questions from Parliament on government policy relating to sanctions against Cuba and Iran, and Dutch Minister of Finance Hoekstra set out his intended measures to combat illegal trust services providers. At a European level, the much-anticipated recast of the EU Dual-Use Regulation entered into force on 9 September 2021, marking the start of a new export control framework. In the United States (‘’US’’), Bank of China (UK) Limited settled for over 2 million USD for violations of the now-repealed Sudan Sanctions Regulations (“SSR”). Furthermore, the situation in Afghanistan continues to unfold, leading Western governments to take restrictive measures. This, and more, in our newsletter.
1. The Netherlands
- Netherlands / Cuba (EU Blocking Statute) – On 23 August 2021, Dutch Minister of Foreign Affairs Kaag responded to questions by Dutch Member of Parliament Simons (“BIJ1”) on recent protests in Cuba and the effect of US sanctions against Cuba. According to Minister Kaag, the Netherlands and other European Union (“EU”) Member States oppose the “undesirable consequences of the extraterritorial effect of sanctions imposed by third countries”. With regard to Cuba, this is already apparent from the EU Blocking Statute, which prohibits European companies from complying with extraterritorial US sanctions against Cuba. On 29 July 2021, the EU reacted to the protests in Cuba by publishing a declaration in which the bloc voiced its concern about repression in Cuba while also calling for the easing of economic restrictions. Politico subsequently reported that this declaration had been criticized by Cuban Foreign Minister Bruno Rodríguez Parrilla, who had accused the EU of lying about protests in the country.
- Netherlands / Iran (Dutch strategy towards Iran) – On 24 August 2021, Dutch Minister of Foreign Affairs Kaag responded to questions by Dutch Member of Parliament Eppink (‘’JA21’’) on future cooperation between the Netherlands and Iran after the election of Ebrahim Raisi. Minister Kaag stated that it was “too early to estimate what Raisi’s appointment [would] mean for the negotiations on the Joint Comprehensive Plan of Action” (“JCPOA”). Pursuant to the JCPOA, nuclear-related economic and financial EU sanctions against Iran are to be lifted when Iran limits its sensitive nuclear activities. Moreover, the Minister indicated that the Dutch government had chosen a strategy of “critical engagement” vis-à-vis Iran, including political pressure and critical dialogue. The Minister stated that where appropriate, she would not hesitate to call for further sanctions, as the extension of the EU’s human rights sanctions regime against Iran in April 2021 arguably underlines. The critical letter by Dutch Minister Kaag is another sign of the deteriorating Europe-Iran relations. Earlier in August, France, Germany and the UK (“E3”) had also voiced “grave concern” over Iran’s nuclear programme.
- Netherlands (Combating illegal trust services) – On 9 September 2021, the Dutch parliamentary commission on finance held a debate on AML/CFT with Minister of Finance Hoekstra. The debate focused on combatting illegal trust services in the Netherlands, often linked to money laundering. The Minister indicated finding this concerning, referring to a recent study by SEO Economic Research showing a 15% increase in market share by illegal trust service providers. In response, Minister Hoekstra stated that he intends to prepare additional legislation to combat evasion of the licensing obligation under the Dutch Trust Offices (Supervision) Act 2018 (Wet toezicht trustkantoren 2018), but also to strengthen supervision of the trust sector, intensify cooperation between administrative and criminal justice authorities, assess effectiveness of penalties and research the future of the entire trust sector in the Netherlands.
- Netherlands (AML/CFT) – On 9 September 2021, Dutch Minister of Finance Hoekstra informed Parliament that Rabobank was wanting to exclude car dealers with an annual revenue of less than EUR 50 million from its customer base, and this in order to mitigate AML/CFT risks. The Minister indicated that this was undesirable without conducting an individual risk assessment and that he would thereby discuss effective and proportionate to reduce the risks of money laundering with the stakeholders. The Minister also indicated that he was preparing an act to prohibit cash payments for movables in excess of EUR 3000. He furthermore states that the government will amend the General Guideline on the Anti-Money Laundering and Anti-Terrorist Financing Act (“Algemene Leidraad Wwft”), which has most recently been amended in December 2020. Minister Hoekstra also wishes to address the potential friction between maintaining an accessible financial system while implementing strong AML/CFT regulation in the multilateral Financial Action Task Force and in discussions in Brussels about the European Commission’s new AML/CFT proposals that were published on 20 July 2021.
2. European Union & United Kingdom
a. European Union
- EU (Recast of EU Dual-use Regulation) – On 9 September 2021, the much-anticipated EU Regulation No. 2021/821 on the control of exports, brokering, technical assistance, transit and transfer of dual-use items (“EU Dual-Use Regulation”) entered into force. Amongst others, the recast introduces controls on cyber-surveillance items and technology, new EU General Export Authorizations, extended catch-all controls on human rights and details Internal Compliance Programmes. BenninkAmar has published an in-depth analysis of the revised EU Dual-Use Regulation which you can consult here. It is worth noting that the UK will continue to use the former EU Dual-Use Regulation No. 2009/428 as the backbone of its export control regime – driving a further divide between the EU and the UK export control rulebook.
- France (Lafarge case) – On 7 September 2021, the Court of Cassation, France’s highest judicial body, overturned the Paris Court of Appeal’s decision concerning a cement manufacturer Lafarge, to the extent that it had dismissed the charges against Lafarge for “complicity in crimes against humanity” committed in Syria. Lafarge had been indicted with several criminal offences, its Syrian subsidiary having reportedly paid bribes to intermediaries to negotiate with armed groups, so as to maintain Lafarge’s cement plant open despite the civil war. In 2019, the Paris Court of Appeal had maintained Lafarge’s indictment for “endangering the lives of others” and ‘’terrorist-financing’’, but had dismissed the ‘’complicity in crimes against humanity’’ charge, ruling that the payments were not aimed at abetting the Islamic State’s agenda. The Court of Cassation confirmed the indictment of the cement manufacturer for “terrorist-financing” but referred the other charges back to the investigating chamber for reconsideration. On ‘’complicity in crimes against humanity’’, the Court namely indicated that “one can be complicit in crimes against humanity even if one does not have the intention of being associated with the crimes committed” and “knowingly paying several million dollars to an organisation whose sole purpose was exclusively criminal suffices to constitute complicity, regardless of whether the party concerned was acting to pursue a commercial activity”. Eight Lafarge executives, including former CEO Bruno Laffont, are also charged with financing a terrorist group and/or endangering the lives of others.
b. United Kingdom
- UK, US / Russia (New sanctions on anniversary of poisoning Navalny) –On 20 August 2021, the UK and the US imposed additional sanctions against Russian individuals and entities one year after the poisoning of Alexey Navalny. Most designated individuals are related to the Russian Federal Security Service (“FSB”) which is being held responsible for the poisoning of Mr. Navalny by the UK and the US. The UK imposed the additional sanctions pursuant UK Chemical Weapons (Sanctions) (EU Exit) Regulations 2019 and the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) and the US Department of State extended restrictive measures pursuant to Executive Order 13382 and 14042.
3. United States of America
- US / UK (Sudan sanctions settlement) – On 26 August 2021, Bank of China (UK) Limited (“Bank of China”) agreed to a USD 2,329,991 settlement with OFAC to settle its potential civil liability. Between 2014 and 2016, Bank of China processed 111 transactions totalling more than USD 40 million, in apparent violation of the Sudan Sanctions Regulations (“SSR”) in force at the time and that prohibited the export from the US, directly or indirectly, to Sudan of any goods, technology, or services from the US. The settlement was stated to reflect OFAC’s conviction that the Bank of China’s self-identified violations were voluntarily self-disclosed and constitute a ‘’non-egregious case’’. In the Netherlands, the Dutch Public Prosecutor’s Office is similarly rewarding voluntary self-disclosure and has recently made efforts to offer more transparency about such rewarding.
- US / Russia (Nord Stream 2) – On 20 August 2021, US President Biden issued Executive Order 14039 on Blocking Property with Respect to Certain Russian Energy Export Pipelines (“Executive Order 14039”). The Executive Order enables the US Department of Treasury to promulgate regulations and designate persons as required by the Protecting Europe’s Energy Security Act of 2019 (PEESA) without the exception relating to the importation of goods in Section 7503(e) of PEESA. In addition, the US Department of State has submitted a report to Congress as required by PEESA, listing one Russian vessel and two Russian persons involved in Nord Stream 2. Persons identified in the report will be sanctioned under PEESA. The new sanctions seem to be primarily driven by legally required updates laid down in PEESA, as the US seeks to strike a balance between opposing (misuse of) Nord Stream 2 while seeking cooperation with US allies such as Germany on the conditional completion of the pipeline.
- US / Iran (General license for certain educational purposes) – On 24 August 2021, OFAC issued Iran General Licence M-1 (“GL M-1”) authorizing the exportation of certain graduate-level educational services and software. GL M-1 inter alia authorizes the provision of certain online educational services that are ordinarily required for the completion of graduate degree programs in the humanities, social sciences, law, or business. GL M-1 also authorizes the export of certain software to facilitate the participation of certain Iranian students in certain online educational activities.
4. Around the Globe
- Afghanistan (Recently adopted restrictive measures) – Since the seizure of power by the Taliban in Afghanistan, the international community is looking to further calibrate its response. Germany, the UK and the US have namely taken restrictive export control and sanctions measures:
- On 17 August, German newspaper DW reported that Germany had suspended its development aid and stability measures to Afghanistan, the German Foreign Minister Heiko Maas having indicated freezing funds “for the time being”. Two days later however, Germany’s Foreign Office announced it would provide EUR 100 million in emergency aid for Afghanistan refugees – showing an intended balance between the continuation of humanitarian aid and prevention of financing of the Taliban.
- On 18 August, the UK Department for International Trade’s Export Control Joint Unit (“ECJU”) removed Afghanistan as a permitted destination from 5 open general export licences (“OGELs”). Companies and organisations are now to apply for a standard individual licence (“SIEL”) instead. Amongst the affected licences are the general licence for export after exhibition and the general licence for export for repair and replacement under warranty.
- On 30 August, US Secretary of State Blinken stated that the US would continue its humanitarian assistance to the Afghan people, but through independent organizations, such as UN agencies and NGOs.
- On 31 August, the UK’s Financial Conduct Authority (“FCA”) warned firms about the potential financial crime risks linked to Afghanistan and stated expecting firms to comply with their legal obligations under the Proceeds of Crime Act 2002 and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (“MLRs”). Particularly relevant in this regard, are provisions related to firm risk assessments (Regulation 18), customer due diligence (Regulation 27-32), enhanced due diligence (Regulation 33) and transaction monitoring (Regulations 28(11)).
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