Recently, the Dutch Ministry of Foreign Affairs of the Netherlands published a new Handbook and Factsheet on doing business with Russia, focussing on what sanctions are in place and how to comply with them. In the European Union (“EU”) the European Commission updated the EU dual-use export control list in Annex I of the dual-use Regulation. In the United States of America (“US”), the Trump Administration released the “National strategy for Critical and Emerging Technologies”, which outlines how the US will protect exports of US technologies in critical sectors. In Asia, Saudi Arabia has allegedly imposed a de facto ban on all imports made in Turkey in response to Turkey’s interventions in the Arab world. Other news: in China, an Export Control Law was passed by Congress and will come into effect on 1 December 2020, and a decade-long arms embargo of the United Nations Security Council (“UNSC”) on Iran, expired on 18 October 2020. This, and more, in this newsletter.
1. The Netherlands
Interview ACAMS / Sebastiaan Bennink
- On 15 October 2020, Sebastiaan Bennink, partner at BenninkAmar Advocaten, was interviewed by MoneyLaundering.com, part of ACAMS, about the new EU measures on six Kremlin officials following the poisoning of the Russian opposition leader Alexei Navalny. In this interview, Sebastiaan argued that the sanctions may not prove effective, given that they largely target individuals who may not hold assets in the EU. The designations may instead primarily serve to underscore the risk of doing business there. The sanctions namely come amid closer regulatory scrutiny of transactions to and from the country. Banks are increasingly tightening their internal policies and control measures and alert their clients as to their responsibilities when dealing directly or indirectly with sanctioned countries, Sebastiaan noted.
Handbook on doing business with Russia
- On 20 October 2020, the Ministry of Foreign Affairs of the Netherlands published a new Handbook on Russia, focussing on doing business with Russia and dealing with sanctions. The handbook sets out and explains the current sanctions on export and import as regards Russia, financial sanctions, sanctions with respect to Crimea and Sevastopol, sanctioned Russian persons and entities, how one can submit an application or notification at the Central Import and Export Office in the Netherlands (“CDIU”) etc.
Factsheet on sanctions related to Russia
- On 20 October 2020, the Ministry of Foreign Affairs of the Netherlands published a Factsheet on sanctions related to Russia. The factsheet is compact (2 pages) and provides background information on sanctions in respect of Russia, what the restrictions in trade with Russia, Crimea and Sevastopol are at the moment, where one can find sanctioned persons and entities and what other focus points there are when doing business with Russia.
2. European Union & United Kingdom
a. European Union
- On 7 July 2020, the Grand Chamber of the European Court of Human Rights (“ECtHR”) delivered a judgement in the case of Albert and Others v. Hungary. In this case, brought by bank shareholders, the Grand Chamber answered the question when shareholders themselves can turn to the ECtHR for alleged violations of their fundamental rights – the right to undisturbed use of one’s possessions (Art. 1 Protocol 1 of the European Convention on Human Rights). The Grand Chamber judgement provides an overview on when shareholders may be victims of human rights violations, further developing on the ECtHR’s case law. The Grand Chamber distinguishes between two situations: (i) the situation where shareholders are directly affected in their own interests (acts affecting the rights of the shareholders) and (ii) the situation where the company in which the shareholders hold shares is affected (acts and measures affecting the company). The Grand Chamber concludes that although the impugned Hungarian Integration Act of 2013 does have a notable effect on the business operations of the banks involved in this case, the rights of the individual shareholders cannot be said to be directly affected. This case concerns a public company with many shareholders, and not a family business or other sort of small business. The Grand Chamber notes that both banks could have challenged the Integration Act in Court themselves. Following this reasoning, the Grand Chamber concludes that the shareholders or the banks cannot be regarded as victims within the meaning of article 34 of the ECHR, which makes their complaint inadmissible.
- On 28 September 2020, the College of the European Public Prosecutor’s Office (“EPPO”) gave a solemn undertaking before the Court of Justice of the European Union where the European Chief Prosecutor and 22 European Prosecutors from 22 participating EU Member States took oath. As stated by the press release, “the EPPO is the first independent European prosecution service, competent for investigating, prosecuting and bringing to justice offences affecting the financial interests of the European Union”. The priority now for the EPPO is to recruit the European Delegated Prosecutors, who will conduct the investigations in their respective Member State, under the supervision of their European Prosecutors.
- On 1 October 2020, the ECtHR declared the application in the case of Prina v. Romania (application No 37697/13) inadmissible. The matter concerned the right not to be punished twice for the same unlawful act and is a valuable precedent as it further cements the ECtHR’s case law on so-called ne bis in idem. According to the press release (see link), “the case concerned two penalties imposed on the applicant for acts allegedly committed in his capacity as head of the city’s technical department: an administrative fine and a suspended prison sentence. In the present case, observing that the fine imposed on the applicant could not have been replaced by a custodial sentence in the event of non-payment or given rise to an entry in the criminal record, the Court concluded that the fine had not been a “criminal” penalty within the meaning of its case-law. Accordingly, Article 4 of Protocol No. 7 was not applicable in this case.”
- On 7 October 2020, the European Commission adopted the annual Delegated Regulation, updating the EU dual-use export control list in Annex I to Regulation (EC) 248/2009 (“Dual-use Regulation”). The Commission notes that the majority of the changes result from amendments agreed at the Wassenaar Arrangement, but important changes also reflect the decisions taken in the Australia Group in February 2020. A list of the main changes can be found under the link provided.
- On 12 October 2020, the Council of the EU adopted Council Decision (CFSP) 2020/1464 on the promotion of effective arms export controls. The decision provides that the German Federal Office for Economic Affairs and Export Control shall, for a period of 2 years, carry out project activities to promote effective control on arms exports by third countries and support third countries’ efforts at national and regional levels to render trade in arms more responsible and transparent in order to mitigate the risk of the diversion of arms to unauthorised users.
- EU / Russia – On 15 October 2020, the Council of the EU imposed restrictive measures against six Russian officials and one entity involved in the assassination attempt on Alexei Navalny, in the framework of restrictive measures against the proliferation and the use of chemical weapons.
b. United Kingdom
- On 9 October 2020, the UK Office of Financial Sanctions Implementation published its 2019/20 annual review. Important points include that most reports of breaches concerned the Libya sanctions regime, in respect of which most of the frozen assets in the UK are held. Furthermore, there were 44 additions to the UK sanctions list and 3 new sanctions regimes were introduced.
- On 13 October 2020, the UK Export Control Joint Unit and the Department for International Trade published a quarterly report with licensing statistics on strategic export controls between 1 April and 30 June 2020. In this timeframe, there were 2,803 applicants for standard individual export licenses, 9.6% less compared to the previous quarter. For more information, click on the link provided.
3. United States of America
- On 8 October 2020, the US Directorate of Defence Trade Controls (“DDTC”) issued a FAQ clarifying the “see-through rule”, which refers to the impact of certain controls under the International Traffic in Arms Regulations (“ITAR”). More specifically, it refers to the fact that pursuant to ITAR, any person who intends to export or temporarily import a defence article must obtain the approval of DDTC. The “see through rule” refers to the fact that these controls “do not disappear simply because the defence article is integrated into another item”. “The ITAR “sees through” the larger system or end-item and continues to regulate that defence article”.
- On 8 October 2020, the Trump Administration renewed its sanctions regime with respect to the situation in and in relation to Syria, in particular targeting Turkish military operations in Syria.
- On 15 October 2020, the Trump Administration released the “National Strategy for Critical and Emerging Technologies”, which outlines how the US will protect and promote US technologies in critical sectors such as energy, information science, military, space and communication. The Strategy aims to restrict such export to certain countries by ensuring that such technologies are adequately controlled under export laws and regulations, as well as under multilateral export regimes.
a. US – Iran Relations
- On 7 October 2020, the US Department of Justice seized 92 domain names which were unlawfully used by the Islamic Revolutionary Guard Corps (“IRGC”), a US-designated foreign terrorist organization. The domain names are said to have been used in a global disinformation campaign. According to the press release (see link), “four of the domains purported to be genuine news outlets but were actually controlled by the IRGC and targeted the United States for the spread of Iranian propaganda to influence United States domestic and foreign policy […] and the remainder spread Iranian propaganda to other parts of the world”.
- On 18 October 2020, US Secretary of State, Mike Pompeo, warned that the US will impose sanctions on anyone assisting Iran’s weapons program, after a decade-long UN arms embargo against Iran officially expired that same day.
4. Around the Globe
- UNSC / North Korea – On 28 August 2020, the UNSC Panel of Experts published a midterm report on high-profile sanctions violations. Key findings in the report paint a clear picture of a North Korea that is able to circumvent UN sanctions. Pages 4 and 5 of the report summarizes, amongst others, that in 2020, North Korea reaffirmed its commitment to retaining and developing its nuclear and ballistic missile programmes, in violation of UN sanctions. Besides that, North Korea has continued to violate UN sanctions through the illicit import of refined petroleum products through ship-to-ship transfers and has illicitly exported coal. Moreover, the Panel investigated imports by North Korea of luxury items and illegal exports of artwork.
- Canada / Turkey – On 5 October 2020, Canada’s Minister of Foreign Affairs, Minister Champagne, announced the suspension of arms export permits to Turkey in response to allegations that Canadian technology is being used in the military conflict in Nagorno-Karabakh. Minister Champagne noted that “in line with Canada’s robust export control regime and due to the ongoing hostilities, I have suspended the relevant export permits to Turkey, so as to allow time to further assess the situation”.
- UNSC – On 8 October 2020, the UNSC added one individual (Jamal Hussein Hassan Zeiniye) to its ISIL (Da’esh) and Al-Qaida sanctions list of individuals and entities subject to an asset freeze, travel ban and arms embargo. This individual was designated as he is said to have participated in armed conflicts against Lebanese military forces in his role as the leader of the Al-Nusrah Front for the People of the Levant in Syria.
- Saudi Arabia / Turkey – According to the Financial Times and several other news outlets, Saudi Arabia has imposed a de facto ban on imports made in Turkey. According to the news article “the problems have been viewed by businesses as an attempt by Riyadh and its close ally the United Arab Emirates to punish Ankara for what they deem to be its destabilising interventions in the Arab world”.
- China – On 17 October 2020, China’s Export Control Law was passed by Congress and will come into effect on 1 December 2020. This piece of legislation is the first comprehensive export control law in China and, amongst other things, restricts sensitive exports to protect national security. Due to an increasing amount of friction between the US and China, the US had already taken action against several Chinese companies, including Huawei and the TikTok app. China’s new Export Control law provides a framework under which it can take reciprocal measures if any country abuses their export controls in ways that hurt China’s interest, thus providing for a way to give a stronger response to the US.
- UNSC / Iran – On 19 October 2020, The Associated Press reported that a decade-long arms embargo of the UNSC on Iran that barred Iran “from purchasing foreign weapons like tanks and fighter jets” expired on 18 October 2020 “as planned under its nuclear deal with world powers, despite objections from the US, which insists the ban remains in place”. On 22 September 2020, French President Emmanuel Macron said that Europe would not compromise with the US over Washington’s move to reactivate sanctions on Iran. On 18 October 2020, Mohammad Javad Zarif, the foreign minister of Iran, said the “expiration of the embargo was a ‘momentous day’ for the international community”, according to the Financial Times.
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