Sanctions & Export Controls: New UK Global Anti-Corruption Sanctions Regime & US-sanctions against Russia

In April 2021, the governments of France, Germany, and the UK expressed their concern regarding Iran’s announcement to start uranium enrichment up to 60%. Besides, the UK introduced a new Global Anti-Corruption Sanctions Regime and its Myanmar (Sanctions) Regulations 2021. The US introduced a new Executive Order that authorizes sanctions against designated persons and companies, operating in the technology sector of the Russian Federation Economy. This, and more, in this newsletter.

1. The Netherlands

  • Netherlands – On 19 April 2021, the answers to Dutch parliamantery questions were published about the sale of more than 2,000 weapons by the Dutch Ministery of Defence, of which a part ended up in a weapon store in Malta. The State Secretary of Defense made it clear that it is undesirable that weapons fall in wrong hands. To prevent this, a new stricter assessment framework will be developed in which the sale of hand weapons to private parties (not being the manufacturer or licensee) will be excluded and it will be contractually determined that the end-user is a state-party.

2. European Union & United Kingdom

A. European Union

  • E3 / Iran – On 14 April 2021, the governments of France, Germany and the UK (“E3”) responded to the announcement of Iran that it will start uranium enrichment up to 60%. The E3 says that Iran’s announcements are particularly regrettable given they come at a time when all JCPoA participants and the United States of America (“US”) have started substantive discussions, with the objective of finding a rapid diplomatic solution to revitalize and restore the JCPoA.

  • EU – On 19 April 2021 the European Union (“EU”) decided to sanction ten individuals and the military-controlled companies Myanmar Economic Holdings Public Company Ltd. and Myanmar Economic Corporation Ltd. This action is a response to the military coup staged in Myanmar on 1 February 2021, and the ensuing military and police repression against peaceful demonstrators. The restrictive measures imposed, to 35 inidivduals and two companies in total, are an asset freeze, a travel ban and the prohibition to make funds available to those listed.

  • EU – On 22 April 2021, the European Court of Justice (“ECJ”) ruled in a case between the EU and the Kurdistan Workers’ Party’s (“PKK”). Since 2004, the PKK was listed because of involvement in terroristic acts and other acts of that nature from 1984 onwards, resulting in the death of more than 30,000 Turkish citizens and foreign nationals. In this case regarding the removal of the PKK of the EU terrorist sanctions list, the ECJ overturned the judgement of the General Court of the EU (d.d. 15 November 2018), which the EU had appealed, and referred the case back to the General Court of the EU. The ECJ raised seven grounds of appeal and concluded that there were deficiencies in the decision of the General Court of the EU. The Council’s grounds of appeal relate, among others, to the distinction between the initial inclusion of an entity in a list relating to the freezing of funds (Article 1(4) of Common Position 2001/931) and the maintaining on that list of the entity, who has already been included in that list (Article 1(6) of Common Position 2001/931).

B. United Kingdom

  • UK / G7 – On 19 April 2021, the United Kingdom (“UK”) published a statement of the G7 regarding its commitment to improve working together for a more stable and safer world. First, the G7 members demonstrate their commitment to enhance transperency and responsiblities, by sharing of resources and (technical) expertise, delivery of capacity-building and threat reduction assistance, reducing challenges posed by dual-use research of concern, and the implementation of the highest standards of (nuclear) safety by all states. Second, the G7 remains commited to accountability and compliance, which implies that sanctions against states that do not comply with international non-proliferation commitments will remain in place/will be (further) imposed, e.g. Iran’s commitments under the Joint Comprehensive Plan of Action (“JCPoA”). Lastly, the G7 supports strenghenting of the role of international insitituions through improved implementation of concrete, practical steps.

  • UK – On 26 April 2021, the UK introduced a new Global Anti-Corruption Sanctions Regime, which enables the Secretary of State to prevent and combat forms of serious corruption (bribery and misappropriation of property) by imposing financial sanctions and travel bans on designated persons.  Interestingly enough, the new Regime includes a finance-related exception that allows for the issuance of specific licenses that permit activities prohibited pursuant to Part 2, where this is appropritate for a purpose set out in Schedule 2 of the instrument.  The Foreign Secretary of the UK has already announced the first sanctions under this new Sanctions regime.

  • UK / Myanmar – On 26 April 2021, the UK pubished new Myanmar (Sanctions) Regulations 2021 to promote the peace, stability and security in Myanmar. The Regulations  impose financial sanctions (asset freeze, prohibition to make funds available), trade sanctions (related to military and dual-use goods and technology) and immigration sanctions (travel bans) on designated individuals. Additionally, the Secretary of State published Myanmar Sanctions Guidance to assist persons and entities with the implementation of and compliance with the introduced sanctions.

3. United States of America

  • US – On 12 April 2021, Turkey´s Halkbank had to appear in front of the second U.S. Circuit Courts of Appeals in Manhattan because of fraud, money laundering and conspiracy charges. The bank is suspected of converting oil revenue into gold, documentation of fake food shipments to justify oil transfers, and the secret transfer of 20 billion USD of restricted funds for the benefit of Iranian interests. A representative of Halkbank stated that the bank is immune from US prosecution pursuant to the federal Foreign Sovereign Immunitities Act and that the indictment against the the state-owned Turkish lender should therefore be thrown out. It is unclear yet when the US Court will rule in this case.

A. US – Iran Relations

  • US / Iran – On 29 April 2021, German-based software company, SAP SE, and the US Departments of Justice, Commerce and Treasury (“DOJ”) concluded a non-prosecution agreement with combined penalties of more than 8,000,000 USD. In light of this, SAP SE voluntarily disclosed its violations of the Export Administration Regulations and the Iranian Transactions and Sanctions Regulations. The settlement sends out a clear message to companies that compliance with export control and sanctions laws is critical, and that, in case of violations, disclosure to the DOJ and cooperation with the DOJ is beneficial.

B. US – China Relations

  • US / China – On 28 April 2021, the DOJ published a press release about a Chinese national who pleaded guilty for illegal exports to Northwestern Polytechnical University, a Chinese military university that is heavily involved in military research and works closely with the People’s Liberation Army on the advancement of its military capabilities. The Chinese national used to import items, including technology, with underwater and marine applications from the US, Canada en EU into the People’s Republic of China (“PRC”), without first obtaining the required export authorisations. The man further pleaded guilty for offences connected to money laundering, visa fraud, false statements about export details to law enforcement officials, and trafficking of hydrophones (underwater microfones used for recording or listening to underwater sound) from the US to the PRC.

C. US – Russia Relations

  • US / Russia – On 15 April 2021, the DOJ took multiple sanctions actions under its new Executive Order (“E.O.”), “Blocking Property with Respect to Specified Harmful Foreign Activities of the Government of the Russian Federation”. Reason is the occurrence of harmful foreign activities by the Russian government that pose an unusual threat to U.S. national security, foreign policy, and the economy. Examples include (non-exhaustively): the underminig fair democratic elections, engament in malicous cyber-enabled activities against the US and its allies, and engaging in extraterritorial activities targeting journalists and others openly criticizing the regime. Besides, the Russian Intelligence Services were involved in the poisoning of Navalny with a chemical weapon, and the exploitation of SolarWinds Orion platform, that compromised thousands of IT infrastructures of the U.S. government and the private sector.

    Starting 14 June 2021, when the prohibitions in Directive 1 under E.O of 15 April 2021 come into effect, US financial institutions will not only be prohibited from participating in the primary market for non-ruble, but also ruble denominated funds to the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation. The E.O. will authorize sanctions against persons, companies and entities, operating in the technology, defence and materiel sector of the Russian Federation Economy. Designated companies in the technology service include: ERA Technopolis (research center operated by the Russian Ministry of Defence), Pasit (IT company conducting R&D for Russia’s Foreign Intelligence Service’s malicious cyber operations’) and Federal State Autonomous Scientific Establishment Scientific Research Institute Specialized Security Computing Devices and Automation (Russian state-owned research institute specialising in advanced information security systems located in Russia).


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