In June/July 2020, the US Department of State updated public guidance for Section 232 of the Countering America’s Adversaries Through Sanctions Act, which allows for the imposition of sanctions on persons making investments or engaging in other activities with respect to Russian energy export lines. With this update, the US intends to clarity that Section 232 will now include investments or other activities related to Nord Stream 2 and the second line of TurkStream. Persons making such investments or engaging in such activities may be subject to sanctions. This includes, “but is not limited to:
• financing partners, as well as;
• pipe-laying vessels; and
• related engineering service providers engaging in the deployment of the pipelines”.
Other news in this newsletter: in the Netherlands, the WODC published its annual National Risk Assessment Money Laundering (2019). The EU is preparing additional listings on Turkey within the EU’s existing sanctions framework. The UK government will resume arms sales to Saudi Arabia. In the US, sanctions were imposed on a Russian financier’s global sanctions evasion network.
1. The Netherlands
A. Advice of Advisory Committee on Issues of Public International Law (25 June 2020)
I. In 25 June 2020, the Dutch Advisory Committee on Issues of Public International Law (“Advisory Committee”) published an advice regarding “Delivery and financing of “non-lethal aid” to non-state, armed groups, abroad”. With regard to “dual use goods” the Advisory Committee explains that it is essential that providing support to armed groups that participate in an armed conflict goes hand in hand with a thorough analysis of the nature and the behaviour of these groups (p. 11). During this assessment, it is important that one keeps in mind that, particularly in the case of aid with “dual-use” goods, it is not inconceivable that the prohibition is violated if it is generally known that the group (for who the “dual-use” goods are intended) is guilty of violations of international humanitarian law and the “dual-use” goods can be deployed in operations involving these violations (p. 11). However, the nature and complexity of some armed conflicts, and the sometimes unclear authority structures of these organisations, makes a risk assessment difficult (p. 11).
B. National Risk Assessment Money Laundering 2019 (3 July 2020)
I. The Research and Documentation Centre of the Dutch Ministry of Justice & Security – the WODC – is an international knowledge centre on security, police, criminal, civil and administrative justice and migration issues. On 3 July 2020, the WODC published the annual National Risk Assessment Money Laundering (“NRA-ML”). In 2018, the Netherlands was one of the top 5 largest exporters in the world with USD 724 billion in exports (pp. 40-41). Only China, the United States of America (“US”), Germany and Japan had higher positions than the Netherlands, according to the NRA-ML-report of the WODC (pp. 40-41). In 2018, total exports of products and services amounted to 34% of Dutch GDP. Almost 71% of exports were directed to other EU countries, mainly Germany, Belgium, the United Kingdom (“UK”) and France (pp. 40-41). The main export products of the Netherlands were:
- machinery and machine parts,
- metal and metal products,
- natural gas and
- high-quality plastics.
In addition to goods, the Netherlands also exports many services. Business services and the use of intellectual property form the largest categories (pp. 40-41). Business services include research and development, professional and management advisory services and technical business services (pp. 40-41). Although only approximately 2% of the Dutch population is employed in the agriculture and fisheries sector, the Netherlands is the world’s largest exporter of food and agricultural products, thanks to a focus on extensive innovation and mechanization (pp. 40-41). According to the NRA-ML-report, the export of products or services can be used to launder criminal proceeds, for example through the use of trade constructions with goods or services (pp. 40-41).
I. On 9 June 2020, the rejection of a request under the Dutch Public Access to Government Information Act (“Wet openbaarheid van bestuur”) (“WOB”) was published. The WOB-request concerned a request to make all documents available related to ASML in conjunction with the terms Extreme Ultraviolet, China, export license and/or export credit insurance China.
II. On 15 June 2020, the Dutch Minister for Foreign Trade & Development Cooperation – Sigrid Kaag – answered parliamentary questions regarding the annual budget of the year 2020 for foreign trade and development cooperation. One of the questions Dutch parliamentarians asked to the minister was related to a budget-reduction in expenditure of EUR 4,400,000. Minister Kaag explained that the reduced expenditure of EUR 4.4 million concerned the contribution of the ministry to the Dutch Customs for controls on international sanctions policy.
III. On 10 July 2020, the Dutch Minister for Foreign Affairs and the Minister for Foreign Trade & Development Cooperation – Sigrid Kaag – sent a letter to the Speaker of the Dutch House of Representatives regarding the issue of a license for the export of military equipment to Egypt.
IV. On 13 July 2020, the Dutch government published several documents regarding the Dutch “Gas Roundabout“ (“Gasrotonde”). The request to publish these documents was based on the Dutch Public Access to Government Information Act. Even though the main published document is almost 15 years old (dated: 22 November 2005), it gives a look inside the (business) operations of N.V. Nederlandse Gasunie (“Gasunie”), a Dutch natural gas infrastructure and transportation company operating in the Netherlands and Germany. According to the website of Gasunie, “The Netherlands is ambitious to become Europe’s ‘gas roundabout’. The ‘gas roundabout’ consists of a connected junction of gas infrastructure elements for production, transport, storage, transit, trade and knowledge development. All of these elements create a flexible gas trade. This stimulates the availability of gas for its users and has a cushioning effect on the prices”. The published “Gas roundabout”-related documents were classified as “Strictly confidential”.
V. On 16 July 2020, the Minister for Foreign Trade & Development Cooperation – Sigrid Kaag – provided an answer to questions about cyber surveillance technology and export control. Kaag stated that the cabinet wants to prevent involvement of (Dutch) companies in cybersurveillance items and -technology breaching of human rights. The cabinet makes effort to classify these types of goods under export control, if not already done. In 2019, it was decided, under the Wassenaar Arrangement, that also the technology for cyber surveillance needs to be brought under export control. This will be incorporated in the EU-dual use regulation later this year. In this letter, Kaag makes note on which technologies will be subject to export controls under the (new) Dual-use regulation and which not. Regarding such controlled items, the cabinet explicitly reviews the risk of human rights breaches.
2. European Union & United Kingdom
A. European Union
I. On 8 July 2020, the General Court of the EU rejected the appeal in the Khaled Zubedi v Council of the EU-case, concerning Common foreign and security policy, Restrictive measures adopted against Syria, Freezing of funds and Error of assessment (Case T-186/19).
II. On 9 July 2020, the Court of Justice of the EU rejected the appeal in the George Haswani v Council of the EU-case, concerning Common foreign and security policy, Restrictive measures adopted against Syria, Freezing of funds, Obligation to state reasons, Proportionality and Error of assessment (Case T-477/17).
III. On 13 July 2020, the EU High Representative for Foreign Affairs Josep Borrell has said at a press conference that the EU is preparing “additional listings” on Turkey within the EU’s existing sanctions framework in response to their drilling activities in the Eastern Mediterranean sea.
IV. On 17 July 2020, Josep Borrell made a statement on the growing use of sanctions, or the threat of sanctions, by the US against European companies and interests. Borrell said to be “deeply concerned” with this developing trend, most recently witnessed in the Nord Stream 2 and Turkstream Projects. Borrell underlines that the EU opposes the use of sanctions by third countries on European companies carrying out legitimate business. Moreover, the EU considers the extraterritorial application of the sanctions to be contrary to international law.
B. United Kingdom
I. On 7 July 2020, the UK published the Iraq (Sanctions) (EU Exit) Regulations 2020.
II. On 7 July 2020, the Secretary of State for International Trade of the UK – Elizabeth Truss – updated British parliamentarians on the steps that have been taken to comply with a judgment of the Court of Appeal regarding licences for military exports to Saudi Arabia for possible use in the conflict in Yemen.
III. According to an article in the New York Times (“NYT”) (d.d. 8 July 2020), the UK said it will resume arms sales to Saudi Arabia. “Military sales were suspended over concerns about Saudi human rights violations in Yemen. Now, Britain argues that Saudi violations there are “isolated incidents””, the NYT says.
IV. According to an article on WorldECR (d.d. 9 July 2020), the “UK Foreign and Commonwealth Office has announced its own ‘Magnitsky’ style sanctions – a ‘powerful new regime’ which means that the UK has ‘new powers to stop those involved in serious human rights abuses and violations from entering the country, channelling money through UK banks, or profiting from our economy’”.
V. On 9 July 2020, WorldECR wrote that the “UK’s Office of Financial Sanctions Implementation has said that sanctioned individuals and organisations who believe they have been wrongly designated, or that information about them is wrongly listed, can apply for a change or revocation”.
VI. On 10 July 2020, the UK published Guidance regarding export licences and certificates from 1 January 2021.
VII. On 14 July 2020, the Wall Street Journal published an article stating that the British government said it would bar telecom companies from purchasing new equipment made by China’s Huawei Technologies Co. and gave them until 2027 to remove its technology from the British 5G networks.
3. United States of America
A. US – China Relations
I. On 9 July 2020, the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) sanctioned one Chinese government entity and four current or former government officials in connection with human rights abuses against ethnic minorities in the Xinjiang Uyghur Autonomous Region.
II. On 13 July 2020, a spokesperson of the Ministry of Foreign Affairs of the People’s Republic of China announced the following: “In response to the US wrong moves, the Chinese government has decided to impose corresponding sanctions on the US Congressional-Executive Commission on China, US Ambassador-at-Large for International Religious Freedom Sam Brownback, US Senators Marco Rubio and Ted Cruz and Representative Chris Smith, effective today”.
B. US – Russia Relations
I. On 15 July 2020, the US imposed sanctions on a Russian financier’s global sanctions evasion network. In a news release, the US Secretary of State – Michael Pompeo – explains that the US took action to “further limit Yevgeniy Prigozhin’s destabilizing global activity by designating entities that have enabled his ability to evade sanctions – this time, in Sudan”. That same day – on 15 July 2020 – Pompeo warned investors in two Russian natural gas pipeline projects “that they could face sanctions as the Trump administration seeks to curb the Kremlin’s economic leverage over Europe and Turkey”, according to news agency Reuters.
II. On 15 July 2020, a Media Note was published on the website of the US Department of State. According to the Media Note, the US Department of State updated the public guidance for Section 232 of the Countering America’s Adversaries Through Sanctions Act (“CAATSA”), which allows for the imposition of sanctions on persons making certain investments or engaging in certain other activities with respect to Russian energy export pipelines. “By updating the public guidance, the Department of State intends to clarify that our implementation of Section 232 will now include investments or other activities related to a broader scope of Russian energy export pipelines, including Nord Stream 2 and the second line of TurkStream. Persons making such investments or engaging in such activities, including but not limited to:
• financing partners, as well as;
• pipe-laying vessels; and
• related engineering service providers engaging in the deployment of the pipelines;
may be subject to sanctions […]”.
The updated version of the public guidance can be found [HERE].
I. On 16 July 2020, the OFAC announced a USD 665,112 settlement with Essentra FZE Company Limited (“Essentra FZE”). According to a press release of the US Department of the Treasury, “Essentra FZE, a cigarette filter and tear tape manufacturer located in the United Arab Emirates, has agreed to settle its potential civil liability for three apparent violations of […] North Korea Sanctions Regulations”. According to a 16 July 2020 news release on the website of the US Department of Justice, the public filing against Essentra FZE is the first ever US Department of Justice corporate enforcement action for violations of the International Emergency Economic Powers Act (“IEEPA”) and defrauding the US in connection with evading sanctions on North Korea.
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