In this newsletter, we will take a look at some of the most significant and interesting news items of November and December 2020, in the area of sanctions and export controls (and, to a lesser extent, anti-money laundering, anti-bribery and anti-corruption).
In November and December 2020, in the Netherlands, the crypto sector accused the Dutch Central Bank (“DNB”) of foul play. Moreover, Minister Hoekstra and Minister Grapperhaus sent a letter to parliament on the results of the 3rd progress report on the plan of action against money laundering. In the European Union (“EU”), the Council of the EU imposed a third round of sanctions in response to the ongoing repression in Belarus. Furthermore, Alexei Navalny called on the EU to impose sanctions on Russian oligarchs linked to the Kremlin. In the United States of America (“US”) the US Congress approved the National Defence Authorisation Act for Fiscal Year 2021, which contains provisions on restrictive measures relating to Turkey, Nord Stream 2 and China. Moreover, the US Department of Commerce published a Military End User List and added more than 100 Chinese and Russian companies. This, and more, in this newsletter.
- The Netherlands
- On 2 November 2020, Minister Grapperhaus, minister of justice and security, provided answers to questions regarding the written consultation on terrorism on 1 October 2020. The questions related to (i) the influence of COVID-19 on society, (ii) developments in Syria and Iraq, (iii) travellers, (iv) asylum policy, (v) tackling the threat of extremism and terrorism, (vi) the Long-term Supervision Act and (vii) the Temporary Administrative Measures Counterterrorism Act.
- On 4 November 2020, the Dutch Financial Times (“fd”) published an article written by Rutger Betlem about the crypto sector accusing DNB of foul play. The crypto sector alleges that the supervisory authority sets stricter rules for crypto companies than it does for other financial service providers. Because of this, crypto entrepreneurs fear that work is made impossible for them.
- On 6 November 2020, Minister Kaag presented answers to parliamentary questions about aid, trade and investment. In this document, the minister answers questions about, amongst other topics, (i) the current situation of EU trade policy review and the future of the World Trade Organisation; (ii) trade relations with China and (iii) the US and progress reports on trade agreements.
- On 09 November 2020, Minister Grapperhaus and Minister Kaag sent a letter to Parliament with the evaluation report of the OECD Working Group on Bribery. The report evaluates the implementation and enforcement of the OECD Convention against Bribery of Foreign Public Officials in International Business Transactions in the Netherlands. The focus of this evaluation is detection, enforcement, liability of legal persons and international cooperation, as well as outstanding topics from previous evaluations. The Working Group is positive about the steps the Netherlands has taken since the previous review in 2012, like the establishment of the team on corruption at the Public Prosecutor’s Office (“OM”) and the establishment of the Anti-Corruption Centre at the FIOD. This has led to a strong increase in the number of criminal investigations on foreign corruption. Nevertheless, there are also areas of concern and related recommendations for the Netherlands. The number of (criminal) convictions on foreign corruption remains low, according to the Working Group. Besides that, amongst other things, the Netherlands is encouraged to address delays in assessing (potential) privilege information in investigations and has received the recommendation to amend the House for Whistle-blowers Act. The Dutch approach to corruption is also currently being evaluated by the United Nations (“UN”). Upon completion of this evaluation, the government aims to publish a response on the Dutch policy to prevent and combat corruption. This report can be expected in the spring of 2021.
- On 3 December 2020, the Dutch central government published a video on the Anti-Money Laundering Centre (“AMLC”). It is estimated that approximately 16 billion euros is laundered annually in the Netherlands. At the AMLC, public and private institutions join forces to combat this. The FIOD, the police, the public prosecution service, banks and accountants, amongst others, collect and analyse data in order to recognize money laundering connections and routes of criminals and to improve the investigation and prosecution thereof. The video can be accessed under the link provided.
- On 2 December 2020, Minister Hoekstra and Minister Grapperhaus sent a letter to Parliament on the 3rd progress report on the plan of action against money laundering of 30 June 2019. In this letter, the ministers consider the results of the action plan against money laundering and consider future steps to be taken towards a more effective prevention of money laundering.
- On 11 December 2020, the Dutch central government published a plan of action for the digitalization of customs services. In the document, it is shown which changes as regards to digitalization will take place and when they will be implemented.
- On 27 December 2020, Minister Blok sent a letter to parliament on the evaluation of the EU-UK Trade and Cooperation Agreement, assessing the agreement on the future relationship between the EU and the UK achieved by the negotiators of the EU and the UK.
2. European Union
- EU / Belarus – On 6 November 2020, the EU adopted Council Implementing Regulation (EU) 2020/1648, which adds 15 officials to its Belarus sanctions list. The designations include the current President of Belarus, Alexandr Lukashenko, for “being responsible for the violent repression by the State apparatus carried out before and after the 2020 presidential election”.
- EU – On 9 November 2020, the EU Council and EU Parliament representatives reached an agreement on an updated version of the EU dual-use Regulation. Peter Altmaier, President of the Council, described the agreement as an important contribution in making the EU fit for modern trade challenges. The new rules will put an emphasis son control of certain technologies, especially cyber-surveillance items, which can be misused in connection with human rights violations. You can read more about the new rules of the EU dual-use Regulation in our recently published alert on our website.
- EU – On 20 November 2020, the EU Directorate General for External Policies of the EU published a study on extraterritorial sanctions on trade and investments and European responses. The study notes that recent US sanctions on Iran, Cuba and Russia (in respect of Nord Stream 2) have become ‘a critical challenge for the EU. As they purport to deter economic actors under EU jurisdiction from engaging with target countries, they have an important extraterritorial dimension, which affects EU business and individuals and ultimately the sovereignty of the EU and its Member States.’
- EU / Turkey – On 24 November 2020, an EU spokesperson published a statement on the recent inspection of a Turkish vessel in the Mediterranean by the Operation IRINI. Given the pattern of navigation of this vessel, Operation IRINI had reasonable grounds to suspect that it could be acting in violation of the UN arms embargo. The inspection had found no evidence of illicit material on board and the vessel was cleared to pursue its route. Operation IRINI contributes to the implementation of the UN arms embargo on Libya and is mandated by the EU to perform its work. According to the EU spokesperson, ‘we are currently at a crucial juncture for Libya’s future […] Operation IRINI’s mandate is more important today than ever to ensure the viability of the 23 October ceasefire agreement and the return to peace and stability in Libya.’
- EU / Russia – On 27 November 2020, Alexei Navalny called on the EU at a hearing of the European Parliament’s foreign affairs committee, to impose sanctions on Russian oligarchs linked to the Kremlin. This includes for example the Chelsea football club owner Roman Abramovich. At the hearing, Navalny called Vladimir Putin and hit entourage ‘“a bunch of criminals who temporarily took over power’ in the country.
- EU – On 7 December 2020, the EU adopted Council Regulation (EU) 2020/1998 concerning restrictive measures against serious human rights violations and abuses, establishing a global human rights sanctions regime. This framework allows the EU to target individuals, entities and bodies responsible for, involved in or associated with serious human rights violations and abuses worldwide. Moreover, on 18 December 2020, the European Commission published guidance on the implementation of specific provisions of the new EU Global Human Rights Sanctions Regime. If you wish to read more about this, check out our alert on our website.
- EU / Belarus – On 17 December 2020, the Council of the EU imposed the third round of sanctions in response to the ongoing repression in Belarus. The sanctions target 36 high-level Belarusian officials, prominent businessmen and certain companies responsible for / supporting the ongoing violent repression and intimidation of, amongst other, peaceful demonstrators, opposition members and journalists. The restrictive measures include a travel ban and an asset freeze. In addition, EU citizens and companies are forbidden from making funds available to the listed individuals and entities. In total, 88 individuals and 7 entities are now designated under the sanctions regime on Belarus.
- EU / Turkey – On 11 December 2020, the Council of the EU has adopted conclusions following a European Council meeting on the 10th and 11th of December 2020. The conclusions include the agreement to adopt additional restrictive measures within its existing sanctions framework in respect of Turkey’s continued unauthorized drilling activities in the Eastern Mediterranean.
3. United States of America
- US / China, Russia – On 6 November 2020, the US Bureau of International Security and Non-proliferation imposed sanctions on 5 Russian and Chinese companies pursuant to Section 3 of the Iran, North Korea and Syria Non-proliferation Act of the US. The Act provides for penalties on foreign entities and individuals for the transfer to or acquisition from Iran, Syria or North Korea of goods, services or technology controlled under multilateral control lists or otherwise having the potential to make a material contribution to the development of weapons of mass destruction.
- US / China – On 12 November 2020, the Trump Administration issued an Executive Order on “addressing the threat from securities investments that finance communist Chinese military companies”. The purpose of the Executive Order is to prevent investors from unintentionally providing capital that goes to the development and modernization of the Chinese military and intelligence services. The Executive Order prohibits US persons from investing in any securities, including stocks or shares, in Chinese companies identified by the US as “Chinese military companies”.
- US / Cuba – On 16 November 2020, Airbnb Inc. disclosed in a Securities and Exchange Commission filing that since July 2019, it has conducted an internal review and discussed with the US Office of Foreign Assets Control (“OFAC”) about activities on its platform in territories subject to US sanctions. In relation to potential violations of US Cuba sanctions, OFAC noted that Airbnb could be subject to potentially significant monetary penalties.
- US / Iran – On 18 November 2020, OFAC designated the Islamic Revolution Mostazafan Foundation, 50 of its subsidiaries (operating in the energy, mining, logistics, information technology and financial services sectors) and 10 directors and board members affiliated with the foundation. OFAC notes that’while Bonyad Mostazafan is ostensibly a charitable organization charged with providing benefits to the poor and oppressed, its holdings are expropriated from the Iranian people and are used by the Supreme Leader Ali Khamenei to enrich his office, reward his political allies, and persecute the regime’s enemies.’
- US / North Korea – On 19 November 2020, OFAC imposed sanctions on two entities involved in the exportation of forced labour from North Kore (a Russian construction company and a North Korean company operating in Russia). As stated by US Secretary Steven Mnuchin, ‘North Korea has a long history of exploiting its citizens by sending them to distant countries to work in gruelling conditions in order to financially support Pyongyang and its weapons programs.’
- US / Libya – On 25 November 2020, OFAC designated Mohamed al-Kani and the Kaniyat militia, under the Global Magnitsky Human Rights Accountability Act, for being responsible for or complicit in serious human rights abuses in Libya. “Al-Kani is the leader of the Kniyat militia, which over several years gained control over the city of Tarhouna, Libya, while detaining, torturing and murdering civilians”.
- US / China, Russia, Turkey – On 11 December 2020, the US Congress approved the National Defence Authorisation Act for Fiscal Year 2021. This bill contains provisions on restrictive measures relating to Turkey, Nord Stream 2 and China. Section 1242 of the bill expands the scope of sanctionable activity under the Protecting Europe’s Energy Security Act (PEESA) of the US by widening the definition of “pipe-laying activities” and that non-US persons supporting these activities may also become subject to sanctions.
- US / Turkey – On 14 December 2020, the OFAC published a non-SDN menu-based sanctions list (“NS-MBS List”). This sanctions list is ‘designed as a reference tool that identifies persons subject to certain non-blocking menu-based sanctions that have been imposed under statutory or other authorities.’ OFAC will place the name of the sanctioned person on the list and will also specify the type of sanctions imposed on the listed person and the legal authority under which the person is sanctioned. The US added Turkey’s Presidency of Defence Industries to NS-MBS list for engaging in a significant transaction with Russia’s main arms export entity, by procuring the S-400 surface-to-air missile system.
- US / China – On 18 December 2020, the US Department of Commerce added Semiconductor Manufacturing International Corporation (SMIC), China’s largest chipmaker, to its Entity List, on the basis that it engaged in activities with “entities of concern in the Chinese military industrial complex”. US Commerce Secretary Wilbur Ross noted that the US “will not allow advanced US technology to help build the military of an increasingly belligerent adversary”.
- US / China, Russia – On 21 December 2020, the US Department of Commerce published a Military End User List and added more than 100 Chinese and Russian companies. ’The US Government has determined that these companies are “military end users” for the purposes of the ”military end user” control in the Export Administration Regulations that applies to specified items for exports, reexports, or transfers to the China, Russia, and Venezuela when such items are destined for a prohibited ‘military end user.’ The Military End User list allows to designated military end users and therefore assists exporters in screening their customers for military end users.
- US / Syria – On 22 December 2020, OFAC designated Syrian regime officials (a high-ranking official in the Syrian government, her husband, a member of the Syrian People’s Assembly and their business entities). Furthermore, OFAC added the Central Bank of Syria to its SDN List. . My means of this action, the US aims to discourage future investments in government controlled areas of Syria and compel its commitment to the United Nations-facilitated process.
- US / China – On 28 December 2020, OFAC published guidance on the sanctions under Executive Order 13959, which addresses the threat from securities investments that finance communist Chinese military companies. Besides this, OFAC published a list with the names of entities identified in this Executive Order as Communist Chinese military companies.
- US – On 30 December 2020, OFAC announced a settlement with BitGo Inc., (“BitGo”) a technology company based in California that implements security and scalability platforms for digital assets and offers non-custodial secure digital wallet management services. BitGo agreed to a settlement of 98.830 US Dollars for its potential civil liability for 183 violations of multiple sanctions programs. This was OFAC’s first cryptocurrency fine.
4. Around the world
- Russia / Germany & France – On 12 November 2020, Russia’s foreign minister, Sergey Lavrov announced that retaliatory sanctions will be imposed on certain senior officials of the executive offices of Germany and France in response to the EU sanctions designating 6 senior members of the Russian government over he poisoning of Alexey Navalny. Lavrov noted that “Germany was behind the EU sanctions in connection with the Navalny case. Since they directly affect senior officials from the Russian President’s Executive Office, our response will mirror those sanctions”.
- The Netherlands / Turkey, Azerbaijan – On 17 November 2020, the Dutch Parliament adopted 3 motions concerning the on-going Nagorno-Karabagh conflict, calling the Dutch Government to encourage the EU to impose sanctions on people in Azerbaijan and Turkey who are responsible for the violence in the conflict.
- Russia / UK – On 21 November 2020, Russia’s Ministry of Foreign Affairs announced retaliatory sanctions, in the form of a travel ban, against 25 British officials in response to the British imposition of sanctions against a 25 Russian officials in the framework of their Global Human Rights sanctions regime (Magnitsky Act). According to the UK, these officials have contributed to the death of whistle-blower Sergei Magnitsky.
- UNSC / Iraq – On 16 December 2020, the UN Security Council removed Rafidain Bank from the Iraq sanctions list. Due to this, the bank will no longer be subject to asset freezing measures.
- China / US – On 10 December 2020, the spokesperson of China’s Foreign Ministry, Hua Chunying, announced at a press conference that China vows to take countermeasures in response to the imposition of US sanctions of 8 December 2020 against 14 vice-chairpersons of China’s National People’s Congress for their role in adopting the Hong Kong National Security law. At the press conference, Hua Chunying noted that “As the U.S. side exploits issues relating to Hong Kong to gravely interfere in China’s internal affairs and harm China’s core interests, the Chinese side decides to impose reciprocal sanctions on U.S. officials of executive branch, people of Congress and NGOs who act egregiously and bear major responsibilities on Hong Kong-related issues and their immediate family members. China also decides to revoke visa exemption treatment for U.S. diplomatic passport holders paying temporary visits to Hong Kong and Macao”.
- China, France, Germany, UK, Russia / Iran – On 21 December 2020, the ministers of China, France, the UK, Germany, Russia, the EU High Representative for Foreign Affairs, and Iran (the participants of the Joint Comprehensive Plan of Action (“JCPOA”)) held a meeting in which the participants re-emphasised their commitment to preserve the agreement and their respective efforts in this regard. The need to address ongoing implementation challenges was discussed, including on nuclear non-proliferation and sanctions lifting commitments. Furthermore, the prospect of a return of the US to the JCPOA was acknowledged positively.
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