Sanctions & Export Controls: Sanctions in relation to the financial sector of Iran, the Kerch bridge, and more.

In October 2020, Sjoerd Sjoerdsma (member of the Dutch parliament), together with a member of the German parliament and other signatories, send an open letter to Mr. Heiko Maas in relation to the new (forthcoming) European Union (“EU”) Magnitsky Act. In the letter, the members of parliament call for qualified majority voting and the inclusion in the act of sanctions for corruption. Other news: in the EU, sanctions were imposed against people and entities involved in the construction of the Kerch Bridge and against 40 Belarus officials. In the United States of America (“US”), the Trump administration imposed sanctions on 18 Iranian banks, expanding its economic pressure campaign against Iran. Moreover, the US Commerce Department’s Bureau of Industry and Security (“BIS”) made amendments to the US Export Administration Regulations (“EAR”) by broadening its authority to review licenses for human rights concerns. This, and more, in this newsletter.

1. The Netherlands

  • On 28 September 2020, the Federal Government of the Netherlands published a document with answers on frequently asked questions concerning the legislative proposal which focusses on ways to tackle money laundering. The government answers questions like: why professional or business related cash payments of EUR 3000 or more will be prohibited.   

  • Netherlands, Germany / EU – On 5 October 2020, Sjoerd Wiemer Sjoerdsma (member of the Dutch parliament), Gyde Jensen (member of the German parliament) and other signatories from the European Parliament, the House of representatives of the Netherlands and the German Bundestag send an open letter to the Minister of Foreign Affairs of Germany, Mr. Heiko Maas (as the German government currently holds the Presidency of the Council of the EU). The letter calls for a qualified majority voting system in order for the EU Magnitsky Act to become an effective tool. Furthermore, the letter notes that it is crucial “that the new sanctions regime does not only list human right violators, but also individuals responsible for corruption”. Moreover, the letter stresses the urgency of the creation of the EU Magnitsky sanctions regime and asks for the establishment of the mechanism by the end of 2020.

  • On 6 October 2020, the Dutch parliament published a document with written consultations (questions and answers) on the report ‘The Dutch Arms Export Policy in 2019’. Questions were asked like: whether the ministers can explain the extend in which the Dutch assessment of applications for the export of military items imposes additional requirements in addition to the principles set out in the EU’s Common Position; to what extent other EU countries are following the Common Position; to what extent further harmonisation is being sought in regard to this; whether the United Kingdom (“UK”) will be a member to the EU Common Position on arms exports in case of a no deal Brexit, and more. The document with the questions and answers can be found under the link provided.

2. European Union & United Kingdom

A. European Union

  • A useful website for EU businesses wanting to engage with Iran: This Due Diligence helpdesk on EU sanctions is an initiative funded by the EU and aims to support EU businesses, in particular small and medium-sized enterprises, that are willing to conduct business with Iran, to do so legitimately in compliance with EU law. The support is free-of-charge and shows how to complete due diligence checks on EU sanctions compliance for specific business projects in Iran.
  • Germany / Russia – On 31 August 2020, Germany’s criminal supreme court (Bundesgerichtshof) authorized the extension of the a-trial detention in a dual-use exports case related to Russia. The case revolves around a businessmen suspected of operating a network in Germany which exported, with the use of fraudulent export licenses, dual-use goods to a Russian military end-user, in breach of the EU dual-use regulation.                

  • EU / Russia – On 1 October 2020, the Council of the EU added two individuals and four entities to the list of individuals and entities subject to restrictive measures in respect of “actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine”. The measures were adopted in the light of the role played by these people and entities in the construction of the Kerch bridge and railway tracks, linking Russia to (the illegally annexed) Crimea via the Kerch Strait. According to the press release of the Council, the sanctions apply now to a total of 177 individuals and 48 entities and include a travel ban and an asset freeze.           

  • EU / Belarus – On 2 October 2020, the Council of the EU officially imposed sanctions (travel ban and asset freeze) on 40 Belarus officials for repression and election falsification. According to the press release, these individuals were “identified as responsible for repression and intimidation against peaceful demonstrators, opposition members and journalists in the wake of the 2020 presidential election in Belarus, as well as for misconduct of the electoral process”. The sanctions list does not include President Lukashenko, or persons related to him.                

  • EU / Iran – On 6 October 2020, the Court of Justice of the EU gave judgement in case Bank Refah Kargaran v Council, in which the Court upholds the judgement of the General Court dismissing Iranian Bank Refah Kargaran’s action for damages for the harm suffered as a result of the restrictive measures adopted concerning it. The restrictive measures consisted of its 2010 and 2011 listings, which were held to be unlawful. While the Court dismissed the appeal, the Court found that the General Court had erred in law by declaring that it lacked jurisdiction to hear and determine the action for damages for the harm allegedly suffered by the appellant. The Court held that the Courts of the EU do have jurisdiction for such matters as the harm arose out of a Common Foreign & Security Policy decision adopted under article 29 TEU, which were subsequently implemented by various regulations adopted by the Council on the basis of article 215 TFEU. The Court found that such decisions come within the scope of judicial review for non-contractual liability and action for damages in EU courts, in order to ensure the effectiveness of the system of judicial protection and preventing any lacuna in judicial protection.                

B. United Kingdom

  • On 28 September 2020, HM Treasury published its quarterly report on its operation of the UK’s asset-freezing regime from 1 January 2020 to 31 March 2020. Under the Terrorist Asset-Freezing Act of 2010 (“FAFA”), the Treasury is required to report to Parliament, quarterly, on its operation of the UK’s asset freezing regime mandated by UN Security Council Resolution 1373. The report shows that as of 31 March 2020, 9.000 British Pounds continued to be frozen under TAFA powers and 18.000 under EU the counter-terrorism sanctions regime.

3. United States of America

  • On 30 September 2020, the US Department of State published guidance “on implementing the UN Guiding Principles for transactions linked to foreign government end-users for products or services with surveillance capabilities”. The guidance is intended to provide practical human rights guidance to US businesses seeking to prevent their products or services with surveillance capabilities from being misused by government end-users.   

  • On 1 October 2020, the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) issued an advisory on the sanctions risks associated with ransomware payments due to an increase in demand for ransomware payments during the COVID-19 pandemic. The advisory states that “Companies that facilitate ransomware payments to cyber actors on behalf of victims, including financial institutions, cyber insurance firms, and companies involved in digital forensics and incident response, not only encourage future ransomware payment demands but also may risk violating OFAC regulations”. With regards to possible sanctions violations, OFAC states that it will “consider a company’s full and timely cooperation with law enforcement both during and after a ransomware attack to be a significant mitigating factor when evaluating a possible enforcement outcome”.  

  • US / ICC – On 1 October 2020, OFAC issues the International Criminal Court-Related Sanctions Regulations to implement Executive Order 13928 (“Blocking Property of Certain Persons Associated With the International Criminal Court”). According to background information to this Final Rule in the Federal Register (under the link provided), The President found in Executive Order 13928 that “the situation with respect to the International Criminal Court (“ICC”) and its illegitimate assertations of jurisdiction over personnel of the United State and certain of its allies […] threatens to subject current and former United States Government and allied officials to harassment, abuse, and possible arrest. The President therefore determined that any attempt by the ICC to investigate, arrest, detain, or prosecute any United States personnel without the consent of the United States […] constitutes an unusual and extraordinary threat to the national security […] of the United States”. The US maintains that such investigates are illegitimate as it is not a party to the Rome Statute and has not otherwise consented to ICC jurisdiction.  

  • On 1 October 2020, the Open Society Justice Initiative, a New York based team of human right s lawyers and staff who pursue strategic litigation, and four law professors filed a complaint against the Trump Administration over International Criminal Court Executive Order (see previous news item). The Executive Order authorizes strict economic sanctions and severe civil and criminal penalties for those who support the ICC.  Prior to the issuance of the executive order, the plaintiffs provided training and advice to the ICC. The lawsuit argues that “the executive order violates constitutional rights, including the plaintiff’s freedom of speech, and prevents them from carrying out work in support of international justice”.           

  • On 6 October 2020, the US Commerce Department’s BIS made amendments to the US EAR by broadening its authority to review licenses for human rights concerns.  The new rules “are designed to promote respect for human rights throughout the world and further the foreign policy interests of the United States pertaining to the prevention of human rights violations”.

  • On 8 October 2020, the US Secretary of the Treasury, in consultation with the US Secretary of State, identified the financial sector of the Iranian economy pursuant to Executive Order 13902, which authorizes the US Secretary of the Treasury to sanction any Iranian financial institution. Subsequently, the OFAC sanctioned 18 major Iranian banks. As part of this action, OFAC sanctioned 16 Iranian banks for operating in the financial sector of Iran and one bank for being owned or controlled by a sanctioned Iranian bank. Additionally, the action included the designation of an Iranian military-affiliated bank under the US Secretary of the Treasury’s counter-proliferation authority. “Today’s action to identify the financial sector and sanction 18 major Iranian banks reflects our commitment to stop illicit access to US dollars,” said the US Secretary of the Treasury Steven Mnuchin. “Our sanctions programs will continue until Iran stops its support of terrorist activities and ends its nuclear programs. Today’s actions will continue to allow for humanitarian transactions to support the Iranian people”.

4. Around the Globe

  • In September 2020, the Financial Action Task Force published a report on red flag indicators of virtual assets being used for money laundering and terrorist financing. Amongst other findings, the report found that virtual assets are often being used to evade sanctions and as a means to raise funds to support terrorism.


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