In September 2020, the Transaction Monitoring Netherlands (“TMNL”) was launched in the Netherlands. On 17 September 2020, the Court of Justice of the EU (“ECJ”) upheld the judgment of the General Court dismissing an action brought against the restrictive measures imposed on Russian oil companies that are members of the Rosneft group in the context of the Ukraine crisis. In light of the EU’s growing importance in arms production, Members of the European Parliament (“MEPs”) called for strengthened public oversight on exports of military equipment and technology, in a resolution adopted on 16 September 2020. That same day, the European Commission (“EC”) published a Notice to stakeholders, regarding the withdrawal of the UK and EU rules in the field of dual-use export controls. In the United States of America (“US”), the US government imposed restrictions on exports to China’s biggest chipmaker, SMIC, after concluding that there is an “unacceptable risk” that the equipment supplied to it could be used for military purposes. Allegedly, suppliers of certain equipment to SMIC will therefore now have to apply for individual export licenses. This, and more, in this newsletter.
1. The Netherlands
- Transaction Monitoring Netherlands (2020)
In September 2020, the so-called Transaction Monitoring (“TMNL”) was launched: “TMNL is a joint initiative of five Dutch banks: ABN AMRO, ING, Rabobank, Triodos Bank and de Volksbank. With TMNL, these banks will collectively monitor their payment transactions to look for signals that could indicate money laundering or the financing of terrorism. Collective transaction monitoring will improve the detection of criminal money flows and networks. In addition to this collective monitoring, the banks will continue to monitor their own transactions in accordance with their obligations under Dutch anti-money laundering legislation (the Anti-Money Laundering and Anti-Terrorist Financing Act, or ‘Wwft’)”.
- Evaluation IOB: “Closing the Gap” (2020)
In September 2020, the Policy and Operations Evaluation Department (“IOB”) published the evaluation of Dutch policies with regard to development of civil and military capabilities of the European Union. The name of the evaluation is “Closing the Gap”, and one of the things the Dutch cabinet is calling for, is the harmonisation of EU export policies (p. 49). The IOB is the independent evaluation service of the Ministry of Foreign Affairs of the Netherlands.
2. European Union & United Kingdom
A. European Union
- Recently, according to several online sources, like RiskScreen, a document was leaked containing a European Commission draft of the EU’s new human rights sanctions regulations. The targets are reported to be individuals and entities responsible for serious human rights violations including genocide, torture and crimes against humanity. The 12 criteria however do not include corruption, unlike similar legislation in the US and Canada. The EU Commission called the draft regulations “restrictive measures against serious human rights violations”.
- On 16 September 2020, the President of the EC, Ursula von der Leyen, announced that the EC will make a proposal for EU human rights sanctions and that the legal acts are being drafted.
- On 16 September 2020, the EC published a Notice to stakeholders, regarding the withdrawal of the UK and EU rules in the field of dual-use export controls.
- On 17 September 2020, the European Parliament published the press release: “EU arms exports: need for more control and transparency”. In light of the EU’s growing importance in arms production, MEPs called for strengthened public oversight on exports of military equipment and technology, in a resolution adopted on 16 September 2020.
- EU / Belarus – On 17 September 2020, the EU Parliament adopted a resolution, in which it rejects the official results of the presidential elections in Belarus on 9 August this year. Once the term of office for president Lukashenko expires on 5 November 2020, “the EU Parliament will no longer recognise him as the president of the country”. Moreover, the EU Parliament calls for “EU sanctions against the group of individuals responsible for falsifying the election results and for the violent repression in Belarus, including President Lukashenko and call on EU member states in the Council to implement these restrictive measures without delay, in close coordination with international partners”.
- EU / Russia – On 17 September 2020, the ECJ rejected an appeal brought by Rosneft against the General Court’s decision to uphold its 2014 EU listing in the list of entities to which restrictive measures apply. These measures were adopted in view of the actions of the Russian Federation destabilising the situation in Ukraine. According to the Court, the General Court was correct to hold that there was indeed a ”rational connection between the targeting of undertakings [like Rosneft] in the Russian oil sector, on the basis notably of their estimated total assets of over RUB 1 trillion, in view of the importance of that sector for the Russian economy, and the objective of the restrictive measures [restrictions on exports and access to capital markets] in the present case, which is to increase the costs of the Russian Federation’s actions to undermine Ukraine’s territorial integrity, sovereignty, independence, and to promote a peaceful settlement of the crisis” (para 93-95).
- EU / Libya – On 21 September 2020, the EU imposed sanctions on two people responsible for human rights abuses in Libya, and 3 entities involved in violating the UN arms embargo on Libya. The sanctions imposed comprise a travel ban and an asset freeze for natural persons, and an asset freeze for entities. In addition, EU persons and entities are forbidden from making funds available to those listed.
B. United Kingdom
- UK / Afghanistan – On 8 September 2020, the UK published the Afghanistan (Sanctions) (EU Exit) Regulations 2020, No. 948, under the Sanctions and Anti-Money Laundering Act of 2018.
- UK / Belarus – On 24 September 2020, the UK’s Foreign Secretary announced in the House of Commons that given President Lukashenko’s fraudulent inauguration, he has “directed the [Foreign, Commonwealth & Development Office] sanction team to prepare Magnitsky sanctions for those responsible for the serious human rights violations [in Belarus], and we are coordinating with the United States and Canada to prepare appropriate listings as a matter of urgency”.
3. United States of America
A. US – Iran Relations
- On 14, 16, 18 and 21 September 2020, the International Court of Justice heard the preliminary objections raised by the US in Iran’s claim (Iran v. US) that the US’ re-imposition of sanctions after its withdrawal from the nuclear deal violates the 1955 Treaty of Amity, economic relations and consular rights. Iran is seeking an order requiring the US to lift its sanctions, and for compensation.
- On 17 September 2020, OFAC imposed sanctions on 2 Iranian cyber groups (Advanced Persistent Threat 39 (APT39) and Rana Intelligence Computing Company (Rana)) and 45 associated individuals. “Masked behind its front company […] the Government of Iran employed a years-long malware campaign that targeted Iranian dissidents, journalists, and international companies in the travel sector”.
- On 21 September 2020, OFAC announced a new executive order and the designation of 27 individuals and entities, following the US’ recent decision to restore UN sanctions on Iran. The sanctioned individuals and entities concern key actors “directly involved in Iran’s nuclear, ballistic missile, and conventional arms programs”.
- On 15 September 2020, OFAC designated a Chinese state-owned entity, Union Development Group, for seizing and demolishing local Cambodians’ land for the construction of the Dara Sakor development project. OFAC designated this entity pursuant to the Global Magnitsky Human Rights Accountability Act. Union Development Group allegedly conducted some of the activities through Hun Kim, a senior Cambodian general previously designated by OFAC for his involvement in corruption.
B. US – China Relations
- On 18 September 2020, the US Department of Commerce, in response to President Trump’s Executive Orders signed in August 2020, announced the prohibitions on transactions relating to WeChat and TikTok to safeguard the national security of the US. According to the Department of Commerce, “the Chinese Communist Party has demonstrated the means and motives to use these apps to threaten the national security, foreign policy, and the economy of the US. Today’s announced prohibitions, when combined, protect users in the US by eliminating access to these applications and significantly reducing their functionality” (Press release US Department of Commerce, 18 September 2020).
- On 19 September 2020, a district court in the Northern District of California granted the motion of the WeChat Users Alliance, blocking WeChat restrictions, on the ground that (inter alia) the plaintiffs have shown serious questions going to the merits of the First Amendment claim. The plaintiffs contended that “effectively banning WeChat – which serves as a virtual public square for the Chinese-speaking and Chinese-American community in the United States and is (as a practical matter) their only means of communication – forecloses meaningful access to communication in their community and thereby operates as a prior restraint on their right to free speech that does not survive strict scrutiny”. The court agreed that WeChat is the only means of communication for many people in such communities, and that the “prohibited transactions burden substantially more speech than is necessary to serve the government’s significant interest in national security, especially given the lack of substitute channels for communication” (US District Court, Northern District of California, San Francisco Division, 19 September 2020).
- According to a 22 September 2020 news article from Reuters, an Intel spokesperson has confirmed that Intel has been granted licenses from US authorities to continue supplying certain products to Huawei.
- On 27 September 2020, the United States District Court of Columbia granted TikTok’s motion for a preliminary injunction, which temporarily prevents enforcement of restrictions on US app stores from providing services to TikTok, which were due to come into effect the same day.
- According to news reports of 28 September 2020, the US government has imposed restrictions on exports to China’s biggest chipmaker, SMIC, after concluding that there is an “unacceptable risk” that the equipment supplied to it could be used for military purposes. Allegedly, suppliers of certain equipment to SMIC will therefore now have to apply for individual export licenses.
C. US – Russia Relations
- On 16 September 2020, OFAC has designated 2 Russian nationals for their alleged involvement in a phishing campaign in 2017 and 2018 that targeted customers of two US-based and one foreign-based virtual asset service providers. The cyber-enabled activity resulted in combined losses of at least 16.8 million US Dollars. The designation has been made pursuant to the cyber sanctions regime of the US. According to US Secretary Steven Mnuchin, “the individuals who administered this scheme defrauded American citizens, businesses, and other by deceiving them and stealing virtual currency from their accounts”.
- On 10 September 2020, a federal court in the US dismissed FedEx’s claim challenging the US Department of Commerce and the Bureau of Industry and Security, alleging that the Department’s Export Administration Regulations (“EAR”) violate the Due Process Clause of the Fifth Amendment. Specifically, FedEx’s alleges that the EAR’s export controls place onerous restrictions on its shipping enterprise by being held to a higher standard on export regulations. FedEx claimed that it would have to deduce the origin and technological makeup of each item it handles to make sure they all comply with export rules. The case therefore raised the question of how much responsibility common carriers should take on for customers that make illegal shipments. US District judge John Bates wrote that it is reasonable that common carriers might be held to higher standards as they are “repeat players with the institutional knowledge and scale to navigate the EAR” (Press release JD Supra, 15 September 2020).
- US / Cuba – On 21 September 2020, OFAC issued a final rule, amending the Cuban Assets Control Regulations to further implement the US’ foreign policy towards Cuba to deny the Cuban regime sources of revenue. More specifically, the rule “adds a new prohibition for persons subject to US jurisdiction regarding lodging and related transactions at certain properties in Cuba identified on a new list maintained by the State department […] amends four general licenses to restrict the importation into the United States of Cuban-origin alcohol and tobacco products; amends a general license to remove the authorization for persons subject to US jurisdiction to attend or organize professional meetings or conferences in Cuba; and removes a general license that authorizes persons subject to US jurisdiction to participate in or organize certain public performances, clinics, workshops, other athletic or non-athletic competitions, and exhibitions, and replaces it with a specific licensing policy.”
- On 21 September 2020, the US Department of Commerce has added 47 people and entities to the Entity List: “The Entity List […] identifies entities reasonably believed to be involved in, or to pose a significant risk of being or becoming involved in, activities contrary to the national security or foreign policy interests of the United States”.
4. Around the Globe
- China – On 19 September 2020, the Chinese Ministry of Commerce published “Regulations on the List of Unreliable Entities”. The Regulations stipulate that foreign enterprises, other organizations or individuals may be included on the list if they cause damage to China’s national sovereignty, security and interest of development, or violate normal market business principles, discontinue normal transactions with or take discriminatory measures against Chinese companies and seriously harm the legitimate rights and interests of Chinese companies or individuals. Against an unreliable entity, the4 Chinese Ministry of Commerce may take one or more of the following restrictive measures: restrictions on importing and exporting to and from China; restrictions on investing in China; restrictions on entering into the territory of China; the imposition of a fine.
- UAE – According to news reports of 20 September 2020, leaked documents of the FinCEN Files show that the United Arab Emirates’ (“UAE”) central bank failed to act on warnings about a local firm, which was helping Iran to evade sanctions. The document indicates that Dubai-based Gunes General Trading processed 142 million US Dollars in suspicious transactions through the UAE financial system in 2011 and 2012. Apparently, the activity was flagged by a British bank, but not acted upon by the UAE. “US prosecutors alleged that Gunes General Trading was part of a network controlled by Turkish-Iranian gold trader Reza Zarrab that conducted hundreds of millions of dollars’ worth of transactions on behalf of the Iranian government and other Iranian entities that were banned under US sanctions”.
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