Welcome to Baker McKenzie Stockholm Fifth Annual Trade Day. 7 November 2017

Transcription

1 Welcome to Baker McKenzie Stockholm Fifth Annual Trade Day 7 November 2017

2

3 Sanctions Update Alison Stafford Powell and Olof Johannesson

4 4 Alison J. Stafford Powell Partner Baker McKenzie Palo Alto CA Olof Johannesson Associate Baker McKenzie Stockholm +46 (0) olof.johannesson@bakermckenzie.com

5 Current EU and US Sanctions Targets Cyprus* Balkans Lebanon Belarus Ukraine Crimea & Sevastopol Syria Armenia and Azerbaijan Iraq Kuwait Egypt Russia Tunisia Iran Libya Afghanistan Saudi Arabia China Cuba Haiti* Venezuela North Korea UAE Burma Guinea and Guinea-Bissau EU and US EU only US only (*arms embargo only) US Anti-Boycott only Yemen Eritrea Central African Republic Burundi DR Congo Zimbabwe Somalia Sudan and South Sudan 5

6 UN, EU and US Designated Persons Programs and TI Rankings 6

7 Country Updates

8 IRAN EU Sanctions Developments Delistings Withdrawal of UK ECO Iran List Ongoing challenges for banks in processing payments Differing approaches across Member States 8

9 North Korea EU Sanctions Developments New product controls Controls on making property Strengthened funds transfer Controls on vessel and aircraft crew services Controls on chemical, mining, refining and IT services Expansion of DP list More restrictions likely to follow Supplements to existing controls 9

10 OTHER DEVELOPMENTS EU Sanctions Developments Libya Zimbabwe Russia Various amendments to DP lists 10

11 EU Country-by-Country Wrap-Up 11

12 US Sanctions Update

13 US Russia Sanctions

14 US Russia Sanctions Picture Restricted party controls ( SDNs ) Sectoral Sanctions ( SSILs ) Export/product controls Crimea US Specially Designated Nationals (SDNs): blocked and prohibited as to US Persons On OFAC List or 50% or more owned by one or more SDNs in aggregate (ownership test) Not blocked; more targeted restrictions on US Persons under four OFAC Directives Finance: new debt/new equity eg. VEB, Gazprombank, VTB,Sberbank Energy: new debt or Russian Oil Industry End-Uses eg. Rosneft, Lukoil, Gazprom Neft, Gazprom Defense: new debt eg. Rostec Russian Entity List parties (inc. Yuzhno-Kirinskoye Field, GGE, FSB) Russian Oil Industry End-uses any items Military end-user/end-use controls specific items (eg. telecoms) Denial policy; high technology items Virtually complete embargo Applies to US Person dealings Export ban (minor exceptions) for exports/reexports by anyone of US origin/content items 14

15 Russia Sanctioning Entities with Routine Regulatory Functions FAU Glavgosekspertiza Rossi ("GGE"); mandatory role in reviewing/approving construction project designs, issuing permits (inc. Kerch Bridge project) Added to OFAC SDN List (Sep 2016) and BIS Entity List (Sep. 2016) OFAC General License 11 (Dec 2016): for projects "wholly located within Russian Federation" BIS Entity List (10 Jan 2017): amended to exclude items related to transactions under GL 11 FSB (Federal Security Service), GRU (Main Intelligence Dir.) FSB - key role in encryption notifications, import permits, anti-bribery enforcement, immigration, immigration Added to OFAC SDN List (29 Dec 2016) and BIS Entity List (4 Jan 2017) OFAC General License 1 (2 Feb 2017): administrative and law enforcement functions (goods/technology must be licensed by BIS; US$5000 fee limitation) BIS Entity List entry revised (18 Apr 2017) to align with OFAC GL 1 Just also added to CAATSA s231 List

16 Russia Cybersecurity Focus Increased focus on cybersecurity/hacking EO Dec 2016 FSB, GRU targeted under cybersecurity sanctions Sec. 224 of CAATSA : Requirement to impose sanctions on those knowingly engaging in significant activities undermining cybersecurity on behalf of Russian government. 16

17 Russia Countering America's Adversaries Through Sanctions Act ("CAATSA") Signed into law 2 August 2017 by President Trump Tightened US sectoral sanctions restrictions on transactions by US Persons (Sec. 223(b)-(d) of CAATSA) Directive 1 New debt with a maturity of greater than 14 days, down from 30 days for new debt on or after 28 Nov 2017 (revised Directive 1 pub. 29 Sep 2017) Directive 2 New debt with maturity of greater than 60 days, down from 90 days for new debt on or after 28 Nov 2017 (revised Directive 2 pub. 29 Sep 2017) Directive 4 Providing goods, non-financial services, or technology in support of exploration or production for deepwater Arctic offshore, or shale projects With potential to produce oil in the Russian Federation, or, if initiated after 29 January 2018, that have the potential to produce oil in any location, and In which any person subject to Directive 4 has (a) a 33% or greater ownership interest, or (b) ownership of a majority of the voting interests (revised Directive 4 pub. 31 Oct 2017) 17

18 Russia Key Developments Countering America's Adversaries Through Sanctions Act ("CAATSA") New secondary sanctions authorities for non-us persons include: Knowingly making significant investments in "special Russian crude oil projects" and (ii) foreign financial institutions that facilitate payments by Russian SDNs (Secs. 225 and 226) Facilitating "significant transactions" with persons "subject to sanctions imposed by the United State" with respect to Russia (Sec. 228) Engaging in "significant transactions" with Russian intelligence and defense sectors (Sec. 231) 27 Oct List Issued. Will be imposed starting 29 January 2017 Making certain investments or provide goods/services that contribute to Russia's ability to construct energy export pipelines (Sec. 232) 18

19 US Iran Sanctions

20 Iran US Iran Sanctions Picture Restricted party controls ( SDNs, etc.) US Specially Designated Nationals (SDNs): blocked and prohibited for US Persons eg. IRGC On OFAC List or 50% or more owned by one or more SDNs in aggregate (ownership test) Executive Order Entities Comprehensive sanctions Export/product controls US Persons: virtually complete embargo US owned/controlled subsidiaries still subject to embargo, but General License H authorizes some transactions Export ban With minor exceptions, all exports/reexports to Iran require license EAR99 items not controlled for exports/reexports for Iran and general inventory rule applies to EAR99 items held outside the United States 20

21 Iran Key Developments CAATSA Continuing SDN designations for non-nuclear reasons outside scope of JCPOA Under ballistic missile program Focus on IRGC-related entities Persons responsible for human rights violations in Iran Broadened general license available for exports/re-exports of medical devices to Iran by restructuring list of eligible products 21

22 Iran 13 October 2017 "Decertification" 13 October 2017: President Trump announced that he is "decertifying" the Joint Comprehensive Plan of Action ("JCPOA"), effectively handing issue over to Congress for 60-day review period. Does not mean that the US has withdrawn from the JCPOA Does not reinstate sanctions yet Iran and US allies have reconfirmed commitment to JCPOA 22

23 Other US Sanctions Developments

24 North Korea New Developments June 2017: FinCEN issued a proposed rule that would identify Bank of Dandong, a Chinese bank, as an institution of primary money laundering concern Ongoing designations of North Korean, Chinese, and others as SDNs 21 Sep 2017: New Executive Order New blocking in sectors of construction, energy, financial services, fishing, information technology, manufacturing, medical, mining, textiles, or transportation or for "at least one significant" import/export Banking restrictions Aircraft/vessel restrictions on entry into US ports/airports, including vessel that have engaged in ship-to-ship transfers New CAATSA secondary sanctions authorities, import ban on items made with NK labor 24

25 Venezuela Key Developments SDN blockings 26 July: Designation of PdVSA President of Finance Simon Alejandro Zerpa Delgado 31 July: Designation of President Maduro and various government officials August 2017: Executive Order Sectoral Sanctions Prohibits US persons from engaging in transactions related to, providing financing for, or otherwise dealing in: New debt with maturity of greater than 90 days of PdVSA New debt with maturity of greater than 30 days (other than the debt of PdVSA) or new equity of the government of Venezuela Bonds issued by government of Venezuela prior to the order (but see General License) Dividend payments/distributions of profits to the government of Venezuela from any entity owned or controlled by government of Venezuela Prohibitions on US persons from purchasing securities from the government of Venezuela General Licenses eg, for CITCO Military end-use/end-user controls Arms embargo 25

26 Cuba US Cuba Sanctions Update Changes proposed by the Trump Administration in June 2017 (yet to be implemented) Limit self-directed individual travel to Cuba by persons for purposes of people-topeople educational activities Prohibit transactions with Cuban military, intelligence, or security services or personnel (such as Grupo de Administracion Empresarial S.A. (GAESA), its affiliates, subsidiaries, and successors) that operate large portions of the Cuban tourist economy Require that OFAC regularly audit documents maintained by US travelers to Cuba 26

27 Sudan US Sudan Sanctions Update Comprehensive sanctions were eliminated on 12 October However, US export controls remain in place and Sudan remains a State Sponsor of Terror.

28 US SDN Programs - Key Developments Increased designations under the following programs. Transnational Criminal Organizations Sanctions Regulations [TCO] Entities that enable money laundering such as those associated with Pacnet Group designated in However, Pacnet and affiliated individuals and entities were removed from SDN List in October Weapons of Mass Destruction Proliferators Sanctions Regulations [NPWMD] In August 2017, OFAC sanctioned 10 Chinese and Russian entities and six individuals that advanced North Korea's programs to develop nuclear weapons. US government continues to attempt to isolate North Korea through sanctions. Foreign Narcotics Kingpin Sanctions Regulations [SDNTK] Waked Group and Grupo Wisa designated 5 May 2016 Entities enabling money-laundering associated with drug trafficking continued to be designated in

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