On March 16, 2023, HM Treasury’s Office of Financial Sanctions Implementation (“OFSI”) published an updated version of its Enforcement and Monetary Penalties for Breaches of Financial Sanctions Guidance (“OFSI Guidance”).  The OFSI Guidance outlines OFSI’s compliance and enforcement approach as well as providing an overview of the civil monetary penalty regime and how potential financial sanctions breaches are assessed.  The latest update to the OFSI Guidance sets out the framework within which OFSI will assess breaches of UK financial sanctions that flow from, or involve, an incorrect assessment of the ownership and control of an entity by a UK designated person. 

The publication of the updated OFSI Guidance follows repeated calls for clarity regarding the ownership and control test and OFSI’s enforcement stance in relation to it, particularly following the significant expansion of the Consolidated List in response to Russia’s invasion of Ukraine in February 2022 and the UK’s introduction of strict civil liability for financial sanctions breaches in June 2022.

Continue Reading OFSI Updates Enforcement and Monetary Penalty Guidance to Address the Assessment of Ownership and Control

On 8 March 2023, the General Court granted Violetta Prigozhina’s request to annul the restrictive measures imposed via Council Regulation (EU) 2022/260 implementing Regulation (EU) No 269/2014 (“the contested Regulation”).

Ms. Prigozhina was placed on the list of designated persons on 23 February 2022, along with members of the government, banks, businesspersons, and Members of the State Duma, who are deemed to have supported Russia’s aggression against Ukraine. As a result, she was made subject to a travel ban in the EU, an asset freeze, and a prohibition for EU persons to make any of her funds or economic resources available to her.

Continue Reading EU General Court annuls the listing of the mother of Wagner group chief Yevgeny Prigozhin

On March 14, 2023, the UK High Court issued a judgment in the first challenge to a UK sanctions listing under Section 38 of the Sanctions and Anti-Money Laundering Act 2018 (“SAMLA”).  The challenge was brought by LLC Synesis, a Belarusian technology company (“Synesis”) and followed an unsuccessful ministerial review of Synesis’ UK designation.  The High Court rejected the challenge on the grounds that the decision to maintain Synesis’ designation was reasonable and proportionate.  Mr. Justice Jay’s judgment addressed both the threshold for a UK listing and the standard of review the court is required to undertake when assessing a designation decision under Section 38 of SAMLA, points which will have broader relevance to future UK delisting cases.

Continue Reading UK High Court Rejects First Challenge to a UK Sanctions Listing

After weeks of going back and forth, the Council of the European Union (“Council”) was finally able to adopt the 10th package of sanctions against Russia in time to coincide with the first anniversary of Ukraine’s invasion on Friday, 24 February. Since a unanimous decision by the Member States is required in order to move forward with the sanctions, the adoption of the tenth package was delayed due to differences between certain countries over parts of the package.

The new set of measures include additional designations, trade and financial restrictions, reporting obligations, and further restrictions on Russian nationals. Most of the rules entered into force on 26 February 2023, the day following their publication in the Official Journal of the EU. The key measures described below can be found in the following documents:

Continue Reading EU adopts 10th package of sanctions

On February 24, 2023, the US government announced a range of new export controls, sanctions, and tariffs to coincide with the first anniversary of Russia’s ongoing war against Ukraine. These actions by the US Department of Commerce, Bureau of Industry and Security (BIS), the US Department of the Treasury, Office of Foreign Assets Control (OFAC), the US Department of State, and the White House reflect the continued efforts of the US – in coordination with its allies – to impose costs on Russia for the war.

Each successive round of US export controls and sanctions presents new compliance challenges, against the backdrop of heightened enforcement risk resulting from aggressive, well-coordinated US government actions. US and non-US entities and individuals who engage in transactions related to Russia or Belarus should pay close attention to this complex and evolving regulatory framework. Additionally, entities and individuals exporting to Iran should take note of the expanded scope of the US Export Administration Regulations (EAR) under a new Iran Foreign Direct Product (FDP) Rule.

Continue Reading US Imposes Additional Export Controls, Sanctions, and Tariffs targeting Russia, Belarus, and Iran On First Anniversary of Russia’s War Against Ukraine

On February 16, 2023, the Department of Justice (DOJ) and Commerce Department announced the creation of the Disruptive Technology Strike Force with a mission to prevent nation-state “adversaries” from acquiring “disruptive” technologies.  The strike force will be co-led by Assistant Attorney General Matthew Olsen of the DOJ’s National Security Division (NSD) and Assistant Secretary for Export Enforcement at the Commerce Department’s Bureau of Industry and Security (BIS) Matthew Axelrod, and will bring together the DOJ’s NSD, BIS, the Federal Bureau of Investigation, Homeland Security Investigations, and 14 US Attorneys’ Offices in 12 metropolitan regions. 

The strike force’s mandate, and remarks by Deputy Attorney General Lisa Monaco announcing the new initiative, illustrate the US government’s continuing focus on protecting sensitive data and “disruptive” technologies, as well as the regulatory and enforcement tools that the US government has used and will continue to use to prevent the acquisition, use, and “abuse” of “disruptive” technologies by autocratic governments to commit human rights abuses and seek strategic advantage vis-à-vis the United States.

Continue Reading Justice and Commerce Departments Announce Creation of Disruptive Technology Strike Force

Further to our post about General License (GL) No. 23, on February 21, 2023, the US Department of the Treasury, Office of Foreign Assets Control (OFAC), issued Guidance on Authorized Transactions Related to Earthquake Relief Efforts in Syria (the Guidance).  Although it does not appear that OFAC has published the Guidance as part of formal Frequently Asked Questions, affected US persons and non-US persons who are relying on GL 23 should review the Guidance, which provides additional OFAC interpretations about the scope of GL 23 until it is scheduled to expire on August 8, 2023.  More specifically, the Guidance covers topics such as:

(1) donating money and raising funds for earthquake relief efforts in Syria;

(2) sending money to the people of Syria;

(3) sending any goods or providing any services to Syria;

(4) processing financial transactions related to earthquake relief in Syria;

(5) earthquake relief activity or efforts involving the Government of Syria (GOS);

(6) non-governmental organizations providing aid to Syria;

(7) activity by foreign governments in Syria; and

(8) application of US secondary sanctions under the Caesar Syria Civilian Protection Act of 2019.

Continue Reading Additional OFAC Guidance and BIS Licensing Policy Statement on Earthquake Relief for Syria

In this blog post, we update our earlier post regarding OFAC’s determination and guidance on implementing the price cap policy for Russian crude oil (see link), by incorporating the recently released determinations regarding the price cap policy for Russian petroleum products and the updated guidance on implementing the price cap policy for Russian-origin crude oil and petroleum products.

On November 22, 2022, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) published a determination targeting Russian-origin crude oil pursuant to section 1(a)(ii) of Executive Order 14071 (EO 14071), and guidance on the implementation of the price cap policy for Russian-origin crude oil. These followed OFAC’s preliminary guidance released on September 9 (see Steptoe’s earlier blog post here).

Further, on February 3, 2023, OFAC published a determination targeting Russian-origin petroleum products pursuant to section 1(a)(ii) of EO 14071, and updated guidance on the implementation of the price cap policy for Russian-origin crude oil and petroleum products (the Updated Guidance).

The two determinations (the Determinations) set forth the categories of services relating to the maritime transport of Russian-origin crude oil and petroleum products (Covered Services) that US persons are prohibited from providing directly or indirectly to a person located in Russia, unless these items are purchased at or below relevant price cap. The Updated Guidance addresses issues relating to the implementation of the price cap policy for Russian-origin crude oil and petroleum products.

Continue Reading [UPDATED] OFAC Publishes Determinations and Guidance on Implementing the Price Cap Policy for Russian Crude Oil and Petroleum Products

On February 15, 2023, HM Treasury’s Office of Financial Sanctions Implementation (“OFSI”) issued General Licence INT/2023/2711256 (“GL”) in relation to humanitarian activity associated with earthquake relief efforts in Syria and Turkey.  OFSI’s action follows a similar move by OFAC last week, which is discussed in our blog post (here).  On the same day, the Export Control Joint Unit (“ECJU”) also issued General Trade Licence Syria Sanctions – Earthquake Relief Efforts in Syria (“GTL”), to further facilitate humanitarian assistance in relation to the earthquake relief efforts. 

Continue Reading OFSI and ECJU Issue General Licences for Earthquake Relief in Syria

Recognizing the importance of humanitarian aid to support rescue and recovery efforts in Syria, the US Department of the Treasury, Office of Foreign Assets Control (“OFAC”) issued a new General License on February 9, 2023 focused on the Syrian earthquake.  This new General License supplements existing OFAC regulations and authorizations supporting humanitarian relief in Syria.

Continue Reading OFAC Issues General License for Earthquake Relief in Syria