On August 5, President Trump issued executive order (EO) 13884 expanding sanctions in Venezuela by blocking the property of the Government of Venezuela as a whole. In connection with this step, OFAC issued 12 amended and 13 new general licenses and published interpretive guidance pertaining to the provision of humanitarian assistance and support for the Venezuelan people. According to an OFAC press release, the new EO and general licenses “allow U.S. persons to continue to provide humanitarian support to the Venezuelan people” while putting pressure on the Maduro regime.
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On July 22, 2019, Secretary of State Mike Pompeo announced that the US Government would impose sanctions on Chinese state-owned oil trading company Zhuhai Zhenrong Company Limited and its chief executive Youmin Li for knowingly purchasing or acquiring oil from Iran.  Zhuhai Zhenrong was previously sanctioned in 2012 due to alleged dealings with Iran, but those sanctions were far less extensive, and were removed in 2016 pursuant to the Iran nuclear deal. This action announced by Secretary Pompeo involves the addition of these parties to the Specially Designated Nationals (SDN) list, as a result of which any transactions or dealings involving US persons with these parties or their “interests in property” are prohibited, and US persons are required to freeze any such property pursuant to specific rules promulgated by the US Treasury Department’s Office of Foreign Assets Control (OFAC). In addition, Youmin Li is subject to a US visa ban.

According to the Department of State, these sanctions resulted from Zhuhai Zhenrong’s purchase or acquisition of crude oil from Iran after the expiration of China’s Significant Reduction Exception (SRE), which we have previously discussed and which allowed China to continue buying oil from Iran until May 2, 2019 without the risk of sanctions for companies and financial institutions involved in that trade. These sanctions were imposed under Executive Order (EO) 13846. Section 3(a)(ii) of EO 13846 authorizes the imposition of different types of sanctions, ranging from less severe measures to the most severe measure of designation on the SDN list, for persons determined to have, “on or after November 5, 2018, knowingly engaged in a significant transaction for the purchase, acquisition, sale, transport, or marketing of petroleum or petroleum products from Iran.” Section 3 also authorizes sanctions on a person determined to be a “successor entity to,” or, if there is some knowledge or participation in the relevant activity, a person that “owns or controls” or “is owned or controlled by or under common ownership or control with,” a person designated under Section 3 of EO 13846. 
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On 17 May 2019, the Council of the EU established a framework against external cyber-attacks which constitute an external threat to the EU or its Member States. The new rules, which reportedly follow a diplomatic push by the UK and the Netherlands, provide for a strong legal instrument to deter and respond to cyber-attacks against the EU or its Member States. The new framework enables the EU for the first time to impose sanctions against persons, entities and bodies because of cyber-attacks. While no names have been added to the sanctions list yet, the new mechanism is expected to allow the EU to move quickly in the future. However, the new framework does not help companies that are under attack. Victims of cyber-attacks are on their own when it comes to fighting off a cyber-attack.

Sanctions under the new framework are country neutral. In other words, they do not target specific third countries but specific malicious actors. Member States are free to make their own determinations with respect to the attribution of responsibility for cyber-attacks to third countries but such determinations have no impact on the EU sanctions.
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President Trump issued an executive order (EO) on May 8, 2019 imposing broad new sanctions against Iran’s metals industries that go beyond pre-existing sanctions on that sector.  President Trump issued a statement about the EO, which came on the one year anniversary of the US withdrawal from the Iran nuclear deal, calling Iran’s iron, steel, aluminum, and copper sectors “the regime’s largest non-petroleum-related sources of export revenue,” said to constitute 10% of Iran’s “export economy.”  The President said this EO “puts other nations on notice that allowing Iranian steel and other metals into your ports will no longer be tolerated.”  But the scope of the EO is actually quite a bit broader than that – it puts within the crosshairs of US sanctions enforcement not just third-country importers of Iranian metals products, but also exporters in Europe, Asia and elsewhere that provide raw materials and other inputs, along with industrial machinery and other capital goods used in the production of Iranian metals.  As usual, banks, insurers, shippers, traders, investors and other intermediaries and stakeholders in these industries would also be at risk.  It appears that the Trump Administration is continuing along a path of rising escalation, with President Trump noting in his statement that “Tehran can expect further actions unless it fundamentally alters its conduct.”

The EO provides for any person to be listed as a Specially Designated National (SDN) if they are determined:
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On April 25, 2019, OFAC announced that Haverly Systems, Inc. (“Haverly”), a New Jersey software company, had agreed to pay $75,375 to settle apparent violations from 2014 related to Haverly’s collection of payments from JSC Rosneft (“Rosneft”), a Russian oil major on OFAC’s Sectoral Sanctions Identifications (“SSI”) list. The key issue was OFAC’s finding that Haverly accepted the payments from Rosneft outside of the then-applicable 90-day window and thereby dealt in the restricted “new debt” of Rosneft. This appears to be the first time OFAC has published a settlement involving violations of the SSI list Directives, and underscores the importance for companies subject to US jurisdiction of monitoring invoicing and payments with SSI list entities and their subsidiaries. Non-US companies may also face “secondary sanctions” risk under Section 228 of CAATSA, on which we have previously advised, for certain types of transactions with SSI list designees. See also our previous advisory on OFAC’s SSI list sanctions, along with our previous discussion of the CAATSA-mandated changes to those sanctions.

Pursuant to Directive 2 under Executive Order 13662 and § 589.201 of OFAC’s Ukraine-Related Sanctions Regulations, US persons are prohibited from transacting or otherwise dealing in “new debt” of longer than certain stated maturity periods of SSI list designees or any entities of which they own 50% or more. At the time of this apparent violation, the relevant maturity period was 90 days.[1] “Debt” is defined broadly to include any “extensions of credit.” OFAC has stated in FAQ guidance that open payment terms, such as the time permitted to pay commercial invoices, also fall within the scope of “new debt.”
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Secretary of State Mike Pompeo’s announcement yesterday that the US Government will not renew any of the significant reduction exemptions (SREs), previously granted to eight countries under Section 1245 of the National Defense Authorization Act for Fiscal Year 2012 (NDAA), could significantly impair Iran’s ability to conduct international trade.  If fully implemented, this move would create a new, high level of risk for those engaging in continued trade in oil and related products with Iran. It also could directly impact ancillary activity such as shipping and insurance.  Moreover, any such move could have indirect effects on other, non-oil sectors that rely on third country banking arrangements to fund trade with Iran.  Although there are broad provisions of US law restricting the President’s authority to impose sanctions for trade with Iran in agricultural commodities, food, medicine, and medical devices, even this trade could be indirectly impacted by reduced availability of funds and banking channels.  No sanctions restrictions have ever been imposed under the NDAA, although the firmness of US policy in this area may now be put to the test, as the current SRE waivers are set to expire on May 2, 2019.

At the same time, even though the US Government will not renew the eight existing SRE waivers, the actual imposition of sanctions under the NDAA could still be delayed.  This blog post provides some brief background on the NDAA and the SRE waivers, what the consequences of non-renewal of these waivers may be, and how the Trump Administration may use other provisions of law to delay action in this area in order to sidestep confrontations with China, India, Turkey or other major Iranian trading partners were they to refuse to back down in the face of US sanctions threats as the “moment of truth” approaches.
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Yesterday, Secretary of State Mike Pompeo announced his intent to designate Iran’s Islamic Revolutionary Guard Corps (IRGC) as a Foreign Terrorist Organization (FTO), noting that this is the first time the US government has designated part of another government as an FTO. The announcement explains: “This action underscores that the Iranian regime’s use of terrorism makes it fundamentally different from any other government. Iran employs terrorism as a central tool of its statecraft; it is an essential element of the regime’s foreign policy.” The related State Department fact sheet notes that the designation will occur on April 15, upon publication in the Federal Register. While this long-anticipated move could increase the risk to non-US persons of doing business with Iran, at least in certain sectors or with certain partners, its primary effect at least in the short-term will probably be to add yet another deterrent to commerce with Iran rather than leading to a significant increase in legal actions against entities continuing to engage with Iran.

The US government already maintains strict sanctions on dealings with the IRGC and its agents, including secondary sanctions targeting activity with the IRGC that has no jurisdictional link to the US. Although the FTO designation does provide that US financial institutions must block all transactions involving an FTO or its agents and report them to OFAC, in practice the FTO designation does not lead to any additional “blocking” requirement under US law, because the IRGC as a whole is already listed as a Specially Designated National (SDN) under Executive Order 13224 (i.e., as a Specially Designated Global Terrorist (SDGT)). So there are already broad sanctions in place both for US persons and non-US persons in dealing with the IRGC or its agents. 
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This Tuesday, March 19, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on CVG Compañía General de Minería de Venezuela CA (Minerven), the Venezuelan state-run ferrous metals mining company, and its President, Adrian Antonio Perdomo Mata. The addition of Minerven and Mr. Perdomo Mata to the OFAC Specially Designated Nationals and Blocked Persons list (SDN List) follows the imposition of the same sanctions announced against PdVSA (Petróleos de Venezuela, S.A.) on January 28, pursuant to Executive Order 13850, after the United States recognized Juan Guaidó, the head of Venezuela’s National Assembly, as the country’s interim president.

Also on Tuesday, at the White House, President Donald Trump welcomed Brazilian President Jair Bolsonaro, in his first official international visit since taking office in January. During the press conference, President Trump defined the crisis in Venezuela as a priority in the context of the bilateral partnership between the US and Brazil, and lauded Brazil’s leadership in supporting democracy in its neighbor. Recently, Brazil and the US have worked together to provide humanitarian assistance across the border.
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Next week, the World Trade Organization (WTO) will consider Venezuela’s request for the establishment of a panel to decide whether US sanctions affecting Venezuela violate international trade law.

In December, Venezuela filed its second ever complaint at the World Trade Organization challenging US sanctions. Specifically, Venezuela claimed that the US imposed “coercive trade-restrictive measures” in an attempt to isolate Venezuela economically. These measures included “certain US laws and regulations relating to goods of Venezuelan origin, the liquidity of Venezuelan public debt, transactions in Venezuelan digital currency, and the Specially Designated Nationals and Blocked Persons List [which] are inconsistent with the WTO’s General Agreement on Tariffs and Trade (GATT) 1994 and the General Agreement on Trade in Services (GATS),” according to a statement by the WTO.
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On February 13, 2019, the State Department provided a summary of Secretary of State Mike Pompeo’s recent phone call with Russian Foreign Minister Sergey Lavrov, which stated that “Secretary Pompeo reiterated the US determination to hold Russia accountable for its use of a chemical weapon in Salisbury, UK through sanctions as required by the CBW Act.”  The sanctions Secretary Pompeo referenced are the second round of sanctions slated to be imposed on Russia under the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (CBW Act) for that country’s use of a nerve agent against a former Russian spy and his daughter in the United Kingdom.  The decision to impose the second round of CBW Act sanctions was announced in November of last year, but there has largely been radio silence from the administration over the past few months with respect to a timetable for imposition or the type of sanctions to be imposed.  While the summary of Secretary Pompeo’s call did not provide any additional detail on those questions, it is notable as it indicates that despite the months of delay the administration is still expressing an intent to move ahead with the sanctions.
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