On February 11, 2021, the White House issued an Executive Order (EO) authorizing sanctions in response to the February 1, 2021, military coup in Myanmar (Burma). The US Treasury Department’s Office of Foreign Assets Control (OFAC) named ten individuals and three entities as Specially Designated Nationals (SDNs) pursuant to the EO. At the same time, the US Commerce Department’s Bureau of Industry and Security (BIS) announced new restrictions on certain exports to Myanmar of items subject to the Export Administration Regulations (EAR).

This is the first new sanctions program adopted under the Biden administration, less than one month after the inauguration. Prior US sanctions and export controls targeting Myanmar were terminated in October 2016. Since then, the United States continued to maintain targeted sanctions against certain individuals and entities under other sanctions programs, including a number of SDNs named under the Global Magnitsky Sanctions program.


Continue Reading Biden Administration Announces Sanctions and Export Controls in Response to Myanmar Coup

The Chinese government has enacted new “blocking” rules to counteract extraterritorial application of certain foreign laws that it deems unjustifiable. On January 9, 2021, China’s Ministry of Commerce issued its No. 1 order of 2021— the Rules on Counteracting Unjustified Extraterritorial Application of Foreign Legislation and Other Measures (the Blocking Rules).

This Client Alert outlines

In a Federal Register notice dated February 5, 2021, the US Department of State provided notice that the Secretary of State has determined that six individuals sanctioned by the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) on January 15, 2021 fulfilled the criteria for being designated as Specially Designated Nationals (SDNs) under Section 4(a)(iii) of Executive Order (EO) 13936, which authorizes the Treasury and State Departments to impose blocking sanctions in relation to certain events in Hong Kong.

The State Department issued similar notifications on January 22, 2021 (here and here) with respect to a total of 18 individuals designated as SDNs under EO 13936 on December 7 and November 9, 2020. No such determination appears in the Federal Register for 11 individuals designated under EO 13936 on August 7, 2020.

The Secretary of State’s recently issued determinations do not alter OFAC’s SDN designations, which took effect on January 15, 2021, December 7, 2020, and November 9, 2020, respectively, nor has the State Department added the individuals to its report under Section 5(a) of the Hong Kong Autonomy Act.


Continue Reading US State Department Issues Notices on Prior Hong Kong Sanctions Designations

Peter Jeydel and Brian Egan from Steptoe’s Economic Sanctions group published an article in the American Society of International Law’s “ASIL Insights” on the recent decisions by two US District Courts to bar the U.S. government temporarily from restricting transactions with Chinese mobile app TikTok under the International Emergency Economic Powers Act (IEEPA). As they

On January 19, 2021, the European Commission presented a Communication setting out a strategy to stimulate the openness, strength, and resilience of the European Union’s economic and financial system.

An important part of this Communication concerns EU sanctions, in particular:

  1. the implementation and enforcement of EU sanctions regimes.
  2. the EU’s resilience to the effects of

On January 19, 2021, the US State Department announced the imposition of sanctions on Russia-based entity KVT-RUS and Russian-flagged vessel FORTUNA pursuant to Section 232 of the Countering America’s Adversaries Through Sanctions Act (CAATSA), for “knowingly selling, leasing, or providing to the Russian Federation goods, services, technology, information, or support for the construction of Russian

On January 14, 2021, the White House issued an Executive Order (EO) to amend EO 13959 of November 12, 2020, which prohibits US persons from transacting in securities related to so-called “Communist Chinese military companies” (CCMCs).

The amended EO 13959 makes clear that US persons must divest their holdings in such securities within designated wind-down periods, after which possessing the securities will also be prohibited. For CCMCs identified in the Annex to EO 13959, on November 12, 2020, the wind-down period will end on November 11, 2021. The amended EO also clarifies that prohibited transactions include both “purchase for value” and “sales” of covered securities.

Meanwhile, the US Department of Defense (DoD) identified an additional nine entities as CCMCs, bringing the total number to 44. Restrictions under EO 13959 will take effect with respect to the newly named CCMCs after 60 days, on March 15, 2021.

Shortly thereafter, the US Treasury Department’s Office of Foreign Assets Control (OFAC) published four new Frequently Asked Questions (FAQs) and General License No. 2 (GL-2) authorizing securities exchanges operated by US persons to engage in transactions involving covered securities through the relevant wind-down periods.


Continue Reading Updated: Amended Executive Order Makes Clear US Persons Must Divest Securities of Chinese Military Companies as Defense Department Identifies Nine More Entities

Following the adoption of the EU Global Human Rights Sanctions Regime, which is set out in Council Regulation (EU) 2020/1998 and Council Decision (CFSP) 2020/1999 (see our previous client alert), the European Commission published a Guidance Note on the implementation of certain provisions under Council Regulation (EU) 2020/1998. The stated aim of the Guidance Note is to address the questions most likely to arise in the application of the new restrictions and to ensure their uniform implementation by EU operators and EU Member States competent authorities. Upon its issuance, Mairead McGuinness, European Commissioner for Financial Services, Financial Stability and Capital Markets Union, explained that this was the first time that a new EU sanctions framework is accompanied by such Note.

The Guidance Note provides guidance on the scope of financial restrictions, including the freezing of funds and economic resources and the prohibition to make funds and economic resources available to sanctioned persons, entities and organizations. It also addresses compliance obligations and specific notions, such as “ownership” and “control” of entities by listed persons. Further, the Guidance contains information on exceptions and derogations, including for the provision of humanitarian aid.


Continue Reading European Commission issues Guidance Note on the EU Global Human Rights Sanctions Regime

On January 1, 2021, the U.S. Senate passed – over President Trump’s veto – the National Defense Authorization Act, or NDAA, for Fiscal Year 2021 (H.R. 6395), a massive annual Department of Defense spending bill, which this year includes a section expanding sanctions on the Nord Stream 2 and TurkStream pipeline projects.  The Senate action follows House passage of the bill over the President’s veto on December 28, 2020.

Section 1242 of the 2021 NDAA broadens the scope of the sanctions provisions contained in the 2020 NDAA in the following principal ways:

  • For Nord Stream 2 only, it targets foreign persons that provide “services for the testing, inspection, or certification necessary or essential for the completion or operation of the … pipeline[.]”
  • For both Nord Stream 2 and TurkStream, it –
    • expands the scope of sanctionable activities in support of pipe-laying for these projects to include activities that “facilitate pipe-laying, including site preparation, trenching, surveying, placing rocks, backfilling, stringing, bending, welding, coating, and lowering of pipe[;]”
    • includes, in addition to selling, leasing or providing the covered pipe-laying vessels, “facilitat[ing]” that activity (even if not involving “deceptive or structured transactions,” language that had been included in the 2020 NDAA); and
    • clarifies that the scope of sanctionable activity includes providing underwriting services for covered vessels or insurance or reinsurance necessary or essential for the completion of the project; and providing services or facilities for technology upgrades or installation of welding equipment for, or retrofitting or tethering of, covered vessels that are necessary or essential for the completion of the project.


Continue Reading U.S. Tightens Sanctions on Nord Stream 2, TurkStream Pipeline Projects

On December 11, 2020, the US Treasury Department’s Office of Foreign Assets Control (OFAC) issued a much-anticipated report under Section 5(b) of the Hong Kong Autonomy Act (HKAA) that—to the relief of non-US financial institutions, including those in Hong Kong—stated the Treasury Department had not identified any foreign financial institution (FFI) at risk of secondary sanctions under the HKAA at this time.

Background

Under Section 5(b) of the HKAA, Congress directed the Treasury Department to identify any FFI that knowingly conducted a significant transaction with a person identified by the State Department in a report under Section 5(a) of the HKAA. The State Department issued its report on October 14, 2020, identifying ten individuals, including Hong Kong’s Chief Executive and other prominent government officials.

(For more information about the HKAA and the State Department’s Section 5(a) report, see our blog post of October 15, 2020, “Update: Hong Kong Financial Institutions Face US Secondary Sanctions after State Department Issues First Report under Hong Kong Autonomy Act.”)

Under the HKAA, FFIs identified in a Section 5(b) report could be subject to a “menu” of ten secondary sanctions described in Section 7 of the HKAA. Those sanctions would become mandatory after one year of the report’s issuance.


Continue Reading Financial Institutions Spared, for Now, from Secondary Sanctions after Treasury Department Issues ‘Null Report’ Under Section 5(b) of the Hong Kong Autonomy Act