OFAC has clarified that, pursuant to the terms of General License 14 and General License 16, it still expects all U.S. persons who participated in transactions with United Company Rusal PLC, EN+ Group PLC, JSC EuroSibEnergo, or their subsidiaries in reliance on the general licenses during the period when these entities were SDNs (April 6, 2018 through January 27, 2019) to file reports with OFAC.  The delisting of these entities does not terminate the reporting requirement.  Reports are due Monday, February 11, 2019, and must include “a comprehensive, detailed report of each transaction, including the names and addresses of parties involved, the type and scope of activities conducted, and the dates on which the activities occurred.”  Reports are to be filed with the Office of Foreign Assets Control, Office of Compliance and Enforcement, U.S. Department of the Treasury, 1500 Pennsylvania Avenue N.W., Freedman’s Bank Building, Washington, DC 20220, or via email to OFACReport@treasury.gov.

Please contact Paul Marquardt or Sameer Jaywant with any questions.

On January 28, 2019, the U.S. Department of the Treasury’s Office of Foreign Assets Control designated Petróleos de Venezuela, S.A.; effective immediately PdVSA is on OFAC’s Specially Designated Nationals and Blocked Persons List and all of its assets within U.S. jurisdiction are blocked.

Simultaneously, OFAC issued a number of general licenses intended to mitigate the impact of this designation outside of Venezuela by providing limited authorization for certain transactions and activities related to PdVSA and its subsidiaries. As a result:

  • all assets of PdVSA and its direct and indirect subsidiaries owned 50% or more by PdVSA or other specially designated nationals (SDNs) (in the aggregate) within U.S. jurisdictions are now blocked and all transactions within U.S. jurisdiction involving these persons and entities are prohibited, absent a license;
  • PdVSA and its subsidiaries may still service debt issued prior to August 25, 2017, and U.S. persons can continue to hold and provide services related to such debt, but transfers of such debt are now only permitted to non-U.S. persons (in other words, U.S. persons may only divest PdVSA debt, not acquire it);
  • purchase and importation into the United States of petroleum and petroleum products from PdVSA is permitted until April 28, 2019, so long as all proceeds from such sales are paid into blocked, interest-bearing accounts in the United States rather than released to PdVSA;
  • certain U.S.-linked PdVSA subsidiaries—including PDV Holding, Inc., CITGO Holding, Inc., and their subsidiaries—are not subject to blocking sanctions until July 27, 2019, and thus their assets are not frozen and transactions with these entities within U.S. jurisdiction remain permitted; and
  • U.S. financial institutions are permitted to reject rather than block (i.e., return rather than seize) funds transfers involving PdVSA or its subsidiaries, so long as the funds transfers originated outside of the United States and both the originator and beneficiary are non-U.S. persons located outside of the United States or Venezuela, until March 29, 2019.  Note that this does not authorize the processing of U.S. dollar transfers relating to PdVSA, which are now prohibited unless related to U.S.-licensed activities.

Please click here to read the full alert memorandum.

This Trade Summary provides an overview of WTO dispute settlement decisions and panel activities, and EU decisions and measures on commercial policy, customs policy and external relations, for the fourth quarter of 2018.

If you have any questions regarding the above, do not hesitate to contact fclaprevote@cgsh.com or tmuelleribold@cgsh.com.

On November 14, 2018, almost a year and a half after the British public voted to exit the EU, the UK and EU reached agreement on the terms of separation manifested in a draft Withdrawal Agreement.  This draft text updates an earlier version published in March 2018. Subsequently, on November 22, the EU and UK published the accompanying draft Political Declaration that sets out key principles of the future relationship.  On November 25, the European Council endorsed these two texts.  This post summarizes the key outcomes with respect to trade in goods, the continued applicability of EU law and European Court of Justice jurisdiction, and dispute settlement during the transition period, as well as the framework for the EU and UK’s future relationship. Continue Reading The EU and UK Agree on Arrangements for Brexit Transition Period and Future Relationship Framework

On November 28, 2018, the Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) identified for the first time digital currency addresses associated with sanctioned persons.  The newly sanctioned individuals, Iran-based Ali Khorashadizadeh and Mohammad Ghorbaniyan, were accused of converting digital currency payments into Iranian rial as part of a widespread ransomware scheme.  Since 2015, the ransomware scheme (known as “SamSam”) has infected the data networks of corporations, hospitals, universities, and government agencies.  According to OFAC’s announcement, the identified bitcoin addresses were used with over 40 digital currency exchangers to process more than 7,000 illicit transactions in bitcoins worth millions of U.S. dollars. Continue Reading OFAC Lists Digital Currency Addresses for First Time, Releases New Guidance

Over the past few months a number of developments have highlighted the growing pressure in favour of reactive sanctions implementation in the EU and the UK.

New EU chemical weapons sanctions regime

On October 15, 2018, the Council of the EU adopted a new programme of restrictive measures (Council Regulation (EU) 2018/1542). Where necessary to address the use or proliferation of chemical weapons, the EU is now able to impose asset freezes and travel bans on persons and entities anywhere, regardless of their nationality and location, and forbid EU persons and entities from making funds available to them.

Continue Reading Fast-Moving Political Developments Increase the Pressure for Reactive Sanctions Implementation

In recent years, sanctions have become one of the issues of greatest concern for parties entering into international transactions. As a result, detailed contractual clauses designed to manage sanctions risks have become commonplace. The October 2018 judgment of the High Court in Mamancochet Mining v. Aegis Managing Agency[1] (the “Judgment”) has highlighted certain pitfalls in the standard wording of some sanctions clauses, and should be heeded by any party seeking to contractually protect itself from sanctions risks by, for example, making its performance under the contract conditional upon the non-occurrence of certain sanctions events, or tying a termination event to sanctions. The Judgment also casts some light on the interpretation of the EU Blocking Regulation[2] and suggests exercising contractual rights (even ones designed to ensure compliance with U.S. sanctions) does not breach the Blocking Regulation. Continue Reading Interpreting Sanctions Clauses and the EU Blocking Regulation: The High Court of England Weighs In

This Trade Summary provides an overview of WTO dispute settlement decisions and panel activities, and EU decisions and measures on commercial policy, customs policy and external relations, for the third quarter of 2018.

If you have any questions regarding the above, do not hesitate to contact fclaprevote@cgsh.com or tmuelleribold@cgsh.com.

On September 13, 2018, the Taxation (Cross-border Trade) Bill received Royal Assent, formalizing its application into UK law as an Act of Parliament.  This date marks less than one year since the Cross-border Trade Bill, also referred to as the “Customs Bill”, was first brought before the House of Commons.  The initial scope of the Customs Bill, as well as the accompanying Trade Bill, was discussed in a previous blog post. Continue Reading UK Parliament Passes Trade and Customs Legislation in Shadow of Brexit Uncertainty

On September 25, OFAC designated four additional Venezuelan officials as “Specially Designated Nationals” (“SDNs”), blocking all of their assets and prohibiting any transaction in which they have an interest within U.S. jurisdiction. The new designations target important former and current officials in the Venezuelan government who have supported President Nicolas Maduro, whom OFAC designated on July 31, 2017. The newly designated officials include: Cilia Adela Flores de Maduro, the current First Lady and former Attorney General under Hugo Chavez; Delcy Eloina Rodriguez Gomez, the Executive Vice President and former President of the National Constituent Assembly (“ANC”); Jorge Jesus Rodriguez Gomez, the Minister of Popular Power for Communication and Information; and Vladimir Padrino Lopez, the Sectoral Vice President of Political Sovereignty, Security, and Peace. In addition, OFAC also designated a network supporting Diosdado Cabello Rondon’s “key front man,” Rafael Alfredo Sarria. Continue Reading OFAC Sanctions Additional Venezuelan Officials