Sanctions Top-5 for the week ending 26 June 2020

Here are five things that happened this week in the world of economic sanctions that I think you should know about.

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1. The US Senate passed the Hong Kong Autonomy Act, which, if passed, would authorize sanctions against non-US persons and financial institutions in connection with Beijing's planned national security law for the Hong Kong Special Administrative Region (expected today). The Act still has to make it through the House of Representatives before becoming law. Word on the street, it could end up in the National Defense Authorization Act for Fiscal Year 2021. (Drop me a line to receive my separate Hong Kong-related updates.)
2. In related news, the US State Department announced that it would impose visa restrictions on certain Chinese Communist Party officials for "undermin[ing] human rights and fundamental freedoms in Hong Kong." No word yet on who the targets are, but the State Department news release says it could include officials and their family members. (China responded in kind.)
3. The US Office of Foreign Assets Control (OFAC) named seven companies in Iran, Germany, and the United Arab Emirates as Specially Designated Nationals (SDNs) under Executive Order 13871 for operating in Iran's iron, steel, and aluminum sectors. OFAC also designated a China and Hong Kong-based company under Section 1245 of the Iran Freedom and Counter-Proliferation Act for transferring graphite to the Islamic Republic of Iran Shipping Lines (IRISL).
4. OFAC named five Iranian nationals as SDNs under Executive Order 13599 for captaining vessels owned or operated by IRISL and the National Iranian Tanker Company (NITC). The vessels recently delivered Iranian gasoline to Venezuela.
5. Switzerland's Federal Council adopted financial sanctions and travel bans against six individuals in Nicaragua for "ongoing violations against human rights, democracy and the rule of law" by the government of Nicaraguan President Daniel Ortega. The European Union sanctioned the individuals in May 2020. OFAC sanctioned them between July 2018 and March 2020 (here, here, here, here, and here).

Comments

What would the Hong Kong Autonomy Act do? Section 5 gives the Secretary of State 90 days to report to Congress the names of foreign persons who materially contribute to "the failure of the government of China to meet its obligations" under the Sino-British Joint Declaration or the Hong Kong Basic Law. The Secretary of Treasury then has between 30 and 60 days to identify any foreign financial institution that "knowingly conducts a significant transaction" with such persons.

Sections 6 and 7 mandate sanctions against persons and financial institutions named in reports within one year (unless they get removed from the reports). However, the Act does not include blocking sanctions (like those in the recent Uyghur Human Rights Policy Act or last year's Hong Kong Human Rights and Democracy Act). There are also no strict correspondent banking sanctions. Instead, Section 7 offers a menu of 10 financial institution sanctions to be applied in two phases.

The latest: the National Security Law is expected to be approved today in Beijing. A few hours ago the US State Department announced the United States would "end exports of US-origin defense equipment and will take steps toward imposing the same restrictions on US defense and dual-use technologies to Hong Kong as it does for China." The US Commerce Department announced "regulations affording preferential treatment to Hong Kong over China, including the availability of export license exceptions, are suspended." Still waiting for specifics.

For the IT pros out there: OFAC issued a technical notice of the annual renewal of the public certificate for the Treasury Department website. Systems that retrieve automatic SDN List updates from OFAC's website should have been updated by 25 June, else they might miss some updates. (Thanks to Alisher Rakhmatullaev at First Abu Dhabi for the heads up.)

Did I miss something? Send me a message or comment below.

(The views expressed are my own and do not constitute legal advice. Photo from Vladislav Reshetnyak.)