August 2024 saw a significant increase in US designations, with a continued focus on Russia and the Middle East. OFAC also added five entities to its Uyghur Forced Labor Prevention Act (“UFLPA”) Entity List and was joined by the UK and EU in targeting several individuals and entities in Belarus.
In the enforcement space, the US Department of Commerce’s Bureau of Industry and Security (“BIS”) imposed two civil penalties on US entities for alleged violations of export controls. The US Department of Justice also announced the arrest of three individuals and extradition of three individuals for violating US sanctions. In Europe, 13 applicants have challenged the EU’s restrictions on legal advisory services to Russian companies.
August 2024 also saw the extension of the US’ sanctions programmes targeting Lebanon and targeting those involved in hostage-taking and the wrongful detention of US nationals abroad.
Designations
- August 2024 saw the US designations of several individuals and entities in the Middle East. These designations included: one individual, six entities and three vessels for alleged involvement in shipping Iranian commodities to Yemen and UAE on behalf of Sa’id al-Jamal, a sanctioned Houthi financial official; one entity and four vessels for their role in shipping Iranian liquefied petroleum gas to Hizballah in Lebanon; Yitzhak Levi Filant, a civilian security coordinator of the Yitzhar settlement in the West Bank, for allegedly setting up roadblocks and patrols to pursue, attack and expel Palestinians; and Israeli NGO Hashomer Yosh for allegedly fencing off a village preventing the return of 250 Palestinians.
- Elsewhere, OFAC designated Paraguayan tobacco company Tabacalera del este for financially supporting US-sanctioned Horacio Manuel Cartes Jara, Paraguay’s former president, as well as the former President of Haiti, Michel Joseph Martelly, for the alleged role he played in perpetuating the ongoing crisis in the country. On 8th August the US Department of Homeland Security announced the addition of five Chinese entities to the UFLPA Entity List, bringing the total entities listed to 73. The designation restricts the listed entities’ goods from entering the US and is designed to eradicate forced labor and promote accountability for the ongoing genocide in the Xinjiang Uyghur Autonomous Region.
- Russia and Belarus remained a focus of international sanctions. On 23rd August OFAC designated almost 400 individuals and entities involved in Russia’s fintech sector, procurement networks, domestic war economy, and strategic metals and mining sector. Earlier in the month OFAC designated 19 individuals, 14 entities, and 1 aircraft pursuant to its Belarus sanctions programme. The UK also designated four individuals and three entities under its Belarus sanctions regime for alleged human rights violations and for destabilising the situation in Ukraine. The designations coincided with a joint statement from the US, Canada, UK and EU on the 4th anniversary of the “fraudulent” presidential election in Belarus. The statement called for the release of 1,400 political prisoners called for accountability from the Lukashenko regime.
- On 29th August the UK imposed travel bans on two individuals under its counter-terrorism sanctions programme: suspected Hizballah financier Nazem Ahmad and Mustafa Ayash, who is alleged to have promoted terrorism through his involvement with Gaza Now media network. The EU designated 28 individuals for their alleged roles in internal repression and human rights violations in Belarus. The individuals included members of the judiciary, prosecutors, government officials and the heads of prisons and detention centres.
Exemptions and De-Listings
- The UK’s Export Control Joint Unit published two general licences. The first was for the Global Combat Air Programme (“GCAP”), permitting those with an eligibility letter from the Ministry of Defence to carry out the export of dual-use items or military goods software or technology and trade of military goods for the GCAP. The second allowed the export of dual-use items or military goods software or technology and trade of military goods, to, between and among Australia, the US and the UK. The UK also extended its general licences allowing certain transactions related to the Russian National Settlements Depository and permitting payments to local authorities under multiple UK sanctions regimes.
- OFAC began the month with two Russia-related general licenses related to transactions involving the Moscow Exchange, National Clearing Center and the National Settlement Depository. During the month it also issued seven Russian general licenses related to, inter alia, Russia’s diamond sector, safety and environmental exemptions, and the winding down of transactions involving certain entities. OFAC also updated a Venezuela-related general license to authorise certain transactions related to PdVSA. On 20th August OFAC announced several regulatory amendments; these included the publication of a Myanmar-related general licence regarding certain agricultural and medical transactions, as well as administrative amendments to its Sudan and Ukraine-/Russia-Related regulations.
- The EU and UN removed the designations of two entries – the former President Ali Abdullah Saleh and his son Ahmed Ali Saleh – from its Yemen sanctions regime. The UN and EU removed Yassine Chekkouri from its ISIL (Da’esh) and Al-Qaida sanctions list. He was originally listed in 2002 for alleged links to Osama Bin Laden. OFAC removed the listing of Russian individual Ilya Brodskiy, who was designated for his links to Sovcombank.
Enforcement and Challenges
- The European Public Prosecutor’s Office conducted a raid on Bulgartransgaz in Bulgaria as part of an investigation into whether natural gas supplied through the Balkan transit gas transmission network could contain gas from Russia. Separately, German customs conducted raids on two logistics companies in Berlin over suspicions of Russia-sanctions violations. In Lithuania, an unnamed vehicle-export company, reported to be Biovarda, was fined €13.6 million by Lithuanian Customs for violating international sanctions.
- On 8th August the US Department of Justice announced the arrest of US citizen Matthew Knoot for alleged efforts to generate revenue for the DPRK’s arms programme. Five days later US-Iranian national Jeffrey Chancer Nader was arrested for violating US sanctions on Iran by conspiring to purchase and export aircraft components from the US to Iran. On the same day, US Army soldier and intelligence analyst, Korbein Schultz, pleaded guilty to all export control violation charges against him. On 20th August Venezuelan national George Semerene Quintero pleaded guilty to conspiring to violate US sanctions imposed on Venezuelan state-owned oil company Petróleos de Venezuela SA (“PdVSA”).
- US Department of Justice press releases announced the extradition of three individuals in August 2024: a Russian-German national, who was extradited from Cyprus to the US for allegedly helping form a Russian-based procurement network to supply microelectronics to Russia; a Bulgarian national, who is facing charges of conspiracy to export integrated circuits to Russia from the US; and a Latvian national, who is alleged to have conspired to sell avionics equipment to Russian companies.
- On 15th August the BIS imposed a $5.8 million civil penalty against US-registered TE Connectivity Corporation and Hong Kong-registered TE Connectivity HK Limited. The 79 alleged export control violations related to shipments of low-level items to parties tied to China’s hypersonics, unmanned aerial vehicles, and military electronics programs. On 26th August the BIS also imposed a fine of $44,750 against Streamlight Inc, a US manufacturer of portable lighting products, to resolve three alleged violations of the antiboycott provisions of the Export Administration Regulations. Streamlight self-disclosed the violations and reportedly cooperated with the investigation.
- Meanwhile, in Europe the Paris Bar Association, Dutch Bar Association of the Brussels Bar and 11 other applicants have brought annulment actions challenging EU restrictions on the provision of legal advisory services to Russian entities, claiming the restrictions infringe the principles of legal professional privilege, access to justice and proportionality protected by the Charter of Fundamental Rights. Sanctioned Russian-Israeli businessman Mikhail Fridman also reportedly filed an investment treaty claim against Luxembourg over assets frozen by the country in response to EU sanctions. He has reportedly requested over $16 billion and the claim is due to be administered at the Hong Kong International Arbitration Centre.
