This month has seen a continued focus on Russia, with the European Union announcing its ninth package of measures designed to target strategic sectors of the Russian economy, including its technology and aviation sectors, as well as its financial system. The EU has separately published proposals related to its intention to make sanctions violation an ‘EU Crime’, and, more ambitiously, outlined its intention to create a structure which could allow it to invest the €330 billion in frozen Russian funds currently under its control, with a view to generating returns which could be used to support the reconstruction of Ukraine.
OFAC and OFSI made a number of new designations under their respective anti-corruption programs, coinciding with International Anti-Corruption Day and Human Rights Day, both of which are observed on 9th December. OFAC’s Magnitsky program was used to target officials in El Salvador, Guatemala, Indonesia and Haiti. OFSI’s targets included three Serbian businessmen and several officials in Myanmar and Iran.
The UK also launched its own Haiti program this month, following the UN measures announced in October 2022, while OFAC made wide-ranging designations in Iran and Lebanon under its counter terrorism program.
Russian Measures
- On 16th December the EU adopted its ninth package of Russia sanctions. The new package includes additional export controls and trade restrictions on goods which could “contribute to the technological enhancement” of Russia’s defence and security sector, aviation and space industry goods, and a complete ban on export of drone engines to Russia or any third country able to supply drones to Russia. Two Russian banks – Credit Bank of Moscow and Dalnevostochniy Bank – are now subject to asset freezes. Meanwhile a full transaction ban has been imposed on the Russian Regional Development Bank. Finally, the EU council initiated the process for suspending the broadcast licenses of four additional Russian media outlets throughout the EU.
- On 13th December the UK announced the designations of 12 senior Russian military commanders as well as three Iranian businessman and one entity accused of having been involved in the supply of drones to the Russian Government. The Iranian entities involved in the Russian UAV program were also sanctioned by the US a day later.
- On 5th December the G7, EU and Australia agreed to set a cap on the price of crude oil traded by firms shipping oil to third countries at $60 per barrel. The implementation and management of this cap continues to be subject to technical adjustments, with the EU acknowledging a 45-day transitional period to those providing services to the Russian seaborne oil trade which expires on 19th January 2023. The EU measures will be subject to a two-monthly review starting from mid-January 2023.
Other Russian Developments
- Following the decision by the European Council last month to criminalise the violation of EU sanctions, the Commission has now proposed a directive outlining how such an offence would be constructed in practice. The specific offences detailed in this directive include failing to freeze the assets of a sanctioned person or entity without undue delay, as well as simply circumventing EU sanctions or making funds available to a sanctioned individual. The proposed penalties include a maximum of five years in prison for individuals and fines for companies of no less than 5% of total worldwide turnover. The directive will now be discussed by the European Parliament and Council and be subject to the institution’s standard co-legislative procedure.
- The European Commission has presented options to its member states for the possible use of frozen Russian assets to compensate Ukraine. The plans are based on the findings of the ‘Freeze and Seize’ task force, established in March, and include a proposed structure to manage frozen Russian public funds, including €300 billion in Russian Central Bank reserves blocked in the EU and other G7 countries, and €19 billion in assets belonging to Russian businessmen.
- On 9th December an indictment filed by the US Attorney’s Office was unsealed in a District Court in New York which revealed that US-designated Ukrainian national Andrii Derkach has been charged with conspiracy to violate the International Emergency Economics Powers Act, bank fraud conspiracy and four counts of money laundering in connection with the purchase and maintenance of property in California. Derkach, who is at large, is reported to be an active Russian intelligence agent and was sanctioned in September 2020 for his alleged involvement in efforts to influence the 2020 US Presidential Election.
- On 13th December a 16-count indictment was unsealed in US federal court charging Russian nationals Yevgeniy Grinin, Aleksey Ippolitov, Boris Livshits, Svetlana Skvortsova and Vadim Konoshchenok, as well as US nationals Alexey Brayman and Vadim Yermolenko, in connection with an alleged scheme to obtain US-origin military-grade and dual-use technologies and sniper ammunition on behalf of the Russian government, in violation of US sanctions on Russia. The indictment alleges that between January 2017 and October 2022 the goods were procured from US companies using a network of shell companies and shipped or smuggled into Russia via intermediate destinations, including Estonia.
- The UK Administrative Court has refused an application for judicial review of the UK’s designation of Graham Phillips, a UK national and video blogger who was added to the UK’s Russia Sanctions list in July 2020 for producing media content that supports and promotes policies which undermine Ukraine’s territorial integrity. The court ruled that the application, which was brought by activist lawyer Robin Clarke, was without merit and ordered Clarke to pay costs.
- On 21st December 2022 the UK Government ordered private equity firm LetterOne to sell regional broadband provider Upp Corporation pursuant to the UK National Security and Investment Act 2021. LetterOne’s owners include Mikhail Fridman and Peter Aven, who are UK sanctioned, although LetterOne itself is not. The Act allows the UK government to scrutinize and potentially block investments in sensitive sectors and was used earlier in the year to order Chinese-owned firm Nexperia to sell its stake in Britain’s biggest microchip factory.
Global Programmes
- To mark International Anti-Corruption Day and Human Rights Day on 9th December, the UK announced the designations of 30 people said to be corrupt political figures, human rights violators, and perpetrators of conflict-related sexual violence. Those designated included three Serbian businessmen, ten Iranian officials linked to the country’s judicial and prison systems, as well as three entities involved in the Myanmar military junta.
- On the same day, the US designated more than 80 people and entities alleged to have been responsible for human rights abuses and corruption under its Magnitsky program, as well as country programs in Iran, North Korea and Russia. Those designated under the Magnitsky program included political figures in El Salvador, Guatemala, Haiti, Mali, Guinea and Indonesia.
- OFAC made extensive designations under its counter terrorism program this month. On 2nd December it listed four leaders of the Pakistani Taliban, the Tehrik-e Taliban Pakistan, and Al Qaeda in the Indian Subcontinent. On 3rd December three Lebanese individuals and three accounting and audit firms were listed for allegedly having provided financial services to Hezbollah, and on 15th December OAFC listed an oil smuggling and money laundering network comprising two Turkish nationals, as well as an Islamic Revolutionary Guard Corps commander, and 26 entities, including a Panamanian-flagged LNG tanker, also under its counter terrorism program.
- OFAC has also designated Haitian senator Rony Celestin and former senators Richard Lenine and Herve Fourcand under its global counter narcotics programme for having allegedly used their political positions to orchestrate the importation and export of drugs.
Other OFAC Designations
- On 16th December the US delisted 17 individuals no longer deemed a threat to Zimbabwe’s democratic processes and institutions, meanwhile an additional four individuals were listed due to their alleged links to a US-sanctioned company with links to the country’s current President, Emmerson Mnangagwa.
- OFAC has also made additional designations in North Korea, sanctioning three officials of the Workers’ Party of the Republic of Korea for their connections to the country’s WMD and ballistic missile programs.
EU Developments
- The EU General Court handed down its judgement in two joined cases on 7th December brought by the Kurdistan Workers’ Party (“PKK”) against the European Council, challenging the former’s designation under EU terrorism sanctions. The court sided with the PKK and annulled the PKK’s 2014 listing.
- EU designations this month included eight people alleged to have been responsible for serious human rights violations and having sustained the armed conflict in the DRC through the illicit exploitation or trade of natural resources, as well as 20 Iranian individuals and the State Broadcast Company over links to violence against recent protests.
