June saw the launch of new packages of measures by the EU and the UK respectively targeting Russia and Belarus. Both the EU and UK also worked to tighten the scope of their sanctions programmes, with an 11th package of EU sanctions, accompanied by more than 100 new designations, designed to close legal and practical gaps which have allowed Russia to gain access, often via third parties, to materials and technologies vital to its war effort in Ukraine.
The UK and the EU have also simultaneously imposed new measures designed to ensure the comprehensive seizure of assets held by individuals exposed to Russian sanctions, respectively by widening the scope of their programmes to include family members and dependents of sanctioned persons and by imposing greater responsibilities on agents and counterparties to disclose their knowledge of Russian assets. New UK legislation has also laid the basis for the use of sanctioned Russian assets in the eventual reconstruction of Ukraine.
International co-operation has been a continuing theme, notably with regard to Iran, where OFAC and the EU have both made a slew of new designations targeting those involved in internal repression. A June Five Eyes meeting in Ottawa saw the member countries agree to continue to share information on illicit procurement routs and trends in order to strengthen their enforcement of import controls.
EU 11th Package
As trailed last month, on 23rd June the EU adopted its 11th package of sanctions against Russia, which is focused on closing out channels for potential evasion and tightening existing rules around the export of goods which could support the Russian war effort. Alongside these broad areas of focus, new designations and restrictions were imposed which are designed to impact Russia’s capacity to influence public opinion in Europe, including the suspension of broadcasting licences for the television channels RT Balkan, Oriental Review, Tsargrad, New Eastern Outlook and Katehon. The measures were subsequently adopted by Switzerland.
Separately, the EU has also extended the scope of its Russian sanctions programme, explicitly including the family members and other dependents of businesspeople active in Russia, as well as those active in sectors of the economy which provide substantial revenue to the Russian government.
Anti-Circumvention
One of the most striking specific new measures included in the EU package is an anti-circumvention provision, which allows the EU to restrict the export of certain sanctioned goods and advanced technology, especially linked to the aviation sector, to specified third countries deemed to pose a high risk of circumvention, as well as prohibiting their transit across Russian territory. Alongside this new measure, specific export restrictions concerning dual use goods and technology have been imposed on 87 entities registered in China, Uzbekistan, the UAE, Syria and Armenia. Targeted prohibitions have been implemented against the transfer to Russia of intellectual property associated with restricted goods and on 15 specific items found to be used by Russia in its war in Ukraine, as well as certain machinery components and new and second hand cars with large engine sizes.
EU countries are prohibited under the new package from importing Russian origin iron and steel, and there is an absolute ban on the transportation of goods into the EU by road in vehicles registered in Russia. EU efforts to combat sanctions evasion are also extended to the oil sector, with a ban on entry to EU ports by any vessels suspected of carrying sanctioned Russian crude or petroleum products which have engaged in ship-to-ship transfers, or which have interfered with their navigation tracking systems while transporting Russian oil. The northern section of the Druzhba oil pipeline, which connects Russia with Germany and Poland, is closed.
Later in the month, the EU published lists of goods considered high priority battlefield items to the Russian war effort in Ukraine, including prohibited dual-use goods, and of goods considered critical to the functioning of the Russian economy. The lists are intended to support compliance and due diligence measures undertaken by exporters and the activities of customs and enforcement agencies.
Associated Designations
The new sanctions package was accompanied by more than 100 new designations of individuals and entities deemed to be supporting the Russian IT sector, active in the manufacture of military hardware or deemed to be involved in the spread of propaganda and disinformation. Specific designations were also made of military officials convicted of involvement in the downing of Malaysia Airlines Flight MH17, members of the judiciary who took action against opponents of the annexation of Crimea and MRB Bank and CMR Bank, which operate in occupied eastern Ukraine.
Separately, under its new Global Human Rights Sanctions Regime, on 5th June the EU imposed sanctions on a number of Russian legislators, investigators and members of the judiciary for their involvement in the prosecution and imprisonment of opposition politician Vladimir Kara-Murza. These included Deputy Minister of Justice Oleg Mikhailovich Sviridenko, Judges Diana Igorevna Mishchenko, Elena Anatolievna Lenskaya, Ilya Pavlovich Kozlov, and Sergei Gennadievich Podoprigorov, investigators Denis Vladimirovich Kolesnikov and Andrei Andreevich Zadachin, expert witness Danila Yurievich Mikheev and Dmitriy Viktorovich Komnov, who occupies a senior position in the Russian penitentiary system.
Tightening UK Legislation on Russia
On 19th June 2023 the UK announced new legislation which would maintain sanctions against Russia in force until the country had paid compensation for its invasion of Ukraine. In combination with this measure, legislation has been prepared requiring those holding assets in the UK on behalf of the Russian state – notably via the Russian National Wealth Fund, its Ministry of Finance or Central Bank – formally to disclose these to the UK government. This appears likely to be the first step in an attempt to establish a legal process for the use of frozen assets in the reconstruction of Ukraine.
New UK legislation has also explicitly prohibited UK lawyers from advising on transactions which would be prohibited to UK persons under the UK sanctions regime.
Other New Russia Designations
OFAC made a series of new Russia designations over the past month, including FSB officers Yegor Sergeyevich Popov and Aleksei Borisovich Sukhodolov, who were deemed to be involved in malign influence operations, and a group accused of working to destabilise the government of Moldova, who included Konstantin Prokopyevich Sapozhnikov, Yury Yuryevich Makolov, Gleb Maksimovich Khloponin, Svetlana Andreyevna Boyko, Anna Travnikova, Vasily Viktorovich Gromovikov, Aleksey Vyacheslavovich Losev and Losev’s company Perko Julleuchter.
Switzerland has also implemented a series of targeted sanctions concerning Russian activities in Moldova, following the EU designations made earlier in the month.
Iran
June saw a clutch of new designations in the OFAC and EU Iran programmes, targeting individuals and entities deemed to be involved in the country’s ballistic missile programme or associated with internal repression.
The OFAC measures included 15 designations on 8th June linked to Iran’s co-operation with a group of Chinese entities to secure equipment and technology associated with the development of missiles. These included the Chinese company Lingoe Process Engineering Limited and its affiliates, Li Zeming and Shen Weisheng, which were deemed to have procured sensitive and critical parts and technology for the Iranian missile programme, as well as Qingdao Zhongrongtong Trade Development Co. Limited and Hong Kong-registered Do International Trade Co. Limited, which sold dual-use metals to parties affiliated with the programme. On the Iranian side, sanctions were imposed on Iran’s Defence Attaché in Beijing, Davoud Damghani, who was deemed to have co-ordinated the relationship, Blue Calm Marine Services Company, for its role in facilitating the shipment of centrifuges to Iran and three entities: Iran’s Marine Industries Organization and China-incorporated Beijing Shiny Nights Technology Development Co. Limited and Iran Electronics Industries, all of which were deemed to be controlled by the Iranian Ministry of Defence, as well as Iran Electronics Industries principal Ghasem Haghighat. The Chinese individuals Wei Zunyi, Qin Xutong and Gong Jiao were also sanctioned for their roles in the scheme.
A week prior to these designations, on 1st June, OFAC designated 5 individuals and 1 entity associated with Iran’s Islamic Revolutionary Guard Corps and its external operations arm, the IRGC-Qods Force who were deemed to have been important to the suppression of protests against the regime. These were Mohammad Reza Ansari, Shahram Poursafi, Hossein Hafez Amini, Amini’s airline, Rey Havacilik Ithalat Ihracat Sanayi Ve Ticaret A.S., Rouhallah Bazghandi and Reza Seraj. The following day, OFAC designated Iranian technology company, Navyan Abr Arvan Private Limited Company, for allegedly aiding in internet censorship, as well as its founders, Pouya Pirhosseinloo and Farhad Fatemi, and its Dubai affiliate, ArvanCloud Global Technologies L.L.C.
Alongside these two measures, a motion was introduced in the US House of Representatives which could ultimately allow for sanctions to be imposed on individuals or entities assisting in the evasion of US sanctions on Iranian oil.
The EU has also continued to raise the pressure on Iran, imposing designations on seven individuals allegedly responsible for human rights violations in the suppression of protests in the country, including public prosecutor Seyyed Mohammad Mousvian, deputy judge Ali Zare Nouri, governors and police commanders Seyyed Nader Safavi Mirmahalleh, Seyyed Khalil Safavi, and Seyyed Abbas Hosseini and military commanders Mojtaba Fada and Rashid Kaboudvandi.
Wagner
On 28th June OFAC made a number of designations under its Russia programme targeting individuals and entities associated with the Wagner mercenary group and its financing networks in Africa. These included Central African Republic mining company Midas Ressources SARLU, which is deemed to be affiliated with Yevgeniy Prigozhin, as well as Diamville SAU, in Central African Republic, OOO DM, in Russia, and Industrial Resources General Trading, in Dubai, which are understood to have been used by Prigozhin and Wagner to conduct gold trading activities benefitting the group. Wagner executive Andrey Nikolayevich Ivanov was sanctioned at the same time.
Shortly after these designations, the US government issued an advisory on the African gold trade including the activities of Prigozhin’s networks in Central African Republic and Sudan as a case study.
New Belarus Measures
On 9th June new amendments to the UK’s Belarus sanctions programme came into force, expanding the designation criteria to include any individual or entity serving as an official with a government affiliated entity and targeting all those associated with any individuals or entities deemed to be connected with the disappearances in 1999 and 2000 of opposition figures Yury Zakharanka, Viktar Hanchar, Anatol Krasouski or Dzmitry Zavadski.
Export restrictions were also put into place covering goods associated with machinery, chemical or biological weapons or banknotes, while prohibitions were enacted on the importation from Belarus of cement, rubber, and wood, as well as gold and gold-derived products. Connected with the sanctions was an obligation of internet service providers and social media companies to prevent users from being able to access materials published by persons designated under the programme.
New Designations
OFAC made a large number of new designations in June, across various national and transnational programmes. Those targeted included Burma’s Ministry of Defence and the state-owned Myanma Foreign Trade Bank and Myanma Investment and Commercial Bank, under its Burma programme. Two North Korean individuals, Choe Chol Min and his wife Choe Un Jung, were added under its Korea programme due to their alleged connections to the country’s procurement of weapons of mass destruction.
Sanctions were also imposed under OFAC’s transnational criminal programme on the Mexican Hernandez Salas human smuggling organization, its leader, Ofelia Hernandez Salas, gang members Raul Saucedo Huipio, Jesus Gerardo Chavez Tamayo, Fatima Del Rocio Maldonado Lopez, and Federico Hernandez Sanchez and the related entities Hotel Plaza and Hotel Las Torres. OFAC also made a number of narcotics-related designations, targeting the Cartel de Jalisco Nueva Generacion and its members Alonso Guerrero Covarrubias and Javier Guerrero Covarrubias, as well as currency exchange house Nacer Agencia Panamericana de Divisas y Centro Cambiario and its director Mary Cruz Rodriguez Aguirre.
Further, on 20th June 2023 OFAC sanctioned James Nando, a Major General in the South Sudan People’s Defence Forces and Alfred Futayo, Governor of Western Equatoria for attacks resulting in kidnap and rape of civilians. These sanctions were targeted to coincide with the International Day for the Elimination of Sexual Violence in Conflict.
On 1st June new designations were added under OFAC’s Sudan programme targeting Al Junaid Multi Activities Co Limited and Tradive General Trading LLC, which were deemed to be associated with the country’s paramilitary Rapid Support Forces, as well as Defense Industries System and Sudan Master Technology, which were deemed to be associated with the Sudanese Armed Forces.
Concurrently, visa restrictions were introduced by the Department of State targeting unnamed senior officials with the Sudanese military and the former government of Omar al-Bashir.
The US Department of State has made its own series of designations, notably targeting two ISIS leaders as global terrorists for their involvement in the abduction and enslavement of members of the country’s Yazidi community. Others designated by the State Department included former Haitian Prime Minister Laurent Salvador Lamothe and the mayor of the municipality of Struga, North Macedonia, Ramiz Merko. Visa restrictions were also imposed on unnamed Ugandan individuals for human rights abuses and work to undermine the democratic process there. The State Department actions has also debarred ten individuals for violations of the Arms Export Control Act.
Two Chinese companies – Xinjiang Zhongtai Chemical Co. Limited and Ninestar Corporation, including eight of its subsidiaries – were added by the Department of Homeland Security to its Uyghur Forced Labor Prevention Act Entity List for their role in human rights violations in Xinjiang.
The UK made its own series of designations to coincide with the International Day for the Elimination of Sexual Violence in Conflict, imposing sanctions on the Syrian Minister of Defence, Ali Mahmoud Abbas, and Chief of the Syrian Army General Staff, Abdel Karim Mahmoud Ibrahim and two individuals accused of responsibility for sexual violence in conflict zones in Africa – Désiré Londroma Ndjukpa, leader of the Cooperative for the Development of the Congo and William Yakutumba, leader of the armed Mai-Mai Yakutumba rebel group.
Legal Challenges
June saw significant developments regarding legal challenges to the EU’s Belarusian sanctions programme, rejecting applications at the beginning of the month from eight individuals designated under the programme who had argued that their inclusion in the programme was disproportionate and lacked specific grounding. These included real estate developer Dana Astra, which had since also been sanctioned by the Government of Belarus.
The EU did agree to remove Emmanuel Ramazani Shadary and Kalev Mutondo from its sanctions programme after the EU General Court ruled that insufficient evidence had been presented to demonstrate that they had been actively involved in undermining the 2018 electoral process in the Democratic Republic of Congo.
In the US, two former independent board members of the Russian state-owned Bank Otkritie, Elena Titova and Andrey Golikov, began civil litigation against the US State Department and the US Treasury, arguing that they should be removed from the country’s Russia sanctions programme. Both individuals had resigned from their posts in the weeks following Russia’s invasion of Ukraine, and some time before sanctions had been imposed on them.
On 6th July the UK agreed to remove Lev Aronovich Khasis, a former Deputy Chairman of the Management Board at Sberbank, from its sanctions list. A ruling in the High Court has however rejected a bid by Russian racing driver, Nikita Mazepin to suspend the application of part of the UK sanctions programme against him pending his formal challenge to his application. Mazepin had in March been successful in a similar bid before the EU General Court.
Enforcement
OFAC concluded a single enforcement action in June, concluding an agreement with a Latvian subsidiary of Swedbank to settle its liability for violations of sanctions covering the occupied Crimea. Swedbank Latvia AS was found to have allowed a client in Crimea to process $3.3 million in transactions through the US in 2015 and 2016. It paid $3.4 million to settle the case.
The US Bureau of Industry and Security, a division of the Department of Commerce, ordered a temporary suspension of export privileges targeting the Dutch and Greek-headquartered defence business Aratos Group, tied to the allegation that it had illicitly exported sensitive items to Russia. The restriction followed the conclusion in May of a criminal case against Aratos’ President, Nikolaos Bogonikolos, for the supply of US military technology to Russia.
On 2nd June the US Department of State settled another arms-related case involving settlement with US-incorporated VTA Telecom Corporation, which was found to have exported military goods to Vietnam. VTA will be barred for three years from dealing in US military equipment or technologies.
