This month has seen a renewed focus on Russia, with the EU announcing the outline of its planned eleventh package of measures targeting the Russian economy. The new planned package preceded a major G7 meeting in Hiroshima, in which the parties committed to continuing to co-ordinate their sanctions programmes.
Elsewhere, the EU has introduced a corruption regime as well as a new Moldova sanctions program, and the US has expanded the terms of its Sudan sanctions program in order to target those responsible for violence in the country in April.
Russian Developments
- On 11th May European Commission President Ursula von der Leyen announced details of the EU’s 11thpackage of Russia sanctions. The package is focused on closing existing loopholes which facilitate sanctions evasion by Russia. It is expected to include transit bans on products such as aircraft parts exported to Russia via third countries, as well as new mechanisms through which the commission can impose bans on ‘shadow’ entities from Russia and third countries deemed to be circumventing EU sanctions.
- The announcement of the planned 11th EU package of sanctions preceded the G7 summit in Hiroshima, at the outset of which the leaders of the countries involved reaffirmed their commitment to maintaining and increasing sanctions against Russia in a co-ordinated manner. In a joint statement issued on 19th May, the G7 countries promised to restrict the export from their jurisdictions of all items which could be utilised in support of the Russian war effort. There was also a commitment to prevent the circumvention of measures against Russia, including targeting entities transporting material to the front, and working through the Russian Elites, Proxies, and Oligarchs (REPO) Task Force and the Enforcement Coordination Mechanism to enhance the effectiveness of restrictive measures.
- On 19th May the UK added 86 individuals and entities connected to Russia’s energy, metals, defence, transport, and financial sectors to its Russia sanctions list. They include: nine organisations connected to Russia’s state-owned nuclear energy company, Rosatom; Oleg Romanenko, a lead official at the Zaporizhzhia Nuclear Power Plant, the Operating Organisation of Zaporizhzhia Nuclear Power Plant; 13 members of the Gazprom-Neft Board of Directors, and five members of the Transneft Board of Directors; Igor Altushkin, owner of the Russian Cooper Company, and eight companies connected to metals production in Russia; and 24 individuals and entities connected to Russia’s state-owned transport services.
- On 15th May the US Attorney General Merrick Garland announced that $5.4 million forfeited from US sanctioned Konstantin Malofeyev will be transferred directly to Ukraine. It is unclear exactly how the assets will be used, but the US State Department has indicated that the proceeds will be used to “help rebuild Ukraine”.
Enforcement Developments
- On 1st May OFAC announced that Poloniex, LLC, which previously operated an online trading and settlement platform known as Poloniex Inc, had agreed to pay $7.5 million to settle its potential civil liability for nearly 66,000 apparent violations of US sanctions on Crimea, Cuba, Iran, Sudan and Syria. The allegation is that, between January 2014 and November 2019, the Poloniex trading platform allowed 232 customers apparently located in sanctioned jurisdictions to engage in online digital asset-related transactions with a combined value of $15.3 million.
- On 17th May Murad LLC, a cosmetics company in California, agreed to pay $3.3 million to settle its potential civil liability for an apparent violation of OFAC sanctions on Iran, relating to the unauthorized export of goods and services to the country over an approximately eight-year period ending in 2018. A former senior company executive has separately agreed to pay $175,000 to settle their potential civil liability for three apparent violations of OFAC’s Iran sanctions arising from their role as a manager at the company.
- On 30th May German outlet Der Spiegel reported that a Frankfurt court had ruled that a series of searches of Alisher Usmanov’s properties in Germany last year were unlawful. The searches were carried out by German law enforcement as part of a money-laundering investigation into the Russian businessman, but the district court in Frankfurt ruled that the searches did “not meet the minimum requirements of the definition of the crime being investigated”.
New Programs
- On 3rd May the EU High Representative for Foreign Affairs and Security Policy proposed a Council Decision and, jointly with the European Commission, a proposal for a Council Regulation introducing a sanctions regime targeting international corruption. The new programme, which echo existing regimes operated by OFAC and OFSI, will target ‘passive or active bribery’ of public officials or embezzlement or misappropriation by public officials.
- On 4th May the EU adopted a new sanctions framework targeting threats to the stability of Moldova and its government. The framework provides for travel bans and asset freezes on those deemed responsible for supporting or implementing actions or policies which undermine or threaten the sovereignty and independence of Moldova, or democracy, the rule of law, stability or security in the country.
- On 4th May US President Joe Biden issued a new Executive Order, ‘Executive Order on Imposing Sanctions on Certain Persons Destabilising Sudan and Undermining the Goal of a Democratic Transition’, which expands the scope of the national emergency declared in previous Executive Orders in response to the military’s seizure of power in the country in October 2021 and the outbreak of violence on 15th April 2023. The Executive Order provides for the imposition of sanctions targeting those considered to be responsible for threatening the peace, security and stability of Sudan, undermining Sudan’s democratic transition, using violence against civilians or committing serious human rights abuses.
Designations
- On 15th May OFAC designated four members of the Sinaloa Cartel and two Mexican entities involved in the supply of fentanyl and other drugs into the United States, specifically Joaquin Guzman Lopez, a son of Joaquin “El Chapo” Guzman Loera and fourth leading member of the “Los Chapitos” faction of the cartel; Raymundo Perez Uribe, who leads a supplier network to obtain precursor chemicals for manufacturing illicit drugs; Saul Paez Lopez, who coordinates drug shipments; and Mario Esteban Ogazon Sedano, who purchases precursor chemicals and operates drug laboratories.
- On 16th May OFAC designated Mikhail Matveev under its Cyber program, deeming him to be responsible for attacks against US law enforcement, businesses, and critical infrastructure. Matveev is a Russian national who has been a key figure in the development of ransomware variants, including Hive, LockBit, and Babuk.
- On 22nd May the European Council imposed restrictive measures on additional figures allegedly responsible for human rights violations in Iran. Five individuals were sanctioned: Salman Adinehvand, Commander of the Tehran Police Relief Unit of Iran’s Law Enforcement Forces; Seyyed Mohammad Amin Aghamiri, secretary of Iran’s Supreme Council of Cyberspace; Mohsen Nikvarz, public prosecutor of Sirjan; Nader Moradi, Deputy Supervisor of Public Spaces of the Public Security Police; and Saeed Montazer Al-Mahdi, police spokesman.
- On 23rd May OFAC sanctioned four entities and one individual involved in obfuscated revenue generation and malicious cyber and IT activities that support the DPRK Government under the North Korea program. On Wednesday 24 May, The US State Department, designated 5 al-Shabaab leaders as Specially Designated Global Terrorists.
- OFAC concluded a number of additional designations in May, including Ivan Aleksandrovich Maslov, the head of the Mali wing of the Wagner Group, and two Syrian money service businesses and three affiliated individuals that allegedly provide financial support to the Assad regime. Concurrently with the designation of Maslov, the Department of State imposed visa restrictions on two Malian military commanders for their alleged involvement in gross violations of human rights alongside the Wagner Group.
