US Sanctions Updates

EXECUTIVE ORDER 13572 29 APRIL 2011

On 29 April 2011 President Obama issued Executive Order 13572, imposing sanctions against persons involved in human rights abuses in Syria, and empowering the Secretary of the Treasury to further designate such persons.  Three individuals and two entities were initially designated pursuant to Executive Order 13572.

EXECUTIVE ORDER 13573 18 MAY 2011

On 18 May 2011 President Obama issued Executive Order 13573, targeting sanctions against senior officials of the Government of Syria in response to its crackdown of dissidents during an ongoing civil uprising, again empowering the Secretary of the Treasury to designate relevant persons. Sanctions against seven key persons serving in the Syrian Government, including the President himself, were issued.

UPDATE 4 AUGUST 2011

The US Treasury has designated Muhammad Hamsho, a prominent businessman and member of the Syrian Parliament, pursuant to Executive Orders 13572 and 13573. Hamsho International Group is also designated by reason of being controlled by Mr Hamsho. According to a US Treasury Press Release, Hamsho International controls approximately twenty subsidiary or affiliated companies, involved in nearly every sector of the Syrian economy.  As a result of these designations, US persons are prohibited from engaging in commercial or financial transactions with the latest designees. These same entities were added to the EU list of sanctioned entities under the EU's equivalent sanctions regime related to Syria on 24 May 2011 and 24 June 2011 respectively.

Members trading to Syria or with Syrian entities are advised to continue to conduct due diligence on their trading partners to ensure they are compliant with any sanctions measures that are applicable.

UPDATE 11 AUGUST 2011

The US has added further entities to the OFAC list of Specially Designated Nationals.  These include the largest commercial bank in Syria, Commercial Bank of Syria, and an affiliated bank, Syrian Lebanese Commercial Bank. 

If members trading with Syrian entities have monies denominated in US dollars passing through these banks, then those funds seem likely to be blocked by the US.

EXECUTIVE ORDER 13582 - 17 AUGUST 2011

The US has taken further steps to pressure the Syrian Government to stop the use of force against civilians participating in pro-democracy demonstrations in Syria. 

Pursuant to an Executive Order which came into effect on 18 August 2011, US persons, wherever located, are banned from:

  • new investment in Syria;
  • the exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a United States person, wherever located, of any services to Syria;

They are also banned from importing or dealing in Syrian-origin petroleum or petroleum products. 

On the same day, OFAC added the following entities to the List of Specially Designated Nationals:

GENERAL PETROLEUM CORPORATION (a.k.a. "GPC"), New Sham- Building of Syrian Oil Company, PO Box 60694, Damascus, Syria [SYRIA]
 
SYRIAN COMPANY FOR OIL TRANSPORT (a.k.a. SYRIAN CRUDE OIL TRANSPORTATION COMPANY; a.k.a. "SCOT"; a.k.a. "SCOTRACO"), Banias Industrial Area, Latakia Entrance Way, P.O. Box 13, Banias, Syria; Website www.scot-syria.com; Email scot50@scn-net.org [SYRIA]
 
SYRIAN GAS COMPANY, P.O. Box 4499, Homs, Syria; Agricultural Engineering Syndicate Building, Baab Hood Area, Al Arbeen District, Homs, Syria; Website www.sgc.gov.sy; Email sgcpdit@mail.sy; Email info@sgc.gov.sy [SYRIA]
 
SYRIAN PETROLEUM COMPANY (a.k.a. "SPC"), Dummar Province Expansion Square, Island 19, Building 32, PO Box 3378, Damascus, Syria; Dummar Province Expansion Square, Island 19, Building 32, PO Box 2849, Damascus, Syria; Todmar Project, Damascus, Syria [SYRIA]
 
SYTROL, Prime Minister Building, 17 Street Nissan, Damascus, Syria [SYRIA]

A copy of the Executive Order can be found below.  A complete list of individuals and entities designated as SDNs by OFAC can be found at the US Department of Treasury website.

EREN LAW FIRM SYRIAN SANCTIONS CLIENT BRIEF 31 AUGUST 2011

Eren Law Firm has kindly given permission for their latest client briefing on US sanctions against Syria to be published on this website.  A copy can be found below.

PROPOSED U.S. LEGISLATION - IRAN, NORTH KOREA AND SYRIA SANCTIONS CONSOLIDATION ACT OF 2011 - 21 DECEMBER 2011

U.S. Government legislative proposals look likely to introduce tougher measures in support of trade embargoes on Iran, North Korea and Syria.

The measure most directly impacting the shipping industry is a proposed new “180 day rule,” which provides that vessels may not knowingly land at any port in the United States to load or unload cargo or engage in the trade of goods or services if the vessel previously entered a port in Iran, North Korea, or Syria during the 180-day period preceding the arrival of the vessel in the United States. This proposal, which is similar to current U.S. policy for Cuba, passed the House of Representatives on 14 December 2011 and could become law imminently if passed by the Senate and signed by the President.

The proposed legislative amendment to the Ports and Waterways Safety Act (33 USC 1221 et seq.) would require either “the owner, charterer, operator, or master” of a vessel to “certify” prior to arrival in a U.S. port, “that the vessel did not enter a port in Iran, North Korea, or Syria during the 180-day period ending on the date of arrival of the vessel” in a U.S. port. 

In addition to other applicable criminal and civil penalties, ships found to have submitted false declarations could be subject to prohibitions including a prohibition from landing at a port in the U.S. for a period of at least 2 years. This could apply to any vessel for which a false declaration was made and to other vessels owned by a parent/associated company.

The draft legislation also contains provisions which

  • Direct federal authorities to carry out enhanced inspections on vessels that have landed in Iranian, North Korean or Syrian ports during the preceding 12-months to determine whether the vessel was involved in any sanctioned proliferation-related activity. Data from the U.S. Authorities’ vessel tracking systems may be used to establish such activity.
  • Provide for new sanctions on any person providing shipping services for the transportation of goods to or from Iran, North Korea, or Syria for purposes relating to  nuclear, biological, or chemical weapons, or ballistic or cruise missile development programs. This includes provision of vessels, insurance and reinsurance. The only defence would appear to be to demonstrate that the vessel, insurance, reinsurance or other shipping service was not in fact provided in respect of a prohibited activity.

The direct impact of the current proposals will be on the shipowner / operator/ vessel. It remains to be seen whether the final legislation will contain explicit provisions regarding insurers, although to the extent that any enacted legislation results in vessel detention or deviation, the availability of P and I cover could be affected for liabilities arising in consequence thereof. In the event that a Member incurs liabilities as a result of engaging in sanctionable activity, the Club Rules already provide for restrictions on cover.

The International Group Secretariat has sought clarification from the U.S. Administration on a number of issues including:

  • the possible retrospective impact on a vessel’s 180 day prior trading history;
  • the extension of prohibitions for infringements to other vessels in the same or associated ownership, management or control;
  • the levels of due diligence required in relation to ascertaining the prior trading history of newly acquired vessels; and
  • the application of the new measures in the context of shipowners’/operators’ existing contractual obligations to proceed to ports in Iran, Syria or North Korea and the U.S.

The Group will continue to press for clarification on these issues and monitor developments with regard to the progress of the proposed legislation.

A copy of the text of H.R. 2105 may be downloaded from the link set out below.

EXECUTIVE ORDER 13608 - TARGETING FOREIGN SANCTIONS EVADERS - 1 MAY 2012

Entitled “Prohibiting Certain Transactions With and Suspending Entry into the United States of Foreign Sanctions Evaders with Respect to Iran and Syria.”, this Executive Order provides the U.S. Treasury Department with power to impose measures on foreign individuals and entities that have:

  • violated, attempted to violate, conspired to violate, or caused a violation of U.S. sanctions against Iran or Syria; or
  • facilitated deceptive transactions for persons subject to U.S. sanctions concerning Iran or Syria.

A “deceptive transaction” means any transaction where the identity of any person subject to US sanctions concerning Iran or Syria is concealed from other participants to the transaction or any relevant regulatory authority.

Measures may also be imposed on foreign individuals and entities who are owned or controlled by, or are acting or purporting to act for or on behalf of, directly or indirectly, any person determined to have committed, conspired to, or attempted  a violation, or facilitated a deceptive transaction as set out in the Order.

In order for a non-US person to be subjected to sanctions under the new Executive Order, a transaction that they engaged in or are currently engaging in had/has to have a U.S. nexus and be of a type that is prohibited under existing U.S. sanctions laws and regulations.  The US sanctions against Iran and Syria generally apply to US persons (general in personam jurisdiction), and to non-US persons, but only with respect to or to the extent of their transactions that : (i) have a US nexus or connection or effect (specific jurisdiction), and (ii) would be prohibited if engaged in by a US person. The new Executive Order does not expand the universe of prohibited transactions and activities.  Transactions by non-U.S. persons and without any U.S. nexus or connection remain outside U.S. jurisdiction. 

The Order overcomes some of the difficulties OFAC has encountered in enforcing sanctions measures, such as traditional monetary fines, against non-U.S. persons who are located outside of the United States.  Such measures often face opposition from authorities in other countries. Under this new Order, OFAC can punish breaches of sanctions prohibitions by imposing sanctions against offenders directly, i.e. by blacklisting/targeting them, prohibiting US persons from dealing with such violators and cutting them off from trade with and entry into the United States.  Measures which might be imposed on an offender include a prohibition on all transactions or dealings, whether direct or indirect, involving such person, including any exporting, re-exporting, importing, selling, purchasing, transporting, swapping, brokering, approving, financing, facilitating, or guaranteeing, in or related to (i) any goods, services, or technology in or intended for the United States, or (ii) any goods, services, or technology provided by or to United States persons, wherever located.  Appearing on a U.S. blacklist or list of sanctions targets can have negative implications for the activities of such persons outside or beyond the United States, as most international banks, no matter where located, as a practical or risk management matter refuse or decline to handle transactions for such persons.

The Order also empowers the US Treasury to publicly identify foreign individuals and entities that have engaged in evasive or deceptive activities and generally to bar access to the US financial and commercial systems. Publication of foreign offender details is aimed at helping U.S persons to avoid unwittingly engaging in transactions with an offender.  

The measures also include the power to prohibit the entry into the U.S. of foreign persons found to have attempted, or conspired to violate, or actually violated US sanctions against Iran or Syria, or to have facilitated a deceptive transaction. 

Measures under the new Order have potentially serious financial and reputational consequences for offenders, effectively cutting them off from the US marketplace.  To avoid punishment under the new Executive Order, members should ensure they do not violate U.S. Iran and Syria sanctions laws whenever they engage in a transaction with or involving Iran or Syria.

Copies of the Executive Order 13608 and a US Treasury Department Fact Sheet can be downloaded from the links set out below.

The Foreign Sanctions Evaders E.O. comes one week after publication of a U.S. Executive Order Blocking the Property and Suspending the Entry into the United States of Certain Persons with Respect to Grave Human Rights Abuses by the Government of Iran and Syria via Information Technology (the GHRAVITY E.O.), which targeted the provision and use of information and communications technology to facilitate computer or network disruption, monitoring or tracking that could assist in or enable serious human rights abuses by or on behalf of the Government of Iran or the Government of Syria.

THE IRAN THREAT REDUCTION AND SYRIA HUMAN RIGHTS ACT 2012 ( HR 1905) - 10 AUGUST 2012

As it relates to Syria, The Iran Threat Reduction and Syria Human Rights Act of 2012 (ITRSHA) provides for sanctions, including blocking of property and restrictions or prohibitions on financial transactions, with respect to human rights abuses in Syria, with respect to:

  • persons who are responsible for or complicit in human rights abuses committed against citizens of Syria or their family members;
  • the transfer of goods or technologies to Syria that are likely to be used to commit human rights abuses; and
  • persons who engage in censorship or other forms of repression in Syria.

Copies of the Act and a related Client Alert published by Washington law firm Eren Lawyers can be downloaded from the links set out below.

 

OFAC STATEMENT OF LICENCING POLICY - 12 JUNE 2013

OFAC has published a Statement of Licencing Policy establishing a more favourable licencing regime through which US persons can request from OFAC specific authorisation to engage in transactions related to petroleum or petroleum products of Syrian origin for the benefit of the National Coalition of Syrian Revolutionary and Opposition Forces or its supporters.

Specific licences may be issued on a case-by-case basis to authorize U.S. persons to engage in any transaction otherwise prohibited by section 2 of Executive Order 13582, including but not limited to new investment, involving the purchase, trade, export, import, or production of petroleum or petroleum products of Syrian origin for the benefit of the National Coalition of Syrian Revolutionary and Opposition Forces or its supporters. The Statement makes clear that authorisation will not be granted in respect of:

  • any transaction or activity, directly or indirectly, with the Government of Syria, which includes its agencies, instrumentalities, and controlled entities;
  • any transaction with a person whose property and interests in property are blocked, or who is otherwise sanctioned pursuant to US sanctions in respect of Syria;

Similar rules have also been introduced in relation to licencing of transactions related to the telecommunications and agricultural sectors of Syria.  A copy of the Statement can be downloaded from the link set out below.