U.S. Sanctions Against Libya

US Eases Trade Restrictions Under General License No. 5 26 April 2011

As reported in Club Circulars B. 547 and L. 156 (Political Unrest in Libya and Sanctions Measures), on 25th February 2011, the US administration issued Executive Order 13566 in relation to Blocking Property and Prohibiting Certain Transactions Related to Libya.

As of 26th April 2011, and pursuant to OFAC General License No. 5, the US has eased the trade restrictions by allowing US persons to apply for specific licences to purchase hydrocarbon fuel (defined as oil, gas and petroleum products), in limited circumstances and under strict conditions.  Pursuant to General License No. 5, licences may be issued in respect of transactions between US persons and Qatar Petroleum or the Vitol group of companies pursuant to which oil, gas and petroleum products are purchased by US persons from Libya under the auspices of the Transitional National Council of Libya ("TNC") through the Arab Gulf Oil Company ("Agoco"), provided that the Government of Libya, its agencies and controlled entities do not benefit from the activities or transactions.  The exception made in relation to Agoco stems from the fact that it operates under the auspices of and in an area controlled by the TNC.  All such transactions in respect of which authorisation is sought are to be reported to the Licensing Division of OFAC within 30 days of the transaction, and should include details of the parties involved, and outline the due diligence steps taken to verify that neither the Government of Libya nor any persons whose property and interests are blocked, are benefitting from the transactions.

Pursuant to OFAC's Statement of Licensing Policy on The Trade in Oil, Gas and Petroleum Products dated 26th April 2011, licences may also be applied for in advance in relation to the exportation and trading in of oil, gas and petroleum products produced in areas controlled by the TNC, subject to the same preconditions that the Government of Libya and blocked persons do not benefit from such transactions.

Further information may be obtained from OFAC.  Links to OFAC's General Licensing Policy on Libya and General License No. 5 can be found below.

OFAC Tightens Libya Sanctions 21 June 2011 

Two measures have been taken by the US Treasury Department to tighten US sanctions against the Government of Libya.

The first is the revoking of General License No. 1A and issuance of General License No. 1B in its place. Under License No. 1A, transactions involving banks owned or controlled by the Government of Libya were authorised, provided that the transactions did not otherwise benefit the Qadhafi regime.  The Libyan Arab Foreign Bank became subject to an asset freeze on 15 March 2011 (pursuant to the provisions of Executive Order 13566 - see Club Circular B 547) and hence was excluded from the benefits of this license.  License No. 1B continues to allow transactions between US persons and banks owned and controlled by the Libyan Government, however, as from 21 June 2011, three banks are excluded from the benefit of the authorisations - Arab Turkish Bank, North Africa International Bank and North Africa Commercial Bank.  OFAC has identified that all three of these banks have processed transactions on behalf of or for the benefit of Libyan Arab Foreign Bank since the latter became subject to sanctions on 15 March 2011.

OFAC has also today identified nine companies (including the three banks mentioned above) as now being subject to the asset freeze provisions issued under Executive Order 13566. The following extract from the OFAC Press Release sets out details of those entities:

 General Company for Chemical Industries: a Libya-based, state-owned company responsible to the Secretariat (Ministry) of Economy and Trade.
 General National Maritime Transport Company: wholly-owned by the Government of Libya, responsible to the Secretariat of Communication and Maritime Transport. General National Maritime Transport Company owns a number of major vessels, including tankers and undertakes a number of maritime transportation activities on behalf of the Government of Libya.
 Ghana Libya Arab Holding Company: a Ghana-based entity that is 60 percent owned by the Libyan Arab African Investment Company (LAAICO), a subsidiary of the Libyan Investment Authority (LIA). Both LAAICO and LIA were identified by OFAC in March 2011, as being owned or controlled by the Government of Libya. The remaining 40 percent of Ghana Libya Arab Holding Company’s shares are owned by the Government of Ghana.
 Glahco Hotels And Tourism Development Company Limited (Golden Tulip Accra): a Ghana-based subsidiary of the Ghana Libya Arab Holding Company that is 60 percent owned by the LAAICO, a subsidiary of the LIA.
 Libyan Norwegian Fertiliser Company: a Libya-based chemical company that is 25 percent owned by the National Oil Corporation of Libya (NOC), 25 percent owned by the LIA and 50 percent owned by a Norwegian chemical company. NOC was also identified by OFAC as being owned or controlled by the Government of Libya in March 2011.
 Pak-Libya Holding Company: a Pakistan-based entity that is 50 percent owned by LAFICO, a subsidiary of the LIA. The Government of Pakistan owns the remaining 50 percent of Pak-Libya Holding Company’s shares.

Separately, the former Oil Minister and former Chairman of National Oil corporation, Mr Shukri Mohammed Ghanem, who defected from the Qadhafi regime in May 2011, has been removed from the list of those subject to US sanctions pursuant to Executive Order 13566.

Copies of the OFAC press release and General License no 1B can be downloaded from the links below.

OFAC Issues Libyan Sanctions Regulations 31 CFR PART 570 1 July 2011

On 1 July 2011 the United States Department of Treasury (OFAC) issued the Libyan Sanctions Regulations ("LSR") to provide interpretative guidance in relation to Executive Order 13566, which has been in effect since 25 February 2011.  

The LSR state that the blocking provisions apply not just to entities that are specifically designated, but also to all entities of the "Government of Libya" as defined, whether or not they appear on the SDN List. This creates a broad threshold for designation, since the test for determining whether an entity is a part of the Government of Libya is a "reasonable cause to believe" test.  (see section 570.304). 

The property and interests in property of any entity, in which a blocked entity has a greater than 50% interest, are themselves blocked (see section 570.406).

Members should continue to perform thorough due diligence in relation to any trades that involve import or exports to/from Libya, or which otherwise involve Libyan entities. 

OFAC Issues General Licence No. 7

Pursuant to General Licence No. 7 and with effect from 9 September 2011, US persons are allowed to transact with entitities owned or controlled by the Libyan National Oil Corporation ("LNOC"), with the exception of one subsidiary, Zueitina Oil Co., “provided that such transactions do not involve the Libyan National Oil Corp. or any persons whose property and interests in property are blocked other than the authorized subsidiaries.”

The document sets out a non-exhaustive list of authorised subsidiaries, a number of which had been added to the OFAC SDN List in March 2011.

This move reflects efforts to encourage the resumption of oil production in Libya and in turn aid Libya's economic recovery.

A copy of the Licence can be downloaded below.

US Implements UN Resolution 2009 (2011)

UN Resolution 2009 (2011) was adopted by the Security Council on 16 September 2011 with the aim of easing sanctions measures against Libya that had been adopted pursuant to UN Resolution 1970 (2011) of 26 February 2011, and enacted in the US under Executive Order 13566 and the Libyan Sanctions Regulations 31 CFR part 570.

UNSCR 2009 (2011) has now been implemented by the US through the issuance of two licences:

General Licence No. 7A - pursuant to General Licence No. 7 issued on 9 September 2011, the US had already partially lifted trade restrictions with subsidiaries of the Libyan National Oil Company ("LNOC").  Under General Licence No 7A, which supersedes General Licence No. 7, the prohibitions in respect of transactions involving Zueitina Oil Co and the LNOC itself have been lifted with effect from 19 September 2011. In addition, the property of LNOC and its subsidiaries that had previously been frozen have been unblocked. Such property may now be released subject to compliance with reporting requirements.

General Licence No. 8 - with effect from 19 September 2011 it is permitted for US persons to enter into transactions involving all "agencies, instrumentalities, and controlled entities" of the Government of Libya, and the Central Bank of Libya, although assets previously frozen pursuant to Executive Order 13566 and the Libyan Sanctions Regulations 31 CFR part 570 (other than those unblocked pursuant to General Licence No. 7A) remain blocked. General Licence No. 8 expressly prohibits transactions involving 18 persons and 2 entities listed in an annex.  The persons are members of the Qadhafi family and Qadhafi loyalists, while the entities are two charitable organisations believed to be controlled by Colonel Qadhafi.

Copies of the licences and UNSCR 2009 (2011) can be downloaded from the links below.

OFAC General Licence No 8A 23 September 2011

This new general licence supercedes General Licence No. 8 issued on 19 September 2011, and authorizes all transactions involving the Government of Libya, its agencies, instrumentalities, and controlled entities, and the Central Bank of Libya, provided that (1) all funds, including cash, securities, bank accounts, and investment accounts, and precious metals previously blocked pursuant to U.S. sanctions (issued under Executive Order 13566 and Libyan Sanctions Regulations 31 CFR Part 570) against Libya as of 19 September 2011 remain blocked, except as provided in Libya General Licence No. 7A; and (2) the transactions do not involve any persons listed in the Annex to General Licence No 8A, which remain the same as those listed in the Annex to General Licence No. 8. In so far as dealing with any of the persons listed in the Annex to General Licence 8A, US persons and foreign persons who conduct transactions in dollars passing through US banks should continue to exercise caution so as to avoid such dealings.

OFAC General Licence No 9 18 November 2011

This licence deals specifically with the relaxation of asset freezing measures against the General National Maritime Transport Company ("GNMTC"), which had been designated as a Specially Designated National ("SDN") on 21 June 2011 by reason of being owned or controlled by the Government of Libya.  The licence unblocks all funds, including cash, securities, bank accounts and investment accounts, and precious metals, of GNMTC, subject to a requirement to report to OFAC on the release of any blocked funds.  On the same day as the issuance of this licence, the US Treasury removed GNMTC from the SDN list.   

Removals from SDN List 18 November 2011

In addition to the removal of GNMTC from the SDN list, the US Treasury has taken steps to remove a large number of other entities from the SDN list.

Pursuant to General Licence No 7A dated 19 September 2011, the Treasury had authorised transactions involving the Libyan National Oil Corporation ("NOC"), and entities owned or controlled by it.  Pursuant to General Licence No 8A dated 23 September 2011, the Treasury had authorised transactions involving "the Government of Libya, its agencies, instrumentalities and controlled entities", as well as the Central Bank of Libya.

The removal from the SDN list of the names of the entities with whom US persons had already been able to enter into transactions pursuant to Licence No's 7A and 8A does not mean that the reporting requirements set out in those licences do not continue to apply.  Also, it remains the case that transactions involving the entities set out in Licence No 8A should not involve persons listed in the Annex to that licence, and US persons and foreign persons who conduct transactions in dollars passing through US banks should continue to exercise caution so as to avoid dealings with those persons.

Copies of OFAC General Licence No 9, and the US Treasury circular setting out details of these developments can be downloaded from the link below.

OFAC General Licence No 11 16 December 2011

With effect from 16 December 2011, US persons may enter into transactions involving previously blocked assets (totalling approximately US$30 billion) of the Government of Libya (including all of its agencies, instrumentalities and controlled entities), the Central Bank of Libya, and the Libyan Arab Foreign Bank.

US persons remain prohibited from dealing with funds, including cash, securities, bank accounts, investment accounts, and precious metals, belonging to the Libyan Investment Authority and its subsidiaries, including the Libyan African Investment Portfolio.  The property and interests in property of certain members of the Qadhafi family, certain senior members of the Qadhafi regime, and certain entities in which they have an interest also remain blocked.

Copies of OFAC General Licence No 11, and a US Treasury Fact Sheet commenting on these developments can be downloaded from the links below.