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EU Sanctions Updates 2012

Prior to September 2011, the EU measures largely consisted of a ban on the provision of internal repression equipment, and the freezing of funds and economic resources of certain individuals and entities. On 2nd September 2011 EU Regulation 878/2011 introduced a ban on the import into the EU, transport or purchase of Syrian-origin crude oil and petroleum products.  Thereafter various other EU regulations and measures were adopted, culminating in an EU Council Decision of 1st December 2011.

EU COUNCIL DECISION 2011/782/CFSP – 1 DECEMBER 2011

New restrictions were agreed and published on 1st December 2011 in the context of the EU’s Common and Foreign Security Policy on restrictive measures against Syria. The restrictions included a ban on exports to the Syrian oil and gas sectors, and on the provision of insurance and reinsurance to the Syrian government and its corporations and agencies.  The Decision also included a prohibition on the export of telecommunications monitoring equipment for use by the Syrian regime, a prohibition on the participation in certain infrastructure projects and investment in such projects and additional restrictions on the transfers of funds and the provision of financial services. 

EU Council Decisions are binding on the governments of Member States  only and require further implementing legislation (usually in the form of a Regulation) to bind individuals/entities within Member States.

EU REGULATION 36/2012

On 18 January 2012 the EU Council published EU Regulation 36/21012, giving effect to the additional sanctions measures against Syria set out in Decision 2011/782/CFSP of 1 December 2011. The new Regulation consolidates into one regulation existing measures concerning Syria, extends them further, and repeals and replaces EU Regulation 442/201 of 9 May 2011, which had previously been the primary source of EU Sanctions against Syria. EU Regulation 36/2012 came into force with effect from 19 January 2012.

Regulation 361/2012 is summarised below. The provisions of most concern to shipping appear at Article 6 (ban on transport of Syrian –origin crude oil and petroleum products), Article 8, (a ban on provision of key equipment and technology for use in the oil and gas industry in Syria) and Article 26 a ban on the provision of insurance and reinsurance to Syrian persons and entities.

Article 1 - Definitions

Article 2- a ban on the sale, supply, transfer or export, directly or indirectly, of equipment which might be used for internal repression (as listed in Annex 1), and the knowing and intentional participation in circumventing activities.

Article 3 a ban on the provision of technical assistance, brokering services, financial or financial assistance, and knowing and intentional participation in circumventing activities, related to the goods and technologies listed in the Common Military List of the EU.

Articles 4 and 5 - a ban on the sale, supply, transfer or export, directly or indirectly, of, or the provision of technical assistance, brokering services, financial or financial assistance in relation to, equipment, technology or software (identified in Annex V) which may be used, by or on behalf of the Syrian regime, for the monitoring or interception of internet or telephone communications in Syria. 

Article 6 now sets out the prohibitions in respect of the importation of crude oil or petroleum products of Syrian origin into the European Union that were previously adopted under EU Regulation 878/2011 on 2 September 2011 and incorporated into Article 3a of EU Regulation 442/2011.

Article 6 thus imposes a ban on:

(a) import into the EU of crude oil and petroleum products if they:

(i) originate in Syria; or

(ii) have been exported from Syria;

(b) purchase of crude oil or petroleum products which are located in or which originated in Syria;

(c) transportation of crude oil or petroleum products if they originate in Syria, or are being exported from Syria to any other country;

(d) provision, directly or indirectly, of financing or financial assistance, including financial derivatives, as well as insurance and re-insurance, related to the prohibitions set out in points (a), (b) and (c); and

(e) participation, knowingly and intentionally, in activities whose object or effect is, directly or indirectly, to circumvent the prohibitions in point (a), (b), (c) or (d).

Annex IV of Regulation 878/2011 set out the specific petroleum products which are subject to this ban. These include petroleum oils, oils obtained from bituminous materials, crude, petroleum coke and bitumen, asphalt, oil shale and tar sands, petroleum gases, petroleum jelly, paraffin wax and similar products obtained by synthesis or by other processes.

Article 7 sets out the derogations applicable to the Article 6 prohibitions, although these derogations effectively ended on 15 November 2011.

Article 8 adopts the prohibitions set out in Decision 2011/785/CFSP and imposes a ban on the sale, supply, transfer or export of equipment or technology (as listed in Annex VI) directly or indirectly to any Syrian person, entity or body, or for use in Syria, including that for use in the following sectors of the oil and gas industry in Syria:

a)      Exploration of crude oil and natural gas;

b)      Production of crude oil and natural gas;

c)      Refining;

d)     Liquefaction of natural gas.

It includes the provision of geophysical survey vessels, drilling and production platforms for crude oil and natural gas, vessels and barges incorporating drilling and/or petroleum processing equipment used for producing oil, gas and other naturally occurring flammable materials, and maritime vessels specially designed for the transport of LNG.

Article 9 a ban on the provision directly or indirectly to any Syrian person, entity or body, or for use in Syria, of technical assistance or brokering services, or financing or financial assistance related to the equipment and technology listed in Annex VI, or the provision, manufacture, maintenance and use of such goods, and a ban on the knowing and intentional participation in circumventing activities

Article 11 a ban on the sale, supply, transfer or export, directly or indirectly, of new Syrian denominated banknotes and coinage printed or minted in the EU to the Central Bank of Syria (previously set out in EU Regulation 950/2011 of 23 September 2011).

Article 12 adopts the provision set out in Decision 2011/782/CFSP and imposes a ban on the sale, supply, transfer or export, of equipment or technology (listed in Annex VII) to be used in the construction or installation in Syria of new power plants for the production of electricity and a ban on the provision, directly or indirectly, of financial or technical assistance in relation to any such project.  

Article 13 a ban on the granting of financial loans or credit to, acquisition or extension of a participation in, creation of any joint venture with, (and the knowing and intentional participation in circumventing activities), any Syrian person, entity or body engaged in the exploration, production or refining of crude oil, or the construction or installation of new power plants for electricity production. The prohibitions do not apply in relation to the execution of obligations under contracts in respect of (i) exploration, production or refining of crude oil concluded prior to 23 September 2011, and (ii) construction or installation of new power plants for electricity production concluded prior to 19 January 2012.

Article 14 sets out the asset freezing measures previously set out in Article 4 of EU Regulation 442/2011.  The persons, entities and bodies subject to asset freezing measures are now listed in Annexes II and IIa of the new Regulation.  As of 19 January 2012, 86 individuals and 29 entities are subject to these asset freezing measures.  This includes the Commercial Bank of Syria and its worldwide offices which was designated as a sanctions target with effect from 13 October 2011 pursuant to EU Regulation 1011/2011.

Various derogations from the Article 14 prohibitions can be exercised by competent authorities in EU Member States for the purposes listed in Article 16, including the release or making available of funds or economic resources for the purpose of satisfying the basic needs of designated persons and their dependent family members, for payment of professional fees and expenses associated with legal services, and where necessary for humanitarian purposes.

Article 23 - a ban on the European Investment Bank (EIB) making payments under or in connection with existing loan agreements between it and the State of Syria or any Syrian public authority. (previously in EU Regulation 1150/2011 of 14 November 2011).

Additional restrictions on the provision of financial services are set out in Articles 24 to 26 of the Regulation.

Article 24 a ban on the sale or purchase of Syrian public or public-guaranteed bonds and the provision of related broking services.

Article 25 prohibits credit and financial institutions within EU jurisdiction from carrying out certain activities in relation to Syrian credit or financial institutions including, opening new bank accounts, establishing a new correspondent banking relationship, opening a new branch or representative office or subsidiary in Syria and establishing a new joint venture with any Syrian credit or financial institution.

The definition of “Syrian credit or financial institution” in Article 1 of the Regulation includes any credit or financial institution domiciled in Syria, including branches and subsidiaries, and the Central Bank of Syria, and any credit or financial institution that is not domiciled in Syria, but which is controlled by one or more persons or entities domiciled in Syria.

Article 26 - ban on the provision of insurance and reinsurance

Article 26(1) (a) prohibits the provision of insurance or re-insurance, (and the knowing and intentional participation in circumventing activities) to:

(i)                 the State of Syria, its Government, its public bodies, corporations or agencies; or

(ii)               (ii) any person entity or body acting on behalf or at the direction of a person entity or body referred to in (i).

A person, entity or body shall not be considered to act at the direction of a person/entity in (i) above where that direction is for the purposes of docking, loading, unloading or safe transit of a vessel or aircraft temporarily in Syrian waters of airspace.

However the prohibition on insurance does not apply to provision of

•           Health or travel insurance to private individuals

•           Compulsory or third party insurance to Syrian persons, entities or bodies based in the Union

•           Insurance or reinsurance to the owner of a vessel aircraft or vehicle chartered by a Syrian person entity or body which is not designated for asset freeze in Annex II or IIa.

Article 26.4 also prohibits the extension or renewal of insurance and re-insurance agreements concluded before 19 January 2012 save where there is a prior contractual obligation on the part of the insurer or re-insurer to accept an extension or renewal of a policy. Compliance with agreements made prior to 19 January 2012 is not prohibited.

Article 28 There is a defence to breaches of the prohibitions in the Regulation if the person or entity in question did not know and had no reasonable cause to suspect that their actions would constitute an infringement.

Article 29 requires disclosure to the relevant competent authority in the EU of any information which would facilitate compliance with the Regulation.

Article 30 - Member States and the Commission shall immediately inform each other of the measures taken under this Regulation.

Article 33 Member States shall lay down penalties applicable to infringements of the Regulation, which shall be effective, proportionate and dissuasive.

Article 35- Scope of application. The Regulation shall apply:

(a)    Within the territory of the Union including its airspace;

(b)   On board any EU Member State flagged vessel/aircraft

(c)    To any person inside or outside the territory of the Union who is a national of a Member State

(d)   To any person, entity or body incorporated or constituted under the law of a Member State;

(e)    To any person, entity or body in respect of any business done in whole or in part within the Union.

EU COUNCIL IMPLEMENTING REGULATION 55/2012 - 23 JANUARY 2012

With effect from 23 January 2012 the EU has added a further 22 individuals and 8 entities to Annex II of EU Regulation 36/2012, which lists the individuals and entities subject to the EU asset freezing measures in respect of Syria.  The newly designated entities include a number of banks and petroleum companies.

A total of 108 individuals and 38 entities are now subject to the EU asset freeze. A consolidated list may be found on the HMT website at the following link - http://www.hm-treasury.gov.uk/d/syria.htm.

A copy of the EU Council Decision 2011/782/CFSP, EU Regulations 36/2012 and 55/2012 and associated HMT Financial Sanctions Notices can be found below.

EU COUNCIL DECISION 2012/122/CFSP AND COUNCIL REGULATION 168/2012 - 27 FEBRUARY 2012

By adopting EU Council Decision 2012/122/CFSP and Council Regulation 168/2012 (which amends EU Regulation 36/2012) , the EU has extended the scope of sanctions in respect of Syria to include the following measures: 

  • a ban on the sale, supply, transfer, purchase, import, export of, or the brokering or provision of technical or financial assistance directly or indirectly in relation to, gold, precious metals and diamonds to, from or for the Government of Syria, its public bodies, corporations and agencies, the Central Bank of Syria and any person, entity or body acting on their behalf or at their direction,  or any entity or body owned or controlled by them;
  • an asset freeze against 7 further individuals and the Central Bank of Syria (CBS);
  • derogations from the asset freezing measures in relation to CBS set out in Article 21a;
  • a ban on cargo flights by Syrian carriers to the EU.

Article 21a of the amended Regulation 36/2012 provides that the asset freezing measures do not apply to 

(i)                   a transfer by or through CBS of funds or economic resources received and frozen after 28 February 2012, or

(ii)                  a transfer of funds or economic resources to or through CBS where the transfer is related to a payment by a person or entity not listed in Annex II or IIa to Regulation 36/2012 due in connection with a specific trade contract,

provided that the competent authority of the relevant Member State (i.e. HM Treasury for the UK) has determined, on a case by case basis, that the payment will not directly or indirectly be received by any other designated person or entity listed in Annex II or IIa to Regulation 36/2012; or

(iii)                a transfer made by or through CBS of frozen funds or economic resources in order to provide financial institutions within the jurisdiction of EU Member States with liquidity for the financing of trade, provided that the transfer has been authorised by the competent authority of the relevant Member State.

To apply for a licence under these provisions a written request should be made to the competent authority in the relevant Member State setting out the relevant facts and attaching any relevant supporting documentation.

Copies of Council Decision 2012/122/CFSP, Regulation 168/2012, and an associated HMT Financial Sanctions Notice can be downloaded from the links set out below.

EU COUNCIL IMPLEMENTING REGULATION 266/2012 - 23 MARCH 2012

Pursuant to EU Council Implementing Regulation 266/2012 dated 23 March 2012, and with effect from 24 March 2012, the list at Annex II of Regulation 36/2012 of persons and entities subject to EU asset freezing measures by reason of their involvement with the violent repression of the civil population of Syria, has been amended to include an additional 12 individuals, and 2 entities.  The identifying information of 8 existing entries has also been amended.

The newly listed entities are state-owned oil companies, Syrian Petroleum Company, and Mahrukat Company (aka The Syrian Company for the Storage of Petroleum Products). A total of 126 individuals and 41 entities are now subject to the EU asset freezing measures.

Copies of Council Implementing Regulation 266/2012 and an associated HMT Financial Sanctions Notice can be downloaded from the links set out below.

 

EU REGULATION 509/2012 – 15 JUNE 2012
By adopting EU Council Decision 2011/782/CFSP and Council Regulation 509/2012 (which amends EU Regulation 36/2012), the EU has extended the scope of sanctions in respect of Syria to include the following measures:


A new Article 2a is inserted into Regulation 36/2012 so that it is prohibited to sell, supply, transfer or export, directly or indirectly, equipment, goods or technology which might be used for internal repression or for the manufacture and maintenance of products which might be used for internal repression, as listed in Annex IA, whether or not originating in the Union, to any person, entity or body in Syria or for use in Syria.  By way of derogation from this prohibition, the competent authority of a Member State may grant an authorisation for a transaction in relation to such equipment, goods or technology for food, agricultural, medical or other humanitarian purposes.

A new Article 2b provides that prior authorisation from the competent authority of a Member State is required for the sale, supply, transfer or export, directly or indirectly, of certain types of equipment, goods or technology which might be used for internal repression or for the manufacture and maintenance of products which might be used for internal repression, as listed in Annex IX, whether or not originating in the Union, to any person, entity or body in Syria or for use in Syria. Such authorisation will not be granted if the competent authority has reasonable grounds to determine that such equipment, goods or technology might be used for internal repression or for the manufacture and maintenance of products which might be used for internal repression.

Article 3 (b) of Regulation 36/2012 is amended so that the prohibition in respect of the provision of technical assistance or brokering services is extended to goods and technology as well as equipment which might be used for internal repression, as listed in Annexes I and IA. This is subject to a derogation under which the competent authority of a Member State may grant an authorisation for provision of technical assistance or brokering services related to items listed in Annex IA, provided that they are for food, agricultural, medical or other humanitarian purposes.

Prior authorisation from the competent authority in a Member State is required for the provision of:
(a) technical assistance or brokering services related to equipment, goods or technology listed in Annex IX, and to the provision, manufacture, maintenance and use of such equipment, goods or technology, directly or indirectly to any person, entity or body in Syria or for use in Syria. Authorisation will not be granted if there are reasonable grounds to determine that those transactions are or may be intended to contribute to internal repression or for the manufacture and maintenance of products which might be used for internal repression;
(b) financing or financial assistance related to goods and technology listed in Annex IX, including grants and loans for any sale, supply, transfer or export of such goods and technology, or for any provision of related technical assistance to any person, entity or body in Syria or for use in Syria.

A new Article 11b is inserted into Regulation 36/2012 so that it is prohibited to sell, supply, transfer or export, directly or indirectly, luxury goods as listed in Annex X, to Syria.

A copy of Regulation 509/2012 can be downloaded from the link set out below.

 

EU IMPLEMENTING REGULATION 2012/544/CFSP 25 JUNE 2012

With the publication of Council Implementing Regulation 2012/544/CFSP of 25 June 2012 in the Official Journal of the European Union on 26 June, the Council has amended Annex II to Council Regulation (EU) No 36/2012 [“Regulation 36/2012”].

Annex II to Regulation 36/2012 lists persons, entities or bodies identified by the Council as being responsible for the violent repression of the civilian population in Syria, persons and entities benefiting from or supporting the regime, and natural or legal persons and entities associated with them.

The changes to Annex II to Regulation 36/2012 take the form of the addition of 1 individual and 6 entities, who are all now subject to the asset freeze imposed by Regulation 36/2012.

The newly designated entities include:

  • Syria International Islamic Bank, aka SIIB and Syrian International Islamic Bank; and
  • Syrian Company for Oil Transport, aka Syrian Crude Oil Transportation Company, SCOTRACO, and SCOT.

Members subject to EU law should satisfy themselves that any entities with whom they carry on business, and which are not designated, are not owned or controlled by any person or entity that is designated.

Copies of Council Implementing Regulation 2012/544/CFSP, and an associated HMT Financial Sanctions Notice can be downloaded from the links set out below.

EU COUNCIL REGULATION 545/2012 25 JUNE 2012

Council Regulation (EU) No 545/2012 of 25 June 2012 published in the Official Journal of the European Union on 26 June, further develops the application of restrictive measures related to financial assistance in the context of the arms embargo.

The previous text of Regulation 36/2012, Article 3, paragraphs 1 and 4 is now replaced with the text set out in Regulation 545/2012.  This clarifies the provisions on direct or indirect insurance and reinsurance related to the sale, supply, transport or export of military technology etc.

Article 1 of Regulation 36/2012 now includes a prohibition of technical assistance related not just to equipment, but also goods or technology which might be used for internal repression, or for the manufacture and maintenance of products which could be used for internal repression.  The prohibition on the provision of financing or financial assistance related to goods and technology in the Common Military List or in Annex I or IA is extended to include the provision of insurance and reinsurance for any sale, supply, transfer or export of such items, or for any provision of related technical assistance to any person, entity or body in Syria or for use in Syria.

Article 3 of Regulation 36/2012 now provides that prior authorisation from the competent authority of the relevant Member State (as identified in Annex III of the Regulation) is required for the provision of:

(a) technical assistance or brokering services related to equipment, goods or technology listed in Annex IX and to the provision, manufacture, maintenance and use of such equipment, goods and technology, directly or indirectly to any person, entity or body in Syria or for use in Syria;

(b) financing or financial assistance related to goods and technology referred to in Annex IX, including in particular grants, loans and export credit insurance, as well as insurance and reinsurance, for any sale, supply, transfer or export of such goods and technology, or for any provision of related technical assistance to any person, entity or body in Syria or for use in Syria.

The competent authorities shall not grant any authorisation if they have reasonable grounds to determine that the transaction is or may be intended to contribute to internal repression or for the manufacture or maintenance of products which might be used for internal repression.

Copies of Council Regulation (EU) No 545/2012, and an associated HMT Financial Sanctions Notice can be downloaded from the links set out below.

EU IMPLEMENTING REGULATION 944/2012 - 15 OCTOBER 2012

With the publication of Council Implementing Regulation 944/2012 of 15 October 2012 the Council of the European Union has amended Annex II to Council Regulation (EU) No 36/2012 ["Regulation 36/2012"], with effect from 16 October 2012.

Annex II to Regulation 36/2012 lists persons, entities or bodies identified by the Council as responsible for the violent repression of the civilian population in Syria, persons and entities benefiting from or supporting the regime, and natural or legal persons and entities associated with them.

The changes to Annex II to Regulation 36/2012 take the form of the addition of 28 individuals and 2 entities, the removal of 2 individuals and 1 entity, and amendments to the identifying information of 20 existing entries.

The individuals and entities added to Annex II are therefore subject to the asset freeze imposed by Regulation 36/2012. The individuals and entities removed from Annex II are therefore no longer subject to the asset freeze imposed by Regulation 36/2012.

Copies of the Implementing Regulation and an associated HMT Financial Sanctions Notice can be downloaded from the links set out below.

EU COUNCIL DECISION 782 1 DEC 2011.pdf (0.86 MB)
EU REGULATION 36 18 JAN 2012.pdf (1.24 MB)
HMT NOTICE ON EU REG 36 19 JAN 2012.pdf (0.08 MB)
EU REGULATION 55 23 JAN 2012.pdf (0.71 MB)
HMT NOTICE ON EU REGULATION 55 23 JAN 2012.pdf (0.08 MB)
COUNCIL DECISION 122 27 FEB 2012.pdf (0.70 MB)
EU REGULATION 168 27 FEB 2012.pdf (0.71 MB)
HMT FINANCIAL SANCTIONS NOTICE COUNCIL DECISION 122 AND EU REGULATION 168 27 FEB 2012.pdf (0.08 MB)
EU IMPLEMENTING REGULATION 266 23 MARCH 2012.pdf (0.71 MB)
HMT NOTICE EU REG 266 23 MARCH 2012.pdf (0.10 MB)
EU REGULATION 509 15 JUNE 2012 (0.83 MB)
EU IMPLEMENTING REGULATION 544 25 JUNE 2012.pdf (0.70 MB)
EU REGULATION 545 25 JUNE 2012.pdf (0.94 MB)
HMT NOTICE OF 26 JUNE 2012 ON EU REGULATIONS 544 AND 545.pdf (0.07 MB)
EU IMPLEMENTING REGULATION 944 15 OCT 2012.pdf (0.74 MB)
HMT FINANCIAL SANCTIONS NOTICE ON EU REG 944 16 OCT 2012.pdf (0.13 MB)