After years of waiting, the new 22 CFR 126.4 International Traffic in Arms Regulations licence exemption for transfers of defence articles and services by or for the US government has come into effect. While the introduction of the revised exemption is largely positive for exporters, there are a few new boxes to check.
In a strike against Nicolás Maduro and his supporters, the Trump administration recently announced a new executive order. Pursuant to Executive Order 13850, US persons are now broadly prohibited from engaging in transactions with Petróleos de Venezuela, SA (PDVSA), including its majority-owned subsidiaries. However, the Office of Foreign Assets Control has rolled out a slew of general licences authorising US persons to engage in certain transactions involving PDVSA and its majority-owned subsidiaries.
President Trump recently announced the United States' intention to withdraw from the Joint Comprehensive Plan of Action and re-impose secondary sanctions on Iran. The announcement was accompanied by wind-down periods during which non-US persons could wrap up transactions entered into prior to 8 May 2018. The final wind-down period recently expired and secondary sanctions were re-imposed on a broad swathe of Iranian persons and sectors of Iran's economy.
The US State Department recently explained the waivers of the chemical and biological weapon sanctions against the Russian government, confirming that many exports – even of national security-controlled items – can still be exported to Russia. In short, unless the Trump administration imposes additional sanctions in three months' time, the effects on commercial business with Russia should be limited. However, these measures must still be implemented by the various government agencies.
The US administration recently announced that it will be imposing sanctions on the Russian government under the Chemical and Biological Weapons Control and Warfare Elimination Act 1991 over the use of a novichok nerve agent in an attempt to assassinate UK citizen Sergei Skripal and his daughter Yulia Skripal. Of the five sanctions to be imposed, the fifth – the prohibition on the export of national security-controlled items to the Russian government – is likely the most significant.
Most US and multinational corporations are quick to say "we don't do business with North Korea". However, some companies will recognise the risk of sourcing products from businesses located outside North Korea that may use North Korean overseas workers or subcontract to North Korean companies. As such, the Office of Foreign Assets Control recently issued a useful guidance document that provides businesses a helping hand.
Before former President Obama left office in late 2016, the Department of the Treasury's Office of Foreign Assets Control (OFAC) published a list of FAQs to address the possibility of revoking the relaxed sanctions on Iran. Following President Trump's recent announcement that the United States is withdrawing from the Joint Comprehensive Plan of Action, OFAC has published new FAQs explaining how the re-imposition of sanctions will go into effect.
In its first year, the Trump administration has tackled sanctions issues involving Cuba, Iran, North Korea, Russia, Sudan and Venezuela, as well as individuals involved in human rights abuses and corruption. In some cases, the result has been forced by Congress; in others, the president has 'made good' on campaign promises. Most have involved the heightened rhetoric and threats characteristic of Trump's presidency, but the rhetoric has often outpaced the actual action.
At the end of January 2018, the Trump administration took two actions relating to the Russia and Ukraine sanctions programme under the Countering America's Adversaries Through Sanctions Act 2017, the law that President Trump signed on August 2 2017. While these acts did not result in the imposition of any actual sanctions, they do provide additional hints to businesses of where the Trump administration is heading in the months ahead, identifying risk areas that businesses can review and assess.
The Trump administration recently took significant steps towards using economic sanctions to tackle international human rights abuses and corruption. The administration's actions underline the ever-growing importance of know-your-customer and anti-corruption due diligence and compliance procedures for international business.