Worldwide: Sanctions Round-Up: First Quarter 2015

After months of intense negotiations, this quarter saw the announcement of a framework agreement between the P5+1 and Iran that, if it results in a final agreement, will lead to a suspension of Western sanctions. In another historic moment, US announced the first Cuba-related regulatory reforms following President Obama's 2014 announcement that his administration would seek to improve economic ties with the country. The US and EU continue to implement tough sanctions targeting Russia despite the negotiation of a new Ukraine armistice in February. In the spotlight for enforcement actions this quarter was the long-anticipated settlement between Commerzbank AG and US authorities over alleged sanctions violations.

Included in this quarter's sanctions round up is a discussion of:

  • US and EU continue targeting Russia for its activity in Ukraine
  • Cuba-related regulatory reforms announced
  • P5+1 and Iran reach framework agreement
  • US enforcement actions: Spotlight on Commerzbank AG 
  • US uses sanctions to target terrorists abroad
  • OFAC continues use of Kingpin Act to target drug traffickers worldwide

Russia Related Sanctions for Q1 2015

On January 30, the US Office of Foreign Assets Control (OFAC) published three Ukraine-related general licenses allowing for certain personal remittances and communications. In doing so, these general licenses authorize certain transactions that would otherwise be prohibited under E.O. 13685 of December 19, 2014, "Blocking Property of Certain Persons and Prohibiting Certain Transactions with Respect to the Crimea Region of Ukraine."

  • General License 6: "Noncommercial, Personal Remittances Authorized," allows US persons to send and receive personal remittances to individuals living in Crimea and allows US financial institutions to facilitate such transactions. No personal remittances may be made to specifically designated nationals (SDN) under any of the Ukraine-related sanctions orders.
  • General License 7: "Operation of Accounts Authorized," allows US financial institutions to facilitate the operation of personal, noncommercial accounts for individuals living in Crimea, except for SDNs.
  • General License 8: "Transactions Related to Telecommunications and Mail Authorized," allows for all transactions related to the receipt and transmission of telecommunications involving Crimea. The license explicitly does not allow for the provision, sale, or lease of telecommunications equipment, technology or capacity on telecommunications transmissions facilities (such as satellite or terrestrial network activity). The license further allows all transactions of common carriers related to the receipt of mail and packages between the US and Crimea. No such transactions may be made on behalf of an SDN.

On February 16, the EU extended individual sanctions against nineteen individuals and nine entities from Ukraine and Russia over their alleged role in the destabilization of Ukraine. The list includes two members of the Russian parliament, as well as senior military figures. The individuals and entities are subject to EU travel bans and asset freezes. None of nineteen individuals are currently sanctioned by the US; however, two of the entities, the Oplot Brigade and the Novorossiya Party, are subject to US sanctions.

In February, the Russian state-owned oil group Rosneft challenged UK sanctions in the European Court of Justice. The EU imposed sweeping sanctions against Russian oil producers last September, preventing European companies from drilling, well-testing, and providing other services to Rosneft. Rosneft mounted a similar challenge in the UK to its sanctions, which having failed in the lower courts, it is currently appealing.

On March 11, OFAC announced new designations of Ukrainian separatists and Russian supporters, citing ongoing assaults in Eastern Ukraine in violation of the Minsk agreements (an agreement between Ukraine and the Russian Federation to halt the war in the Donbass region of Ukraine). Specifically, OFAC designated eight Ukrainian individuals holding leadership positions within the self-proclaimed rebel governments in Donetsk and Luhansk regions for undermining Ukraine's sovereignty in violation of E.O. 13660. OFAC also designated the Russian pro-separatist organization Eurasian Youth Union and three of its leaders under the same order. Additionally under E.O. 13660, OFAC designated three former officials who served in the Yanukovych government (Mykola Azarov, Serhiy Arbuzov and Raisa Bohatryiova) for misappropriating Ukrainian assets.

Simultaneously, OFAC designated the Russian National Commercial Bank (RNCB) under E.O. 13685 for operating in Crimea. OFAC alleged that RNCB had no presence in Crimea before its annexation and has since used its operations to facilitate Russian intervention in the region. RNCB is currently the largest banking network in Crimea.

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Danforth Newcomb
Barnabas W.B. Reynolds
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