Alaco is looking forward to attending C5’s Global Economic Sanctions conference in Berlin next week.  Please do get in touch with Oscar Gravell or Madeleine Glass if you will be there too and would like to meet us.

May saw a continuation in the lifting of sanctions on Syria from the US, EU, and UK, enabling the country’s reconstruction while maintaining pressure on Assad regime figures. Internationally, regimes applied increased measures against Iran, targeting the country’s oil trading network and suppliers of ballistic missile materials.

Elsewhere, the EU released its 17th package of sanctions against Russia, continuing to focus on its shadow fleet operations. EU representatives additionally discussed preparations for a ‘Plan B’ in the event that the US lifts sanctions on Russia and re-establishes a relationship with Moscow without a peace deal in place; anonymous US officials have, however, stated that the US is preparing new sanctions against Russia.

In the enforcement space, OFSI fined a UK-based company for transactions with a subsidiary of Russia’s largest shipping company, using it as a cautionary tale of the importance of proactively engaging with OFSI.  Meanwhile the US declined to prosecute a company that had self-reported export controls violations.

 

Syria

  • With the exception of certain transactions involving designated persons and entities, the US issued a general license authorising transactions prohibited by its Syria Sanctions Regulations, effectively lifting sanctions on Syria whilst leaving some export controls in place.

 

  • The EU meanwhile has lifted some of its economic sanctions on Syria to support the country’s transition and economic recovery, with limited measures pertaining to the Assad regime remaining. Targeted sanctions on those contributing to instability in the country or committing human rights violations have been introduced.

 

  • In the UK, the House of Lords passed amendments to Syrian sanctions, altering the purpose of the regulations and both amending and revoking some sectoral sanctions. These amendments are set to be debated by the House of Commons.  This follows a series of amendments approved since February aimed at opening up Syria’s financial system and supporting reconstruction efforts while continuing to hold the Assad regime to account.

 

Iran

  • The EU has stated its intention to maintain sanctions on the Iranian Minister of Defence, Mohammad Reza Ashtiani, who was designated in June 2024 for his role in Iran’s military support of Russia.

 

  • OFAC also designated ten entities and five people found to have assisted Iran in sourcing manufacturing of carbon fibre materials for its ballistic missiles. Those sanctioned included an Iranian carbon fibre and industrial machinery supplier to the IRGC and a People’s Republic of China (“PRC”)-based company that has exported carbon fibre to a Hong Kong-registered and sanctioned entity.

 

  • The US designated three individuals and one entity linked to Iran’s Organisation of Defensive Innovation and Research (“SPND”), an organisation identified as being the direct successor to Iran’s pre-2004 nuclear weapons programme. These included SPND senior officials, the head of an explosives-related group owned by SPND, and an SPND affiliate that has attempted to source equipment for nuclear weapons research and development.

 

  • Also in Iran, the US sanctioned 15 entities internationally belonging to Iran’s oil trading network, including companies involved in buying Iranian oil for Chinese companies, Iran’s shadow fleet operations, and acting as fronts for sanctioned entities. A further two people, 11 entities, and six vessels across the UK, Singapore, Hong Kong, Marshall Islands, India and the PRC were sanctioned for their roles in importing Iranian oil.

 

Regulation Amendments

  • The EU approved its 17th sanctions package against Russia, sanctioning almost 200 shadow fleet ships, including entities from the UAE, Turkey, and Hong Kong identified as enabling Russia’s shadow fleet operations. The package further applied sanctions to Russian oil company Surgutneftegaz, 30 companies supplying Russia with dual-use goods, and 75 people and companies involved in Russia’s military-industrial complex. Outside of this package, the EU adopted new measures to address human rights violations, hybrid threats, and the use of chemical weapons in Ukraine.

 

  • Also in Russia, the UK imposed a range of additional measures targeting 14 members of the Kremlin-funded Social Design Agency, as well as 62 entities, predominantly financial institutions involved in sanctions evasion, and 18 ships belonging to Russia’s shadow fleet. This follows actions taken earlier in the month to sanction 101 vessels, five individuals, and four entities in measures targeting the operations of Russia’s shadow fleet. The UK parliament further approved amendments to Russian sanctions regulations, expanding trade sanctions and imposing prohibitions on synthetic diamonds from Russia.

 

  • The US announcedit will impose sanctions on Sudan under the Chemical and Biological Weapons Control and Warfare Elimination Act, restricting exports to Sudan and limiting the country’s access to US credit.

 

  • The Department of State identified ten strategic materials being used in connection with the nuclear, military, and ballistic missile programmes of Iran, meaning that sanctions can be imposed on those found to knowingly sell, supply, or transfer such materials to or from Iran. Having further established that the Iranian construction sector is controlled directly or indirectly by the Islamic Revolutionary Guard Corps (“IRGC”), any person or entity found to knowingly sell, supply, or transfer raw and semi-finished graphite, coal, and software for integrating industrial purposes will be subject to sanctions if those materials are to be used in connection with the Iranian construction sector.

 

  • The EU renewed sanctions imposed by its cyber-attacks regime for a further year, under which 17 individuals and four entities are currently designated. This regime enables the EU to target persons and entities involved in cyber attacks and which constitute an external threat to the EU and its member states.

 

Enforcement

  • OFSI imposed a £5,000 fine on UK-registered Svarog Shipping & Trading Company (“Svarog”) for breaching Russian sanctions regulations and failing to respond to a request for information issued by OFSI within the required timeframe. Svarog had transacted with a subsidiary of Sovcomflot, Russia’s largest and sanctioned shipping company. OFSI later emphasised the importance of proactively engaging with OFSI in a timely manner.

 

  • The US Justice Department meanwhile declined to prosecute a company that had self-reported violations of export controls after its employee pleaded guilty to exporting US army-developed aviation software to a university in the People’s Republic of China.

 

  • A US court sentenced Mohammed Azharuddin Chhipa to 364 months’ imprisonment for his role in fundraising almost $200,000 for ISIS via social media; the proceeds were converted into cryptocurrency and sent via Turkey to members of ISIS in Syria between 2019 and 2022.

 

  • The Southern District Court of New York granted an application to vacate a default judgement awarded in favour of investment firm Gaia against Venezuela, which the court ruled had been rendered practically worthless due to US sanctions on Venezuela.

 

Other Designations

  • In the West Bank, the UK sanctioned three individuals, two settler outposts, and two entities for their human rights violations, notably including settler leader Daniella Weiss and others involved in threatening and perpetuating acts of aggression and violence against Palestinians.

 

  • In counter terrorism designations, the US designated two high-ranking members of Mexico’s Cartel del Noreste, involved in arms procurement and armed enforcement, and two Haitian gangs accused of using violence to destabilise the country. In the Middle East, designations were announced against four individuals associated with Hezbollah and its funding. The US additionally designated four Cuban regime officials for gross violations of human rights, barring them and their families from entering the US, as a result of their roles in prosecuting, convicting and sentencing activist Robles Elizástigui.

 

  • OFAC recognised the Karen National Army in Myanmar as a transnational criminal organisation, designating the militia, its leader Saw Chit Thu, and his two sons Htoo Eh Moo and Saw Chit Chit. The sanctioned individuals and entity were stated to have facilitated human trafficking, cross-border smuggling, and cyber scams targeting US citizens.

 

 

 

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