Web Alert: New US sanctions legislation against Iran, Russia and North Korea
09 August 2017
On 2 August 2017, President Trump signed the Countering America’s Adversaries Through Sanctions Act (the bill), to expand existing sanctions against Iran, Russia and North Korea.
The bill imposes sanctions on any person determined to knowingly engage in any act that materially contributes to the Iranian ballistic missile programme or any other programme relating to the delivery of weapons of mass destruction (section 104). Sanctions are also imposed on any person determined to knowingly engage in any act that materially contributes to the supply, sale or transfer to Iran, directly or indirectly, of various weapons, or who supplies technical training, financial resources or services, advice or other services or assistance related to said weapons (section 107).
The bill further provides that the President can waive the sanctions against Iran (under Sections 104-108), but only once 30 days have passed after the President has reported to US Congress that such waivers are vital to US national security issues.
The USA will have greater powers to impose additional sanctions on both US and non-US persons that knowingly invest in, or sell, lease, or provide goods, services, technology, information, or support the construction of Russia’s energy export pipelines with a fair market value of $1m or more, or have an aggregate fair market value of $5m during a 12 month period.
Section 243 of the bill imposes sanctions on any 'foreign person' who has knowingly exported, transferred or otherwise provided military support to Syria. Shipowners are advised to take extra care when asked to carry any military equipment to Syria.
Modifications to Directives 1,2 & 4 of existing Sectoral Sanctions
- Directive 1: EO 13622 prohibited US persons from engaging in transactions involving debt of more than 30 days maturity or new equity with designated persons/entities in the Russian financial sector. The bill reduces the 30 days to 14 days.
- Directive 2: EO 13622 prohibited US persons from engaging in transactions involving debt of more than 90 days maturity or new equity with designated persons/entities in the Russian energy sector. The bill reduces the 90 days to 60 days.
- Directive 4: EO 13622 prohibited the provision, exportation, or re-exportation, directly or indirectly of goods, services (except for financial services) or technology in support of exploration or production for deepwater, Arctic offshore or shale projects that have the potential to produce oil in Russia. The bill expands Directive 4 in the following ways:
- It now applies not only to US persons but also to 'persons within the US'.
- The oil projects are no longer restricted to those with the potential to produce oil in Russia, but instead apply to projects worldwide.
- The projects to which the Directive applies now include 'any person…who has a controlling interest or a substantial non-controlling ownership interest in a such a project of not less than 33%'.
The bill provides that the President shall designate any person, not just US persons, who engage in the following activities:
- purchasing or acquiring certain metals, ores and minerals from North Korea
- selling or transferring to North Korea significant amounts of rocket, aviation and jet fuel
- registering, insuring or facilitating the registration of a vessel owned or controlled by North Korea
- maintaining a correspondent account with a North Korean institution.
Under the bill, the President may impose sanctions on individuals engaged in the following activities:
- purchasing or acquiring from North Korea significant amounts of coal, iron or iron ore, textiles, food or agricultural products
- selling or transferring to North Korea significant amounts of crude oil, condensates, petroleum or petroleum by-products, LNG (The provision does not apply to heavy fuel oil, gasoline or diesel fuel for humanitarian use)
- facilitating a transfer to or from North Korea of bulk cash, precious metals or gemstones
- engaging or facilitating the exportation of workers from North Korea in a manner intended to generate revenue for North Korea
- conducting a significant transaction in North Korea’s transportation, mining, energy or financial services industries.
The bill further prohibits certain foreign vessels from entering or operating within US waters or transferring cargo to any US ports if they are:
- owned or operated by or on behalf of North Korea or a North Korean person
- owned or operated by on behalf of any country in which a seaport is located, where the President has identified the port’s operator in a report submitted under the North Korea Sanctions and Policy Enhancement Act 2016
- owned or operated by or on behalf of any country identified by the President as a country failing to comply with UN Security Council regulations.
Freehill Hogan & Mahar has published a client alert regarding this subject. A copy of this alert is attached.