Yesterday saw the presidential approval (though not without notable signing objections) of the ‘Countering America’s Adversaries Through Sanctions Act’, aimed at new creating a new sanctions programme for the Russian, North Korean and Iranian regimes and limiting the President's executive power on Russian sanctions.
A summary of the key developments are as follows.
- The bill prohibits President Trump from lifting or waiving any aspect of sanctions on a Russian sanctions target without first reporting to and recieving agreement from Congress (he maintains this ability for North Korean and Iranian sanctioned targets).
- New sanctions were introduced targeting entities believed to pose a cyber security risk, acting on behalf of the Russian government, aimed at both those who seek financial impact as well as ‘influencing’ impact, including DDoS (distributed denial of service) and malware attacks and conducting undefined ‘influence operations’.
- New assessment planned to review the extent of cooperation between North Korea and Iran relating to their respective missile development and chemical and biological weapons development.
- Expansion of mandatory designations, including businesses involved with precious metals, aviation fuel and registration and insurance of shipping vessels.
- Return of some elements of the previous sanctions regime for those entities involved with and linked to Iran’s ballistic missile development programme.
- Further sanctions applied to those linked to the Islamic Revolutionary Guard Corps (IRGC) because of human rights abuses.
The response from Russia has been retaliatory. Russia’s prime minister Dmitry Medvedev said the sanctions were tantamount to a “full-scale trade war” and ordered the US to cut its diplomatic staff in Russia by 60%, as well as taking over a compound leased by the US embassy.
Iran has stated that the new sanctions, which are seen as being a response to its launch of a new satellite system, would ‘undermine the previously agreed Joint Comprehensive Plan of Action between Iran, the five permanent members of the UN Security Council, alongside Germany and the European Union’ as per Deputy Foreign Minister Sayed Abbas Araqchi
These changes will ultimately be factored into OFAC’s designated list and will affect sanctions screening, particularly for those who deal with USD or have links to any part of the US financial system through their providers. As the designated list is updated with newly sanctioned entities within the next 180 days, existing clients may be identified as new sanctions hits, or firms may see an increase in the volume of false positives noted as a result of these new entitities being added.
If you would like any guidance on understanding the sanctions regimes and the implications for your business, get in touch with our team of financial crime experts.
This post contains a general summary of advice and is not a complete or definitive statement of the law. Specific advice should be obtained where appropriate.