Welcome to our tenth bulletin in our regular series on global sanctions this bulletin looks at the new Libyan and Syrian sanctions and gives an update on the general situation in the MENA region.
Libya sanctions update
On 10th August 2011 the European Union Council extended an assets freeze to two further entities closely linked to the perpetrators of the serious human rights abuses in Libya. The decision amends Council decision 2011/137/CFSP, adopted on 28 February, which introduced a travel ban and an assets freeze, while granting the necessary humanitarian exemptions. In total, six port authorities, 49 entities and 39 persons involved in the serious human rights abuses in Libya are now subject to a freeze of their funds and financial resources in the European Union. In addition, the same 39 persons, which include Muammar Gaddafi and several family members, are banned from entering the EU. The decision was adopted by written procedure. It was published in the Official Journal of the EU on 11 August 2011.
On 1st July, the US Department of the Treasury's Office of Foreign Assets Control ("OFAC") issued the new Libyan Sanctions Regulations, 31 CFR part 570, to implement Executive Order 13566 of 25 February 2011, "Blocking Property and Prohibiting Certain Transactions Related to Libya."
As covered in our previous bulletin the Executive Order 13566 of 25 February 2011 required US persons and companies to freeze the property and interests of Muammar Gaddafi and his sons, the Government of Libya and its instrumentalities, agencies, and controlled entities, the Central Bank of Libya, and those involved in human rights abuses relating to political repression in Libya.
The new Libyan Sanctions Regulations (LSR) are as a result of the ongoing conflict in Libya and human rights violations committed by the Government of Libya. The Executive Order prohibited any transactions by US persons involving persons listed in that order and any person determined by the US government to be a senior Libyan government official, a child of Colonel Gaddafi, others identified as having committed human rights abuses or political repression in Libya, and the spouses and children of any of these prohibited individuals. The individuals subject to sanctions under the Executive Order (and now the LSR) are listed on OFAC's Specially Designated Nationals List ("SDN List").
Property and interests in property of individuals and entities sanctioned under the LSR are "blocked," or frozen, by the LSR and Executive Order. A US person, such as a bank, holding blocked property cannot transfer or even return that property to its owner without OFAC authorisation.
The new regulations require US financial institutions to block any transfers of funds or credit that come through those institutions in which sanctioned parties have an interest. But US financial institutions are expressly permitted to undertake certain activities under the LSR. They are permitted to transfer blocked funds between separate blocked accounts that they hold, so long as the blocked accounts are both in the name of the same party and the funds remain within the US. The new regulations also provide more detailed definitions of key terms used in the Executive Order and introduce reporting requirements. Any bank, investment fund, or other party holding funds or other property interests blocked by the LSR is subject to certain reporting requirements under the LSR. These reporting requirements must be strictly followed.
The regulations are effective as of the 1 July and replace and supersede General License Nos. 2 and 3, which have been available on, and are now being removed from, OFAC's Web site. General Licenses Nos. 1B, 4, and 5, previously issued by OFAC to authorise certain transactions related to Libya, remain in effect.
- In June Lebanon's North Africa Commercial Bank froze an undisclosed amount of assets belonging to the Libyan regime at the request of the UN, the Central Bank instructed NACB to freeze any assets belonging to the Libyan government, pursuant to United Nations Security Council resolutions 1970 and 1973.
- On 20 June the United States tightened financial sanctions on the Libyan government and two influential senators pushed back against calls to halt funding for American involvement in NATO operations there. Senators John Kerry and John McCain introduced a measure to formally authorise the US military intervention in Libya for up to one year, and warned against critics who want Congress to act to stop US involvement. The US Treasury said it was blacklisting nine companies for being owned or controlled by Muammar Gaddafi's government. The sanctions will prohibit US transactions with the nine companies, including the Arab Turkish Bank, Tunisia-based North Africa International Bank and Lebanon-based North Africa Commercial Bank.
- 12 August US Secretary of State Hillary Clinton called for wider international sanctions on Syria as the government's violent crackdown on dissent continues. Washington added to its existing sanctions on Syria by including the Commercial Bank of Syria and mobile phone company, and warned that more could follow.
- On 24th May Canada imposed targeted sanctions on Syria called the Special Economic Measures Act published in the Canada Gazette. The Regulations impose restrictions on dealings with designated persons. A separate Special Economic Measures (Syria) Permit Authorization Order made pursuant to subsection 4(4) of the Special Economic Measures Act authorizes the Minister of Foreign Affairs to issue to any person in Canada and any Canadian outside Canada a permit to carry out a specified activity or transaction, or any class of activity or transaction, with a designated person that is otherwise restricted or prohibited pursuant to the Regulations.
- In new recent developments the UN nuclear watchdog brought allegations of covert atomic work by Syria before the Security Council on 14 July 2011, but the 15-nation body took no immediate action amid divisions among key powers. The International Atomic Energy Agency board of governors voted in June to report Syria to the council, rebuking it for stonewalling an agency probe into the Dair Alzour complex, bombed by Israel in 2007. UN Secretary General Ban Ki-moon has renewed calls for Syria to allow fact-finding and humanitarian missions after months of anti-government protests.
- The EU adopted Council Regulation (EU) No 442/2011 on 9 May 2011. The Regulation included asset freezing measures on certain persons identified as being responsible for the violent repression of the civilian population in Syria.
- EU states have extended sanctions against Syria to four military-linked firms and more people connected with the violent suppression of anti-government protests, an EU diplomat said. The EU first imposed sanctions on President Bashar al-Assad on 23 May 2011.
- Iran's state shipping line IRISL will challenge the latest round of sanctions at the European Union's highest court, saying there is no evidence showing that it has been involved in arms trafficking as EU and US officials say. It has been reported that IRISL plans to counter financial sanctions that have hampered its access to insurance by the creation of an Iranian P&I (protection and indemnity) fund. In the US IRISL was charged with about a dozen other firms in a scheme to move more than $60 million through at least seven U.S. banks in violation of government sanctions. The banks included JPMorgan Chase & Co. (JPM), Citigroup Inc. (C), and Bank of America Corp. (BAC), according to Adam Kaufmann, chief of investigations for Manhattan District Attorney Cyrus R. Vance Jr. It must be made clear that the banks aren't accused of any wrongdoing.
- In June Iran's biggest crude oil tanker operator NITC reported that it has secured ship insurance cover mainly in Asia after European providers pulled out earlier this year due to sanctions imposed on the Islamic Republic.
- In the UK a leading ship liner agent has entered into administration due to the loss of business caused by western sanctions imposed on the company's Iranian shipping client, its administrator said. Johnson Stevens Agencies Ltd had previously represented the Islamic Republic of Iran Shipping Lines (IRISL).
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