Trade Compliance Flash: OFAC Set to Terminate Most Sanctions Against Sudan
Effective October 12, 2017, most sanctions against Sudan will terminate as a result of a finding by the U.S. Department of State that the government of Sudan (GOS) has fulfilled the conditions imposed by an executive order issued in the waning days of the Obama administration.
On October 7, 2017, the U.S. Department of State issued a report concluding that the GOS had sustained the positive action that led to the January 17, 2017, relaxation of sanctions by the Obama administration, namely, by: 1) maintaining a cessation of hostilities in Darfur, South Kordofan, and the Blue Nile states; 2) improving humanitarian access throughout Sudan; and (3) maintaining its cooperation with the United States on the conflict in South Sudan, countering the Lord's Resistance Army, and addressing the threat of terrorism. Notably, the report cited agreement by the GOS to fully implement all U.N. Security Council resolutions on North Korea as an example of positive action during the reporting period.
This paved the way for termination of most sanctions against Sudan, which had been suspended since January 17, 2017, pursuant to a general license issued in connection with Executive Order 13761 dated January 13, 2017 (EO 13761). As amended by Executive Order 13804 of July 11, 2017 (EO 13804), the sanctions were set to be terminated effective October 12, 2017, provided that the Department of State had issued a favorable report. This condition has now been satisfied and the requirement for ongoing annual reporting contained in EO 13761 was previously removed by EO 13804.
However, it is important to note that not all sanctions against Sudan will be removed.
The sanctions that will be removed are the sanctions provided for in sections 1 and 2 of Executive Order 13067 of November 3, 1997 (EO 13067), and Executive Order 13412 of October 13, 2006 (blocking property of the GOS and prohibiting transactions with Sudan, respectively). The Sudan Sanctions Regulations (SSR), which implemented these executive orders and prohibited U.S. persons from engaging in most transactions with Sudan, also will terminate.
However, certain sanctions related to Sudan's ongoing designation as a State Sponsor of Terrorism (SST) will remain in place, although general licenses issued by the Office of Foreign Assets Control (OFAC) will authorize most transactions that would otherwise be prohibited as a result of the SST designation, including exports and reexports to Sudan of agricultural commodities, medicines and medical devices, and financial transactions related to the GOS's funding of Sudanese nationals enrolled in U.S. accredited educational institutions. Compliance with the terms of these general licenses will continue to be required for affected persons.
Executive Order 13400 (authorizing blocking of persons who threaten the peace process in Darfur) and Executive Order 13664 (authorizing blocking of persons who threaten peace, security, or stability in South Sudan), related regulations, and other OFAC programs under which Sudanese persons have been blocked, will remain in force and the national emergency with respect to Sudan declared in EO 13067 will not be terminated. In addition, export and reexport restrictions under the Export Administration Regulations (EAR) may apply and Sudan will remain subject to the U.S. arms embargo, with the International Traffic in Arms Regulations (ITAR) continuing to require a policy of denial except in the case of license applications involving United Nations operations or protection of humanitarian and human rights monitoring personnel.
As a result, U.S. persons must continue to exercise due diligence in connection with transactions with Sudan, notwithstanding the lifting of most sanctions.
In addition, guidance issued by OFAC emphasizes that neither suspension of sanctions under the January 17, 2017 general license, nor revocation of the sanctions on October 12, 2017, will impact past, present, or future enforcement investigations or actions related to violations of the SSR that predated January 17, 2017, or October 12, 2017, respectively. As stated by OFAC, "apparent sanctions violations are analyzed in light of the laws and regulations that were in place at the time of the underlying activities, and civil and criminal enforcement authorities are applied accordingly." Thus, while recordkeeping provisions of previously issued general licenses will no longer apply after October 12, 2017, persons who conducted transactions with Sudan under these general licenses should maintain records that will allow them to demonstrate compliance with the terms of the licenses should an investigation of past conduct be initiated in the future.
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