The Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Act 2019 passed Parliament last week and received royal assent shortly after.
On February 1, 2019, the Office of Financial Sanctions Implementation (OFSI) published general guidance on financial sanctions for when the UK leaves the EU. The guidance refers to the Sanctions and Anti-Money Laundering Act 2018 (SAMLA), which enables sanctions to continue uninterrupted post-Brexit. Statutory instruments (SIs) under SAMLA will transfer existing EU sanctions into English law. The SIs will come into force on Exit Day in the event of a no-deal Brexit.
To facilitate implementation, on January 31, 2019, the Foreign and Commonwealth Office (FCO) published statutory guidance on the sanctions regimes in relation to Burma; Iran (Human Rights); and Venezuela. The related regulations impose financial, trade and travel sanctions to encourage compliance with international human rights law and respect for human rights, and to respect democratic principles and the rule of law.
In addition, if there is a no-deal Brexit the FCO’s technical guidance states that those required to comply with UK sanctions should
In a joint statement on January 31, 2019, France, Germany and the UK (together, E3) announced the creation of a payment channel special purpose vehicle (Instrument in Support of Trade Exchanges or INSTEX) to offer European companies a settlement option in relation to their Iranian business activities.
INSTEX aims to facilitate legitimate trade between European companies and Iran, focusing initially on sectors such as pharmaceutical, medical devices and agri-food goods. INSTEX forms parts of the EU's response to the US withdrawal from the Joint Comprehensive Plan of Action (JCPOA) with Iran, in addition to the extension of Council Regulation (EC) No 2271/96 (commonly known as the EU Blocking Regulation) in August last year. INSTEX has been registered in France, will be run by German banks, and will be open to registered European companies that opt to use the system. The specific timing to implement INSTEX remains uncertain.
This latest initiative by the E3 has reaffirmed efforts to uphold their commitments under the JCPOA. However, questions will likely be raised for EU companies considering Iranian business via INSTEX in light of the on-going potential risks under US secondary sanctions. The US secondary sanctions on Iran were reinstated in November 2018, following the US withdrawal from the JCPOA, and remain a risk for EU companies doing business with Iran. The US secondary sanctions include the US preserving the right to designate non-US persons (e.g. EU companies) for any "significant" business activities with Iranian counterparties even where there is no US nexus, and may result in being excluded from the US financial system or doing business with US companies.
The US Office for Foreign Assets Control (OFAC) announced on January 27, 2019 that it had lifted sanctions imposed on United Company Rusal plc (Rusal), En+ Group plc (En+) and JSC EuroSibEnergo (ESE).
These entities had been designated and listed on OFAC’s Specially Designated National and Blocked Persons list (SDN List) for being owned or controlled, directly or indirectly, by Oleg Deripaska, a Russian oligarch designated as an SDN on 6 April 2018. Rusal’s position as the second largest aluminium producer in the world meant that these designations had a significant impact on the global aluminium markets. Following the April 6 designations, En+, Rusal and ESE petitioned OFAC for de-listing and have since engaged in an extended period of negotiation with OFAC.
Following these negotiations, on December 19, 2018, OFAC notified the US Congress of its intention to terminate sanctions imposed on En+, Rusal and ESE, following 30 days of Congressional review. In return, the three entities agreed to
During the period of Congressional review, the US House of Representatives passed a resolution rejecting the de-listing; however, a similar resolution failed to pass the Senate, enabling OFAC to proceed with terminating the sanctions on January 27, 2019.
Oleg Deripaska continues to be listed on OFAC’s SDN List, meaning that his property and interests in property remain blocked under the US sanctions regime.
On January 21, 2019, the Wolfsberg Group – an association of 13 global banks which aims to develop frameworks and guidance for the management of financial crime risks – published new guidance on how financial institutions (FIs) should carry out sanctions screening.
The paper’s objective is to provide guidance to FIs as they assess the effectiveness of their sanctions screening controls, whether automated, manual or both. It notes that most FIs deploy two main screening controls designed to identify sanctions targets: transaction screening; and customer screening. All FIs should identify and assess the sanctions risk to which they are exposed and implement a sanctions screening programme commensurate with their nature, size and complexity. Other key themes from the guidance include
The Wolfsberg Group does not advocate that FIs simply adopt its guidance, but each FI should consider the risks described, the applicable regulatory standards and their own defined risk management strategy.
The Court of Justice of the European Union (CJEU) has delivered its decision in A Ltd, a case concerning the location of insured risk, and therefore which jurisdiction can charge IPT, on cross-border M&A insurance policies.
The recent NSW Supreme Court decision in DIF III – Global Co-Investment Fund LP v Babcock & Brown International Pty Limited ruled that section 54 the Insurance Contracts Act 1984 (Cth) (ICA) did not cure a lack of notification of circumstances if those circumstances were not known during the policy period.