The U.S. Department of the Treasury (Treasury) recently announced a significant relaxation of the U.S. sanctions with respect to Sudan that are currently administered by the Office of Foreign Assets Control (OFAC). The changes, which were effective as of January 17, 2017, are made pursuant to Executive Order (EO) 13761 and OFAC’s “General License Authorizing Transactions Involving Sudan.” This relaxation reflects recognition of the significant steps that the Government of Sudan has taken to address the United States’ concerns regarding Sudan’s internal political and humanitarian situation and engagement with the international community. OFAC’s Sudan sanctions program will be completely terminated effective July 12, 2017 if it is determined that the Government of Sudan “has sustained the positive actions that gave rise to [EO 13761].”
Changes Effective January 17, 2017
Effective January 17, 2017, OFAC’s “General License Authorizing Transactions Involving Sudan,” authorizes all transactions previously prohibited by EO 13067, EO 13412, or the Sudanese Sanctions Regulations, 31 C.F.R. part 538 (the SSR). Categories of transactions now permitted for U.S. persons (subject to other applicable legal restrictions) include:
All trade between the United States and Sudan;
Processing of financial transactions in which persons in Sudan have an interest;
All transactions by U.S. persons relating to Sudan’s petroleum and petrochemical industries;
U.S. persons’ facilitation of transactions between persons in Sudan and third countries; and
Transactions involving property in which the Government of Sudan (including its agencies, instrumentalities and owned or controlled entities) has an interest. In this regard, it is worth noting that the new authorization unblocked previously blocked property and interests in property of the Government of Sudan (and its agencies, instrumentalities and owned or controlled entities).
U.S. persons conducting transactions pursuant to this general license must retain related records for five years in accordance with section 501.601 of the Reporting, Procedures, and Penalties Regulations, 31 C.F.R. part 501. OFAC may obtain these records at any time to monitor activities conducted pursuant to this general license.
Due to the statutory requirements of the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA), the export and re-export of agricultural commodities, medicine, and medical devices to Sudan made under TSRA authority must continue to be conducted pursuant to one-year contracts and shipped within 12 months from date the contract was signed.
The SSR have been amended to include this general license at section 538.540.
Additional Restrictions Remain in Place
Although these recent authorizations are significant, a number of additional restrictions remain in place, including:
Other OFAC sanctions programs, including in particular with respect to Darfur (administered pursuant to EO 13400 and related legislation) and South Sudan (administered pursuant to EO 13664); and
U.S. export controls administered by the U.S. Department of Commerce, Bureau of Industry and Security; the U.S. Department of State; or other U.S. government agencies.
OFAC’s recent action will also not affect any past, present or future enforcement actions or investigations with respect to any violations of the SSR that occurred prior to January 17, 2017.
Provided that the Government of Sudan sustains “the positive actions that gave rise to [EO 13761]”, OFAC will effectively fully revoke the Sudan sanctions program on July 12, 2017. The assessment of the Government of Sudan’s actions will be based on a report to be provided to the President “based on a consideration of relevant and credible information from available sources, including nongovernmental organizations.” The report will consider, among other things, whether the Government of Sudan has continued:
carrying out its pledge to maintain a cessation of hostilities in conflict areas in Sudan;
continued improvement of humanitarian access throughout Sudan; and
maintaining its cooperation with the United States in addressing regional conflicts and the threat of terrorism.
An updated version of the report shall be provided to the President annually and include “recommendations on appropriate U.S. Government responses.”
According to the Treasury, the easing of the United States’ Sudanese sanctions reflects “ongoing engagement between the United States and the Government of Sudan, and [is] the result of sustained progress by the Government of Sudan on several fronts.”
Termination of the program is dependent upon a continuous evaluation that Sudan has sustained the positive steps that resulted in this action. EO 13761 requires that this be evaluated on an annual basis. OFAC may also amend, modify, or revoke its general license at any time. A significant change in the Government of Sudan’s behavior could prompt such action by OFAC or other U.S. government responses. It remains critical, therefore, that corporations and financial institutions engaged in business involving Sudan continue to carefully monitor developments and build flexibility into their plans.