On August 14, 2023, the US State Department, the Labor Department, and the Commerce Department issued a business advisory (“Business Advisory”) highlighting key risks for companies operating in South Sudan.
While it does not impose new legal obligations on companies, the Business Advisory highlights the fact that list-based sanctions remain in force targeting certain South Sudanese persons including designations under the US Treasury Department’s Office of Foreign Assets Control’s Specially Designated Nationals and Blocked Persons List, and the US Commerce Department’s Bureau of Industry and Security’s Entity List. Our prior blog post about these risks can be reviewed here.
The Business Advisory also recommends that US financial institutions continue to submit suspicious activity reports and perform proper due diligence on South Sudanese political figures as already required and outlined in a 2017 advisory from the US Treasury Department’s Financial Crimes Enforcement Network. Annex 1 and Annex 2 of the Business Advisory provide a further overview of companies legal and due diligence obligations when dealing with South Sudan parties, including a focus on issues related to forced labor in South Sudan.
The Business Advisory focuses on the following key areas of concern:
- Government Tenders: Transparency International ranked South Sudan as the country with the world’s worst public sector corruption in its 2021 rankings of perception of corruption; South Sudan tied for second-worst in 2022.
- Oil and Gold: The Business Advisory alleges substantial diversion of revenue from the oil and gold industries to fund illicit activities or payments to government officials.
- Contracts managed by governing entities for delivery of assistance: Companies should flag for compliance review unnecessary fees, engagement with unqualified companies, and diversion of funds intended for humanitarian relief.
- Arms, Military Equipment, and Related Activity: The Business Advisory cautions companies against dealings with South Sudanese armed forces due to alleged human rights abuses.