On December 21, the U.S. Treasury Department announced the implementation of a new global sanctions regime under the Magnitsky Human Rights Accountability Act (the “Global Magnitsky Act”). President Trump issued an Executive Order declaring a national emergency with respect to human rights abuses and global corruption, targeting individuals and entities spanning nations across the world, including Russia, Ukraine, Uzbekistan, Pakistan, Nicaragua, and elsewhere.
The Global Magnitsky Act is an expansion of the 2012 Magnitsky bill named for Russian whistleblower Sergei Magnitsky, an accountant who died in a Moscow prison in 2009 under mysterious circumstances after exposing a tax fraud scheme allegedly involving high-level Russian officials. Unlike the traditional country-by-country sanction programs implemented by the Treasury Department’s Office of Foreign Assets Control (OFAC), the Magnitsky Act authorizes the President and OFAC to impose visa bans and strict sanctions on individuals anywhere in the world who have committed human rights violations or severe acts of corruption.
Key Figures Sanctioned and Impact for U.S. Businesses
Several powerful international political figures were included in the most recent bout of sanctions, such as the former President of the Gambia Yahya Jammeh, the President of Nicaragua’s Supreme Electoral Council Roberto Jose Rivas Reyes, the former chief of the Burmese Army’s Western command Maung Maung Soe, and Gulnara Karimova, the daughter of former Uzbek president Islam Karimov. The range of human rights abuses and corrupt misconduct the sanctions target are varied in scope and are described in further detail here, including alleged ethnic cleansing in Myanmar’s Rakhine State, arms dealing in the Balkans, misallocation of government funds, electoral fraud, and even the trafficking of human organs.
For U.S. businesses, the implementation of the first major global Magnitsky sanctions is a harbinger of things to come. As we recently blogged here, global sanctions programs are only becoming more complex and it is critical to screen all parties, and related parties under some programs, before doing business. This is arguably the broadest sanctions regime implemented by the U.S. to date, and there are no black-letter definitions promulgated for key terms like “corruption” and “bribery.” Dozens of entities related to the sanctioned individuals were targeted by OFAC in this announcement, and as the U.S. blacklist grows larger, so do the perils and complications of doing business in high-risk regions. Multi-national businesses should take note that several countries, including the U.K., have passed similar versions of Magnitsky sanction regimes targeting human rights abusers from any country. Due diligence and compliance training is becoming more and more important as economic sanctions are increasingly used as a foreign policy tool to deter grave misconduct, hold bad actors accountable, and cut off financing for those perpetuating human rights abuses and corruption.