Effective October 12, 2017, the U.S. Government has revoked its long-standing comprehensive economic sanctions against Sudan. This action will make permanent the conditional lifting of sanctions put in place by President Obama earlier this year. U.S. persons will be generally permitted to conduct business and financial transactions in and with Sudan and Sudanese companies. However, there will remain certain sanctioned individuals and entities in Sudan. In addition, since Sudan remains listed as a State Sponsor of Terrorism, strict export controls will continue toexist on exports of most items to Sudan. Accordingly, while new business opportunities may now exist, Sudan continues to present significant compliance risk.
On October 6, 2017, the U.S. Department of State issued a press release and accompanying report stating that the U.S. Government has revoked its economic sanctions against Sudan. The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) also released FAQs. The State Department’s report outlined that the Government of Sudan had made positive progress in the five key areas outlined in President Obama’s executive order: (1) maintaining a secession of hostilities in Darfur and two other conflict areas, (2) improving humanitarian access throughout Sudan, and maintaining its cooperation with the United States on (3) the conflict in South Sudan, (4) countering the Lord’s Resistance Army, and (5) addressing the threat of terrorism. The report also praises the Government of Sudan for its commitment to fully implement United Nations sanctions against North Korea. This follows reports that Sudan had officially halted its arms deals with North Korea.
The State Department’s decision comes after President Obama conditionally lifted sanctions on Sudan for a trial period of six months and President Trump extended this deadline by a further three months. President Trump’s revised travel ban issued on September 24, 2017 notably did not include Sudan as one of the banned countries.
OFAC’s FAQs indicate that the President will revoke portions of the existing executive orders prohibiting U.S. persons from doing business with Sudan, Sudanese companies, and the Government of Sudan and requiring U.S. persons to block the assets of these persons. The Sudanese Sanctions Regulations will also be revoked. Because Sudan remains on the State Sponsors of Terrorism List, OFAC issued a general license allowing exports of agricultural commodities, medicine, and medical devices to Sudan (despite the lifting of sanctions, these items would otherwise require an export license under a different statute). Additionally, U.S. persons will now be permitted to export certain EAR99 items to Sudan and Sudanese persons without licenses or authorizations from the U.S. Department of Commerce’s Bureau of Industry and Security (BIS).
U.S. businesses that wish to begin doing business with Sudan or Sudanese persons should be aware that Sudan remains a high-risk jurisdiction for sanctions and export compliance. Residual sanctions on Sudanese persons remain, including those associated with the conflicts in Darfur and South Sudan and those designated as Specially Designated Nationals pursuant to other sanctions programs, such as those relating to supporters of terrorism. Because Sudan remains listed as a State Sponsor of Terrorism, BIS imposes separate export controls that will remain in place and require a license to export most items to Sudan. U.S. businesses should exercise caution and heightened scrutiny when considering exports to Sudan, particularly if the transaction would involve export-controlled goods or the Sudanese military, police, or intelligence services.
Though the U.S. embargo on Sudan is officially ended, it remains to be seen whether the U.S. and international financial industry and business community at large will embrace Sudan as a target for new investment. Nearly all U.S. financial companies currently maintain compliance policies forbidding business with Sudan, and many companies are subject to corporate transactional agreements with similar restrictions. Though these policies and agreements can be revised to remove Sudan, it remains to be seen whether and to what degree this will occur. Sudan’s economy remains fragile and a risky target for new investment. U.S. and international financial institutions may be wary of potential reputational risks from dealing with a country still officially branded as a state sponsor of terrorism. Banks also sometimes impose policies beyond those required by law, as seen most recently by non-U.S. banks refusing to finance lawful Iranian business. We recommend that U.S. businesses and financial institutions review and revise their compliance policies to reflect this new development, as well as commit to a risk-based approach to any new Sudan business.