On October 12, 2017, the United States lifted its general commercial embargo on Sudan, removing sanctions that had prohibited US Persons from engaging in or facilitating most transactions involving Sudan or its government. This action concludes a process begun by President Obama to restore commercial ties between the US and Sudan. However, while Sudan will no longer be subject to comprehensive sanctions after October 12, persons seeking to conduct business involving Sudan must remain vigilant of the significant restrictions and compliance risks that continue to apply.
The process to eliminate the US embargo on Sudan was initiated by President Barack Obama and then implemented by President Donald Trump, reflecting a rare adoption by President Trump of the foreign policy of his predecessor. On January 13, 2017, President Obama issued Executive Order (EO) 13761, which terminated the Sudanese Sanctions Regulations, 31 CFR Part 538 (“SSR”) effective July 12, 2017, provided that the Department of State determined prior to that date that the Government of Sudan had sustained its pledge regarding ceasing hostilities in certain areas of Sudan, humanitarian access, and cooperation with the United States on addressing regional conflicts and the threat of terrorism. Contemporaneous with the EO, the US Treasury Department's Office of Foreign Assets Control (OFAC) issued a general license authorizing all transactions that had been prohibited pursuant to the SSR and EOs 13067 and 134121. That general license effectively authorized US persons2 to engage in most transactions involving Sudan, although the SSR remained in place.3
The July 12 deadline was extended by three months by EO 13804. On October 11, 2017, the State Department published a notice in the Federal Register confirming that Sudan had sustained the positive actions that gave rise to the decision to lift sanctions against it, thus giving effect to the delayed termination provisions of EO 13761.4
Most sanctions on Sudan lifted…
The termination of the SSR makes permanent the sanctions relief effected by EO 13761 and the resulting general licenses. As of October 12, 2017, Sudan is no longer subject to comprehensive OFAC sanctions, and most transactions involving that country may be conducted without a specific or general license from OFAC. Thus, Sudan is no longer among the jurisdictions subject to broad US embargoes, a group that includes Crimea, Cuba, Iran, North Korea and Syria.
OFAC also issued a new general license effective October 12, 2017, General License A, authorizing transactions involving goods eligible for export to Sudan under the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA). This change is procedural in nature: TSRA imposes a statutory requirement of a license from OFAC for certain exports and reexports of agricultural commodities, medicine, and medical devices. While the general license added to the SSR following the issuance of EO 13761 covered TSRA-eligible goods, the termination of the SSR made it necessary to issue a standalone general license.
Finally, OFAC removed dozens of entities and individuals from the Specially Designated Nationals and Blocked Persons (SDN) List who were designated solely pursuant to the now-terminated SSR.5
…But certain sanctions remain
Notwithstanding the termination of the SSR, the following noteworthy restrictions relating to Sudan remain:
- Export controls: Exports, reexports or transfers to or through Sudan of items, software or technology listed on the Commerce Control List continue to require a license from the Bureau of Industry and Security (BIS) under the Export Administration Regulations (EAR).
- Darfur and South Sudan: The Darfur and South Sudan sanctions programs are unaffected by the termination of the Sudan Sanctions Program.
- SDNs: US persons are still generally prohibited from dealing with persons and entities listed as SDNs.6 While the termination of the SSR was accompanied by the delisting of a number of SDNs, there remain SDNs in Sudan.
In addition, because Sudan remains designated by the US as a State Sponsor of Terrorism ("SST"), there are additional restrictions and risks to consider, including:
- Arms embargo: Sudan is subject to a comprehensive arms embargo, so US persons may not engage in exports and reexports of defense articles controlled under the International Traffic in Arms Regulations (ITAR).
- Donations from Sudan to US Persons: Pursuant to the Terrorism List Governments Sanctions Regulations (TLGSR), 31 CFR Part 596, donations from the Sudanese government to a US person are generally prohibited and US persons may not engage in transactions relating to them.7
- US securities disclosures: Companies that file disclosures with the US Securities and Exchange Commission (SEC) may receive comment letters or requests for information concerning Sudan-related activities, regardless of whether those disclosures address such activities.
Finally, as with other, similar authorization or sanctions program terminations, the termination of the SSR does not have retroactive effect. Any conduct occurring prior to October 12, 2017 can result in enforcement actions, and any pending enforcement matters will continue.
While most sanctions on Sudan were lifted effective October 12, 2017, significant restrictions remain, particularly with respect to export controls and the individuals and entities in Sudan that remain on the SDN list. In addition, the South Sudan and Darfur sanctions programs remain in effect, and Sudan sanctions could still be reimposed with little or no notice.
For these reasons, Sudan remains a high-risk area in which to conduct business. This underscores the need for a clear understanding of licensing requirements, effective screening of counterparties to transactions, and continued vigilance regarding potential changes in US sanctions.