South Sudan and Central African Republic
On 2 and 7 July, respectively, OFAC issued the South Sudan Sanctions Regulations and the Central African Republic (“CAR”) Sanctions Regulations. These new regulations have been issued in abbreviated format, and OFAC has stated that it intends to follow up with a more comprehensive set of regulations in the future. The new regulations incorporate the prohibitions set out in EO 13667 and EO 13664, respectively, define important terms, including “property”, “property interest” and “transfer”, set forth provisions for handling blocked property and provide rules governing the effects of prohibited transfers.
The new regulations also add a number of new general licences. A “general licence” is an authorisation that applies to anyone who meets the criteria described in the regulations without need to apply to OFAC for permission. The general licences in both the CAR Sanctions Regulations and South Sudan Sanctions Regulations include authorisations for certain transactions by financial institutions holding blocked property, for emergency medical treatment and for certain legal services. In particular, US persons are authorised to provide legal services to blocked persons. Payment for these legal services may be received from funds located outside the US, subject to certain reporting and other requirements. However, payment from blocked funds in the US, from blocked funds in the hands of a US person or from a blocked person other than the client is not permitted without a specific licence from OFAC.
On 10 July, OFAC issued a final rule amending the Zimbabwe Sanctions Regulations (Title 31 CFR Part 541), originally issued as an interim final rule on 29 July 2004. The final regulations implement the prohibitions authorised by EOs 13391 and 13469, which expanded the Zimbabwe sanctions after the issuance of the interim final rule. The final regulations also now contain amended and updated definitions of key terms related to the blocking prohibitions, including “transfer” and the various categories of prohibited support. Additionally, the amendments include two general licences. The first authorises payments from outside the United States for permitted legal services (section 541.508), and the second, previously available only on OFAC’s website, authorises all transactions, subject to certain limitations, involving Agricultural Development Bank of Zimbabwe and Infrastructure Development Bank of Zimbabwe (section 541.510).
Separately, on 1 July, OFAC amended and reissued in their entirety the Burmese Sanctions Regulations (Title 31 CFR Part 357). The amended regulations incorporate the numerous changes effected by a series of EOs that have been issued since the date the regulations were last amended, and they incorporate several general licences that had previously appeared on OFAC’s website. Among other things, the reissued regulations reflect the revocation in August 2013 of the broad ban on imports of products of Burma, although the ban on the importation of jadeite or rubies mined or extracted from Burma remains in force. The regulations also incorporate the general licences authorising new investments in Burma (subject to reporting requirements), the exportation of financial services to Burma, and transactions with a specific list of blocked banks. The authorisation for funds transfers to accounts at other blocked Burmese financial institutions, previously contained in a general licence, has been moved to the interpretive regulation (section 537.404) that addresses transactions incidental to licenced transactions. Most other transactions with Burmese nationals on the Specially Designated Nationals list remain prohibited.
The issuance of these new and amended sanctions regulations continues OFAC’s recent practice of issuing or updating regulations to implement and codify sanctions-related EOs. Like other recently issued sanctions regulations, the new CAR Sanctions Regulations and South Sudan Sanctions Regulations, the final Zimbabwe Sanctions Regulations and the reissued Burmese Sanctions Regulations contain the “50% rule”, whereby any entity in which a blocked person owns a 50% or greater interest is also subject to blocking, even if that entity does not itself appear on the list of blocked persons. The “50% rule” has existed as a matter of official interpretative guidance for a number of years, and now it appears that OFAC is making a consistent effort to include it explicitly in newly issued regulations.