Sudan Update: OFAC Issues Guidance Clarifying Status of U.S. Sanctions and Export Controls
On August 11, 2020, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued a new guidance document, the Sudan Program and Darfur Sanctions Guidance (“Sudan Guidance”), which clarifies the current status of sanctions and export controls that apply to Sudan and the Government of Sudan. The Sudan Guidance confirms the removal of comprehensive sanctions on Sudan, permitting U.S. persons to engage in most economic activity. However, individual sanctions listings in Sudan and South Sudan continue and a U.S. embargo policy remains in place for exports to Sudan.
Removal of Sudan Sanctions Regulations
For two decades, the Sudanese Sanctions Regulations, 31 C.F.R. Part 538 (SSR), implemented a broad and complex sanctions regime that prohibited most economic activity in or with Sudan, its government and its banking sector. This sanctions regime was established pursuant to a series of executive orders and statutes. Sudan also was added to the U.S. State Department’s State Sponsors of Terrorism list in 1993.
Following negotiations between Sudan and the Obama administration, OFAC published a General License on January 17, 2017 that broadly authorized transactions prohibited under the SSR. The Trump administration continued these policies as the leadership in Sudan changed, removing several government agencies and Sudanese parties from the List of Specially Designated Nationals and Blocked Persons (SDN) in 2017, and rescinding the SSR from the Code of Federal Regulations in 2018.
Continuing Export Controls and Sanctions Designations
Although the economic sanctions that prohibited U.S. persons from engaging in many transactions with Sudan and the Government of Sudan generally have been rescinded, there are still U.S. sanctions designations and export control restrictions that remain in effect.
A number of SDNs and blocked entities operate in Sudan and northeastern Africa. The South Sudan Sanctions Regulations, 31 C.F.R. Part 558, and Darfur Sanctions Regulations, 31 C.F.R. Part 546, are separate from the SSR. They are still in effect and support multiple SDN designations. In addition, parties in Sudan may be subject to sanctions designations under terrorism-related and human rights regimes.
The U.S. export control embargo for Sudan, which is distinct from U.S. sanctions, applies to exports and reexport of items subject to the jurisdiction of the Export Administration Regulations (EAR) administered by the U.S. Commerce Department’s Bureau of Industry and Security (BIS). Specifically, the embargo policy for Sudan under Section 742.10 of the EAR prohibits the export and reexport to Sudan of U.S. origin commodities, software and technology, and non-U.S. items subject to the EAR and controlled on the Commerce Control List (CCL), with limited exceptions for reexports. Licenses from BIS are required, and most exports or reexports to Sudan are subject to a policy of denial or case-by-case review. (There is a general policy of approval for licensing applications related to the safety of civil aviation or the safe operation of fixed-winged commercial aircraft and CCL items that are destined for civil railway use.) Items not on the CCL and controlled under EAR99 are not subject to license requirements.
Finally, the Guidance acknowledges the Terrorism List Governments Sanctions Regulations at 31 C.F.R.§ 596.506 which, although limited in scope, continue to prohibit U.S. persons from engaging in transfers that would constitute a donation from the Government of Sudan to a U.S. person, or which a U.S. person knows or has reason to believe poses a risk of terrorist acts within the United States.
The U.S. government continues to enforce Sudan-related sanctions designations and has assessed penalties based on activity that took place before January 2017. This includes penalties that continue to impact past activities in the financial sector that violated the SSR. For example, in September 2019, the British Arab Commercial Bank agreed to a $4 million settlement, which stemmed from 72 transactions processed by the bank between September 2010 and August 2014.