In the latest of our regular round-ups of sanctions and export controls news, the IOE&IT Daily Update covers a pair of developments from UK and US authorities on the Russian oil price cap, reports that the EU could hit several Chinese firms with sanctions and news that a UK citizen has been jailed in the US for violating the Iranian sanctions regime.
New guidance released
The Office of Financial Sanctions Implementation (OFSI) has updated its guidance for industry on the oil price cap.
In the update, OFSI is warning of new evasion methods and recommending that firms take action to remain compliant with the price cap. It comes following a report covered earlier this week by the Daily Update which called for stronger enforcement on the cap and which argued that sanctions are having a significant effect on Russian government finances.
The price cap is a mechanism, brought in by the G7 and its allies, to limit how much they spend on Russian oil, restricting the maximum price paid for petroleum-based products.
The evasion methods include the use of falsified documents that hide the true price paid for Russian oil, ‘opaque’ shipping costs that hide the fact that oil products are being purchased above the cap and supply chains that sidestep the cap.
Separately, OFSI has released an explainer of reporting requirements – first introduced in December 2023 – for 'designated persons' under the Russia sanctions regime.
Giles Thompson, director of economic crime and sanctions at the Treasury, said that firms are now required to inform OFSI of funds and economic resources held for several Russian government entities and to “proactively provide details” of designated persons under the scheme.
The last measure is also planned to be introduced for the Belarusian regime later in 2024.
Network busting
The US has identified and sanctioned a network based in the United Arab Emirates (UAE) that the US said was helping some to evade the price cap.
In a press release, the US Treasury Department said it has targeted a network that was violating the price gap and imposed sanctions on four corporate entities as well as a ship.
On Thursday (8 February), undersecretary of the treasury for terrorism and financial intelligence, Brian Nelson, said that three companies in the UAE and a fourth in Liberia had been hit by sanctions for trading under the cap. A vessel, the NS Leader, was also being targeted.
Under US regulations, any property and interests of sanctioned persons are ‘blocked’ and must be reported to the US government. It is also forbidden to provide services, goods or funds to any blocked person.
Nelson said:
“Today’s action against vessels violating the price cap on Russian oil should serve as a continued warning that we can and will enforce violations of the cap.”
He added that new prohibitions on Russian diamonds were also being brought in.
China firms hit
The EU is reportedly preparing to impose sanctions on three Chinese firms for aiding Russia.
According to Politico, these firms are part of two dozen companies that face trade restrictions for aiding Russia’s war efforts in its invasion of Ukraine.
If successful, this would mark the first time that Chinese companies have been hit with sanctions relating to the invasion.
The list has not been published yet and requires approval from all EU member states before going into effect. Previous efforts to impose sanctions on Chinese companies were dropped after reassurances from Beijing and resistance by certain member states, according to Bloomberg.
Other companies – based in Thailand, Turkey and Serbia among others – are said to be on the list.
UK citizen jailed
The US has announced that a UK citizen has been convicted and jailed for attempting to export items to Iran that had potential military and civilian uses.
According to the US Justice Department, Saber Fakih received an 18-month prison sentence, as well as three years of supervised release, after pleading guilty to violations of US sanctions law.
Fakih reportedly acted as a liaison between an Iranian purchaser and US-based seller of an Industrial Microwave System (IMS) and counter-drone system, attempting to send the goods to Iran without a licence from the Department of Treasury’s Office of Foreign Assets Control (OFAC).
Fakih was arrested in the UK on February 2021 and later extradited to the US to face the charges, pleading guilty in January 2022.
Dutch fighter ban
A Dutch Court has blocked the export of fighter jet parts to Israel.
In response to requests from human rights groups, including Oxfam, the Hague Court of Appeal ordered the Netherlands government to block all exports of parts of the F-35 fighter jet to Israel.
"It is undeniable that there is a clear risk the exported F-35 parts are used in serious violations of international humanitarian law," the court said.
The appeals court reversed an earlier decision by a lower court, which held that the Dutch government had the authority to send the fighter jet parts.
A similar legal case is pending in the UK courts, after rights groups sought judicial review of the UK’s decision to keep selling military equipment to Israel.
Dutch trade minister Geoffrey van Leeuwen stated that the government would be appealing to the Dutch Supreme Court and would “consult with international partners within the F-35 programme very soon”.
On Twitter, van Leeuwen said that his government’s view was that it was “up to the state to determine its foreign policy”.