Sanctions Watch | Weekly Vol. 73

Sanctions Watch Vol 73

In the latest edition of our Sanctions Watch weekly digest, we present significant updates on sanction watchlists and regulatory developments.

1. OFSI releases a new General License for Legal Services

OFSI has updated its Legal Services General Licence, significantly raising the cap for legal fees under the UK’s Russia and Belarus sanctions. Effective from 29 October 2024, the cap has increased from £500,000 to £2,000,000 for legal services fees, or up to £4,000,000 if the designated person engaged services before being sanctioned. This adjustment aims to reduce the administrative load on OFSI, allowing more sanctioned individuals to pay for legal services under the General Licence without needing additional OFSI-specific approval.

Another key change allows UK law firms to accept payments in non-UK bank accounts, including accounts in Canada, EU, EFTA countries, and the United States. This supports internationally-operating UK law firms while ensuring compliance. Additionally, OFSI clarified fee caps for in-house and directly instructed counsel. The General Licence is valid until 28 April 2025, with potential for amendment or revocation by HM Treasury.

2. Legal Services Permit – SAN-2024-00138

Permit SAN-2024-00138, issued on 30 October 2024, authorizes the use of controlled assets by specific entities in connection with legal services for designated persons or entities (DPEs) under Australia’s Autonomous Sanctions Regulations 2011. This new permit revokes the previous Permit SAN-2022-00079 and remains valid for two years or until further notice. It permits legal service providers, Australian government entities, financial institutions, and others to manage assets to support legal proceedings, settlements, and related ancillary services.

Class A permit holders, primarily legal service providers, can directly or indirectly make assets available to DPEs and handle controlled assets as required for legal representation in Australian courts. Permit holders in Classes B through G are also authorized for asset dealings under specific conditions. Permit reliance requires prior notification to the Australian Sanctions Office. This permit ensures DPEs have access to legal services while maintaining regulatory oversight on controlled assets.

3. Issuance of General Licenses Related to Russia

General License No. 8K, effective October 30, 2024, authorizes transactions related to energy involving certain Russian banks and entities, despite restrictions under Executive Order 14024. Valid until April 30, 2025, this license permits activities like extraction and transport of energy resources but excludes transactions involving sovereign debt, certain accounts, and transactions prohibited by Russian sanctions regulations.

General License No. 25G, effective October 30, 2024, authorizes U.S.-related transactions for telecommunications and internet-based communications with Russia, bypassing certain sanctions under the Russian Harmful Foreign Activities Sanctions Regulations (RuHSR). It allows U.S. persons to export communications services, software, and technology, with exceptions for specific Russian entities and financial restrictions.

General License No. 110, effective until December 14, 2024, authorizes the wind down of transactions involving specific blocked entities under Executive Order 14024. Authorized transactions must be essential and directed to blocked accounts. Exclusions include dealings with certain Russian financial institutions, central banks, and any unlisted blocked persons under RuHSR regulations.

General License No. 111 permits specific transactions involving debt, equity, or derivative contracts of certain blocked entities until December 14, 2024, under Executive Order 14024. Authorized activities include divestment, transfer facilitation, and trade settlement, excluding transactions with fully blocked persons or prohibited financial institutions as specified in directives under E.O. 14024.

General License No. 112 permits transactions necessary for civil aviation safety and the wind-down of dealings involving Shaurya Aeronautics Private Limited, provided they comply with Executive Order 14024. This authorization is valid until December 14, 2024, with payments to blocked accounts. Certain financial restrictions remain, per Russian sanctions regulations.

4. Strengthening Compliance in the Maritime Shipping Sector

The U.S. Department of the Treasury’s OFAC issued a Compliance Communiqué offering sanctions compliance guidance for the maritime shipping industry. This guidance helps stakeholders recognize patterns of sanctions evasion, address due diligence concerns, and adopt best practices. As the industry advances with automation and technology, stakeholders are advised to enhance transaction due diligence by monitoring abnormalities in AIS data, voyage patterns, and cargo origin documentation. Implementing comprehensive compliance controls, such as pre-transaction screening and internal audits, is essential. OFAC also recommends enforcing sanctions compliance through contractual terms, validating insurance policies for compliance, and ensuring effective sanctions exclusion clauses.

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Sanctions Watch is a weekly recap of events and news related to sanctions around the world.