OFAC Amends Sudanese Sanctions Regulations to Implement EO 13412

(The President issued Executive Order 13412 on October 13, 2006 in order to reconcile certain sections of the Darfur Peace and Accountability Act of 2006 (DPAA) and to maintain in place sanctions on the Government of Sudan. EO 13412 continues the blocking of property and interests in property of the Government of Sudan that are in or come within the U.S., as Sudan continues to implement policies and actions that violate human rights, in particular with respect to the conflict in Darfur, etc. (OFAC states that this blocking sanction continues to affect the entire territory of Sudan. See ITT's Online Archives or 10/20/06 news, 06102099 1, for BP summary of EO 13412.)

Final Rule Prohibits Specific Transactions, But Exempts Specified Areas, Etc.

In accordance with EO 13412, the OFAC is amending the SSR to add the following provisions:

All petroleum transactions prohibited. The final rule adds 31 CFR 538.210 which (1) prohibits all transactions by U.S. persons relating to the petroleum or petrochemical industries in Sudan, including, but not limited to, oilfield services and oil or gas pipelines; and (2) prohibits the facilitation by a U.S. person of any transaction relating to Sudan's petroleum or petrochemical industries. OFAC states that this prohibition affects the entire territory of Sudan.

Specified Areas of Sudan exempt from most SSR sanctions. The final rule adds 31 CFR 538.212(g)(1) which provides that, except for the provisions of 31 CFR 538.201-203, 538.210, 538.211, and 538.212(g)(2), the prohibitions contained in the SSR (e.g., the import/export ban, etc.) do not apply to activities or related transactions with respect to the Specified Areas of Sudan, unless they involve any property or interests in property of the Government of Sudan or relate to Sudan's petroleum or petrochemical industries.

These Specified Areas of Sudan are identified in 31 CFR 538.320 as: Southern Sudan, Southern Kordofan/Nuba Mountains State, Blue Nile State, Abyei, Darfur, and marginalized areas in and around Khartoum.

(31 CFR 538.320 also defines the term "marginalized areas in and around Khartoum" to refer to four official camps for internally displaced persons: Mayo, El Salaam, Wad El Bashir, and Soba.)

1. CFR 538.212(g)(2) states that the exemption of 31 CFR 538.212(g)(1) does not apply to the exportation or reexportation of agricultural commodities, medicine, and medical devices. (See ITT's Online Archives or 03/27/07 news, 07032730, for BP summary of the OFAC's notice clarifying its policy for issuing one-year licenses to export agricultural commodities, medicine, and medical devices to Sudan and Iran.)

Southern Sudan regional government. The final rule revises the definition of the term "Government of Sudan" contained in 31 CFR 538.305(b) to exclude the regional government of Southern Sudan.

Transshipments through Sudan. The final rule provides an interpretation in 31 CFR 538.417 that (1) exportation or reexportation of goods, technology, or services to the Specified Areas of Sudan, or (2) importation into the U.S. of goods or services from, or originating in, the Specified Areas of Sudan, are exempt under 31 CFR 538.212(g) only if it does not transit or transship through any area of Sudan other than the Specified Areas of Sudan. Imports and exports to or from the Specified Areas of Sudan that involve the transiting of, or transshipment through, an area other than a Specified Area of Sudan, e.g., Khartoum and Port Sudan, require authorization from OFAC.

(See 31 CFR 538.532 which authorizes humanitarian transshipments to or from Southern Sudan and Dafur.)

Financial transactions in Sudan. The final rule also provides another interpretation in 31 CFR 538.418 stating that financial transactions are no longer prohibited by the SSR if: (1) The underlying activity is not prohibited by the SSR; (2) the financial transaction involves a third-country depository institution, or a Sudanese depository institution not owned or controlled by the Government of Sudan, that is located in the Specified Areas of Sudan; and (3) the financial transaction is not routed through a depository institution that is located in the non-exempt areas or that is owned or controlled by the Government of Sudan, wherever located. However, any financial transactions that involve, in any manner, depository institutions that are located in an area other than a Specified Area of Sudan, e.g., Khartoum, remain prohibited and require authorization from OFAC.

Three new general licenses authorized. The final rule amends the SSR to add three new general licenses, in 31 CFR 538.530, 538.531, and 538.532, as follows:

o General licenses issued pursuant to EO 13067 are authorized and remain in effect pursuant to EO 13412 and all specific licenses and all nongovernmental organization registrations issued pursuant to EO 13067 or the SSR prior to October 13, 2006 are authorized pursuant to EO 13412 and remain in effect until the expiration date specified in the license or registration, or if no expiration date is specified, June 30, 2008.

o General licenses are authorized for official activities of the U.S. government and international organizations otherwise prohibited by the SSR that are for the conduct of the official business of the U.S. government or the United Nations by contractors or grantees thereof, etc., subject to certain conditions and limitations.

o General licenses are authorized for the transit or transshipment to or from Southern Sudan and Darfur of goods, technology, or services intended for humanitarian purposes, through any area of Sudan not exempted by 31 CFR 538.212(g)(1).

(See ITT's Online Archives or 05/31/07 news, 07053120, for BP summary of an OFAC/White House fact sheet and press release providing details on expanded and tightened economic sanctions against Sudan.

See ITT's Online Archives or 11/05/97 news, (Ref:97110555), for BP summary of EO 13067.)

OFAC final rule (FR Pub 10/31/07) available at http://a257.g.akamaitech.net/7/257/2422/01jan20071800/edocket.access.gpo.gov/2007/pdf/E7-21443.pdf