On Friday, February 23, 2018, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) imposed blocking sanctions against one individual, twenty-seven entities and twenty-eight vessels known to have previously provided maritime support to North Korean coal and petroleum transactions. OFAC added the individuals, entities and vessels to its Specially Designated Nationals List (the “SDN List”), which will generally prohibit the fifty-six sanctioned parties from transacting with the United States or any United States person.
Despite Export Administration Regulations administered by the U.S. Commerce Department, OFAC sanctions and previous Executive Orders which already prohibit (and continue to prohibit) almost all forms of trade between the United States and North Korea, the recent announcement was notable because OFAC used new authority under the Countering America’s Adversaries Through Sanctions Act of 2017 (covered here ) in order to impose sanctions on persons outside of the U.S. (commonly referred to as secondary sanctions) in order to further discourage the rest of the world from trading with North Korea. The sanctioned parties included a Taiwanese individual, business entities located in China, Taiwan, Panama and Singapore and vessels from Tanzania, Panama and Comoros. In an OFAC press release, Treasury Secretary Steven Mnuchin stated “The President has made it clear to companies worldwide that if they choose to help fund North Korea’s nuclear ambitions, they will not do business with the United States.”
Coinciding with OFAC’s sanctions announcement, OFAC, the U.S. State Department and the U.S. Coast Guard also issued advisory guidance for insurers, flag registries, shipping companies, financial institutions and other parties involved in the shipping industry. The guidance summarizes various United States and United Nations sanctions against North Korea and explains various deceptive shipping practices such as offshore ship-to-ship transfers that North Korea uses in order to evade sanctions. The guidance specifically states that “Parties subject to U.S. and/or United Nations (UN) sanctions should be aware of [North Korea’s deceptive shipping practices] in order to implement appropriate controls to ensure compliance with their legal requirements” and also provides a list of recommended mitigating compliance practices.
In light of this recent sanctions announcement, persons and companies directly or indirectly engaged in shipping transactions should continue to carefully screen their counterparties and their vessels against the SDN list and should also consider updating their compliance practices to conform to OFAC’s advisory guidance. Husch Blackwell LLP’s Export Controls and Economic Sanctions team will continue to monitor future North Korea sanctions developments. In the meantime, please contact Cortney Morgan, Linda Tiller, or Grant Leach with any questions you may have.