On December 22, 2020, the US Treasury Department’s Office of Foreign Assets Control (OFAC) formally added the Central Bank of Syria (“CBOS”) to the List of Specially Designated Nationals and Blocked Persons (the “SDN List”) along with certain high-ranking officials in the Syrian government and affiliated entities.  Concurrent with OFAC’s designations, the US State Department (State Department) designated six Syrian individuals pursuant to Section 2 of Executive Order 13894, “Blocking Property and Suspending Entry of Certain Persons Contributing to the Situation in Syria.”

Treasury Department Designations

In total, OFAC added two individual senior Syrian officials, nine business entities, and the CBOS to the SDN List under the “[SYRIA]” program tag.  The Treasury Department’s press release states that these designations are meant to “discourage future investment in government-controlled areas of Syria, force the regime to end its atrocities against the Syrian people, and compel its commitment to the United Nations-facilitated process in line with UN Security Council Resolution 2254.” 

The CBOS was already blocked as a legal matter because it met the definition of the “Government of Syria” under Executive Order 13582, “Blocking Property of the Government of Syria and Prohibiting Certain Transactions with Respect to Syria” and the Syrian Sanctions Regulations (31 C.F.R. Part 542). As noted by OFAC, this new SDN designation is meant to highlight its blocked status.  OFAC’s FAQ 866 clarifies that the identification of the CBOS as an SDN does not trigger new prohibitions on the CBOS, and that all property and interests in property of the CBOS remain blocked. 

“US Persons” are generally prohibited from engaging in transactions with SDNs and any entities 50 percent or more owned by SDNs.  “US Persons” include (i) entities organized under US laws and their non-US branches, (ii) individuals or entities in the United States, or (iii) US citizens or permanent resident aliens (“Green Card” holders) wherever located or employed. In addition, non-US persons that engage in certain transactions with the designated parties may themselves be exposed to sanctions.

OFAC updated FAQs 867 and 868 to clarify that notwithstanding the formal addition of CBOS to the SDN List, US Persons may continue to engage with the bank in connection with humanitarian assistance and other authorized trade (i.e., under general and specific licenses). In addition, non-US Persons will not risk exposure to secondary sanctions (under the Caesar Syria Civilian Protection Act of 2019) for engaging in such activity to the extent US Persons would not require a specific license either.

State Department Designations

The State Department’s new wave of sanctions target: Asma al-Assad, the wife of President Bashar al-Assad; several members of her immediate family; and the commander of Syria’s Military Intelligence organization.  These sanctions build upon the State Department’s June 2020 sanctions against many of those designated this time, including Asma al-Asad and were imposed under Executive Order 13894.  Executive Order 13894 was initially issued to respond to Turkey’s military offensive in Syria, but the State Department has relied on its broad language authorizing sanctions on any “foreign person” determined to be responsible for or complicit in, or to have engaged in or financed “the obstruction, disruption, or prevention of a ceasefire in northern Syria,” or to be “an adult family member” of such a person.  Executive Order 13894 has been implemented in the Syria-Related Sanctions Regulations (31 C.F.R. Part 569) effective June 5, 2020 (for further details regarding the implementation of Executive Order 13894, please see our prior blog post here).

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Ms Stafford Powell advises on all aspects of outbound trade compliance, including compliance planning, risk assessments, licensing, regulatory interpretations, voluntary disclosures, enforcement actions, internal investigations and audits, mergers and acquisitions and other cross-border activities. She develops compliance training, codes of conduct, compliance procedures and policies. She has particular experience in the financial services, technology/IT services, travel/hospitality, telecommunications, and manufacturing sectors.

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