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Digital Subscriptions > The Hedge Fund Journal > Issue 125 - August 2017 > Russia, Iran, North Korea and Venezuela

Russia, Iran, North Korea and Venezuela

Sanctions update


On Aug. 2, 2017, President Trump signed into law the Countering America’s Adversaries Through Sanctions Act (the “Act”), after it was passed by overwhelming majorities in the House and Senate.1 While media coverage of the legislation has focused on its provisions tying the hands of the current administration when it comes to lifting Russia-related sanctions, the Act also authorizes, and in many instances directs, the President to impose additional sanctions against Russia, as well as against Iran and North Korea. The sanctions described in the Act contemplate Executive Branch implementation anywhere from 30 to 180 days after the Act’s enactment (implementation requirements vary by provision), so firms should expect to see regulations released and designations by the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) made in the coming months.

Separately, on July 26 and 31, 2017, 14 current and former Venezuelan government officials, including Venezuelan President Nicolas Maduro and the current Vice President of Finance for Petroleos de Venezuela, S.A. (“PDVSA”), were added to OFAC’s Specially Designated Nationals List (“SDN List”). The Venezuelan sanctions take effect immediately.

US firms, including financial institutions and investment fund managers, engaged in any business activity in or with persons or entities in Russia, Iran, North Korea and Venezuela are advised to pay close attention to these new prohibitions.

I. The Countering Russian Influence in Europe and Eurasia Act of 2017

The Act’s provisions relating to Russia are likely to have the greatest practical impact. These provisions modify and expand the scope of existing Russiarelated sanctions and require the President to take steps to sanction additional persons engaged in other types of conduct involving Russia.

A. Modifications to Existing Executive Orders and SSI Directives

In 2014, following Russia’s annexation of Crimea, President Obama issued a series of Executive Orders (“E.O.”) to block property of persons contributing to the undermining of the democratic processes and institutions in Ukraine. These included sanctions directed against various Russian government officials, as well as businesses and individual business executives connected to the Russian government and certain sectors of the Russian economy.3 In December 2016, President Obama also amended a cybersecurity-related E.O. originally issued in April 2015, to block property of persons involved in cyber-enabled attacks directed at influencing the United States presidential election.4 The Act codifies the sanctions provided for in each of those Executive Orders and requires the President to obtain Congressional approval prior to the termination of any such sanctions or the waiver of the initial application of the sanctions against qualifying persons.5 In addition, Section 223 of the Act modifies E.O. 13662, which was issued on March 20, 2014, in order to strengthen and expand its existing sanctions. Specifically, Section 223 of the Act authorizes the imposition of sanctions against state-owned enterprises in the railway or metals and mining sector of the Russian economy. This section of the Act does not mandate any new sanctions; rather, it provides that “the Secretary of the Treasury may determine that a person” is subject to the E.O.6

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