On December 20, 2017, President Trump signed Executive Order (“Order”) 13818 titled “Blocking the Property of Persons Involved in Serious Human Rights Abuses or Corruption”. The Order implements the Global Magnitsky Human Rights Accountability Act (“Global Magnitsky Act”), which was signed into law on December 23, 2016 and which targets human rights abusers and corrupt actors globally. This is to be contrasted with the Sergei Magnitsky Rule of Law Accountability Act of 2012 (“Magnitsky Act”) targeting human rights abusers in Russia, with respect to which the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) published regulations on December 21, 2017. In addition, OFAC designated a number of individuals and entities as Specially Designated Nationals (“SDNs”) under the Magnitsky Act on December 20, 2017 and under the Global Magnitsky Act on December 21, 2017.
The Global Magnitsky Act authorizes the President to impose sanctions on any party (individual or entity) who:
- is responsible for extrajudicial killings, torture, or other gross violations of internationally recognized human rights committed against individuals in any non-US country seeking to expose illegal activity carried out by government officials, or to obtain, exercise, or promote human rights and freedoms;
- acted as an agent of or on behalf of a non-US person in such activities;
- is a government official, or a senior associate of such an official, that is responsible for, or complicit in, ordering, controlling, or otherwise directing, acts of significant corruption, including the expropriation of private or public assets for personal gain, corruption related to government contracts or the extraction of natural resources, bribery, or the facilitation or transfer of the proceeds of corruption to non-US jurisdictions; or
- has materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, such activities.
OFAC designated 52 parties (15 individuals and 37 entities) as SDNs pursuant to the Global Magnitsky Act and the Order. This includes parties in a number of countries, including, among others, The Gambia, South Sudan, Russia, Nicaragua, China, Pakistan, Democratic Republic of the Congo, Dominican Republic, Uzbekistan, and Ukraine. These are the first designations under the Global Magnitsky Act. OFAC has issued new FAQs regarding the Order and these designations.
Though both the Global Magnitsky Act and the Magnitsky Act provide OFAC with the authority to designate SDNs, they are different statutes. The Magnitsky Act targets parties for certain actions related to the death of Russian lawyer Sergei Magnitsky, who died in 2009 after being arrested and tortured in custody by officers of the Russian government, or for involvement in human rights violations in Russia more generally. By contrast, the Global Magnitsky Act targets parties involved not only in human rights violations but also corruption and applies globally, not only to activities related to Russia. Our previous blog post about the Magnitsky Act-related sanctions can be found here. On December 20, 2017, OFAC designated five individuals in Russia under the Magnitsky Act and announced the issuance of the Magnitsky Act Sanctions Regulations, which were published on December 21, 2017.
As a result of the OFAC designations, all of the property and interests in property within US jurisdiction of the designated individuals and entities are blocked, and “US Persons” are generally prohibited from engaging in transactions with these SDNs and any entities 50% or more owned by these 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. Non-US Persons, including separately incorporated non-US subsidiaries of US companies, may be subject to US jurisdiction if they cause any SDN-related transactions to occur in whole or in part in the United States.