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OFAC Announces First SDN Designations under Sudan Executive Order 14098 and Issues General Licenses

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On June 1, 2023, the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) added four (4) entities to the Specialty Designated Nationals (“SDN”) List under Executive Order 14098 (“EO 14098”) and issued four general licenses (“GLs”) authorizing certain transactions involving Sudan.  For more information on EO 14098, see our previous blog post available here.  We summarize the four GLs below that authorize certain activities and transactions involving SDNs designated under EO 14098.

  • Sudan GL 1, “Official Business of Certain International Organizations and Entities,” authorizes all transactions that are for the conduct of the official business of the following entities by employees, grantee, or contractors:
  1. The International Centre for Settlement of Investment Disputes and the Multilateral Investment Guarantee Agency;
  2. The African Development Bank Group, the Asian Development Bank, the European Bank for Reconstruction and Development, and the Inter-American Development Bank Group, including any fund entity administered or established by any of the foregoing;
  3. The International Committee of the Red Cross and the International Federation of Red Cross and Red Crescent Societies;
  4. The Global Fund to Fight AIDS, Tuberculosis, and Malaria, and Gavi, the Vaccine Alliance;
  5. The African Union, including the African Union Commission and other subsidiary bodies and organs; and
  6. The Intergovernmental Authority on Development.

    GL 1 excludes funds transfers in which the intended beneficiary is blocked pursuant to EO 14098, unless for the payment of taxes, fees, or import duties, or the purchase or receipt of permits, licenses, or public utility services.  GL 1 notes that Section 10 of EO 14098 separately exempts transactions that are for the conduct of the official business of the United Nations (including its specialized agencies, programs, funds, and related organizations) by employees, grantees, or contractors thereof.
  • Sudan GL 2, “Certain Transactions in Support of Nongovernmental Organizations’ Activities,” authorizes all transactions ordinarily incident and necessary for certain activities performed by nongovernmental organizations (“NGOs”), so long as neither the NGO nor its property are blocked pursuant to EO 14098.  Such authorized activities include those to support humanitarian projects for basic humanitarian needs, democracy building, education, non-commercial projects to directly benefit civilians, environmental and natural resource protection, and disarmament, demobilization, and reintegration programs.

    GL 2 also excludes funds transfers in which the intended beneficiary is blocked pursuant to EO 14098, unless for the payment of taxes, fees, or import duties, or the purchase or receipt of permits, licenses, or public utility services.  GL 2 explains that OFAC will review license applications on a case-by-case basis to authorize NGOs or other entities to engage in other activities designed to directly benefit the civilian population in Sudan, including support for the removal of landmines and economic development projects directly benefiting the civilian population.
  • Sudan GL 3, “Transactions Related to the Provision of Agricultural Commodities, Medicine, Medical Devices, Replacement Parts and Components, or Software Updates, and the Extraction, Processing, Transport, Sale, or Distribution of Water in Sudan,” authorizes transactions for the provision of agricultural commodities, medicine, medical devices, replacement parts, and components for medical devices, or software updates for medical devices to Sudan or to persons in third countries purchasing specifically for resale to Sudan.  GL 3 also authorizes transactions related to the extraction, processing, transport, sale, or distribution of water, including the maintenance or repair of water pipelines in Sudan.  This provision related to water distribution is a novel authorization that OFAC has not included in similar general licenses related to agricultural commodities, medicine, and medical devices under other US sanctions programs.
  • Sudan GL 4, “Authorizing the Wind Down of Transactions Involving Defense Industries System or Al Junaid Multi Activities Co Ltd.,” authorizes transactions that are ordinarily incident and necessary to the wind down of any transaction involving Defense Industries System, Al Junaid Multi Activities Co. Ltd., or any entity in which Defense Industries System or Al Junaid Multi Activities Co. Ltd. owns, directly or indirectly, a 50% or greater interest.  The wind-down period is authorized through 12:01 a.m. eastern daylight time, July 31, 2023.  Payments to one of the SDNs covered by GL 4 must be made into a blocked account and reported to OFAC consistent with 31 CFR § 501.603.

A list of the four (4) Sudanese entities designated on June 1, 2023 can be found here.  OFAC stated these entities are affiliated with embattled forces fueling the conflict in Sudan and the entities were designated for generating revenue from, and contributing to, the ongoing conflict.

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Ms. Lis has extensive experience advising companies on US laws relating to exports and reexports of commercial goods and technology, defense trade controls and trade sanctions — including licensing, regulatory interpretations, compliance programs and enforcement matters. She also has advised clients on national security reviews of foreign investment administered by the Committee on Foreign Investment in the United States (CFIUS), including CFIUS-related due diligence, risk assessment, and representation before the CFIUS agencies.

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Alex advises clients on compliance with US export controls, trade and economic sanctions, export controls (Export Administration Regulations (EAR); International Traffic in Arms Regulations (ITAR)) and antiboycott controls. He counsels on and prepares filings to submit to the US Government's Committee on Foreign Investment in the United States (CFIUS) with respect to the acquisition of US enterprises by non-US interests. Moreover, Alex advises US and non-US companies in the context of licensing, enforcement actions, internal investigations, compliance audits, mergers and acquisitions and other cross-border transactions, and the design, implementation, and administration of compliance programs. He has negotiated enforcement settlements related to both US sanctions and the EAR.

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Taylor Parker is an associate at Baker McKenzie's Chicago office and a member of the International Commercial group. Taylor leverages her background in governmental affairs, public health and the private business sector to provide global clients with coordinated solutions to international transactions and issues. Taylor advises clients on various international commercial matters, including domestic and cross-border mergers and acquisitions, economic and trade sanctions, export controls, and customs and import laws.

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