International Law Advisory - Sudan Sanctions Regulations Amended By OFAC

November 1, 2007

The Sudanese Sanctions Regulations (SSR), 31 CFR Part 538, administered by the US Department of the Treasury, Office of Foreign Assets Control (OFAC), were amended yesterday, pursuant to 72 Fed. Reg. 61,513-17, to implement the southern Sudan "carve outs" that were the result of the Darfur Peace and Accountability Act of 2006 ("Act") and Executive Order (EO) No. 13067 issued by President Bush on October 13, 2006.

Essentially, the SSR continue to target the Government of Sudan for implementing policies and actions that violate human rights, particularly concerning the conflict in Darfur, as well as Sudan’s petroleum and petrochemical sector. To implement US Government policy, however, the SSR, effective October 31, 2007, now exempt certain trade prohibitions previously directed at Sudan to support the regional government in southern Sudan, assist with peace efforts in Darfur, and provide economic assistance to particular regions of Sudan. The following is a brief summary of the principal changes in the SSR, and reflect an elaboration on the changes set forth in EO No. 13067.

The basic "blocking" and "asset freezing" orders directed against the Government of Sudan (and its controlled entities, officials, and agents) remain unchanged. Furthermore, full economic sanctions that prohibit export, import, and financial transactions involving goods, services, or technology with denied entities and the country of Sudan, other than for certain exempt geographic areas (discussed below), remain in effect. In addition, the existing prohibitions on engaging in any business with petroleum and petrochemical industries throughout all of Sudan, including but not limited to oilfield services and oil and gas pipelines, are explicitly reaffirmed.
The prohibitions in the SSR do not apply to activities or related transactions in certain Sudanese areas, which include Southern Sudan, Southern Kordofan/Nuba Mountains State, Blue Nile State, Abyei, Darfur, and marginalized areas in and around Khartoum ("Specified Areas"). "Marginalized areas” have been defined to include the following four (4) official camps for internally displaced persons: Mayo, El Salaam, Wad El Bashir, and Soda.
These changes mean that all export/import trade activities involving goods, services, and technology with respect to the Specified Areas are no longer prohibited. However, if the transaction involves property or assets held by the Government of Sudan or a denied person, relates to Sudan's petroleum or petrochemical industry, or involves transshipments through regions of Sudan that do not constitute the Specified Areas, then the transaction remains prohibited and a license must be obtained from OFAC.
A blanket prohibition on financial transactions involving the country of Sudan now has been partially lifted, provided that such a transaction: (a) is not contrary to the SSR as now amended; (b) involves a third country depository institution or institution that is not owned or controlled by the Government of Sudan, and that is located in the Specified Areas; and (c) is not routed through an institution in a non-exempt area in Sudan or owned or controlled by the Government of Sudan.
The term "Government of Sudan" has been amended to specifically exempt the regional government of Southern Sudan.
All Sudanese licenses previously granted by OFAC remain valid until their date(s) of expiration, or if not specified, until June 30, 2008. Additionally, new general licenses have been promulgated to authorize previously prohibited official business of the US Government or the United Nations in Sudan, as well as to authorize humanitarian transshipments of goods, technology, and services through non-exempt areas of Sudan to or from Southern Sudan and Darfur (subject to review on an annual basis).

If you have any questions regarding the Sudanese sanctions regime or any related export control issues, please contact Ed Krauland at 202.429.8083 or ekrauland@steptoe.com or Jack Hayes at 202.429.6491 or jhayes@steptoe.com in our Washington office.