OFAC Amends Sudanese Sanctions Regulations to Authorize Certain Transactions
Kelley Drye Client Advisory
September 14, 2009
The Department of the Treasury’s Office of Foreign Assets Control (OFAC) recently amended the Sudanese Sanctions Regulations by issuing a general license that authorizes the sale, exportation and reexportation of agricultural commodities, medicine, and medical devices to specified areas of Sudan. Additionally, the general license authorizes the conduct of related transactions in the same specified areas. These specified areas include Southern Sudan, Southern Kordofan/Nuba Mountains State, Blue Nile State, Abyei, Darfur, and marginalized areas in and around Khartoum.

These regulations were designed to resolve a tension that previously existed between two laws. Executive Order 13412 states that generally most trade is allowed within specified areas of Sudan (other than trade with the Government of Sudan or relating to Sudan’s petroleum of petrochemical industries). In contrast, the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA) states that any exports of agricultural commodities, medicine and medical devices to any entity in Sudan could only be made pursuant to a one-year license. The amendments resolve this tension and clarify the rules regarding exporting with Sudan by authorizing a general license and removing any specific license requirement for transactions involving agricultural commodities, medicine and medical devices to these specified areas.

The general license does not extend to exports that involve any property or interests in property of the Government of Sudan or relate to the petroleum or petrochemical industries in Sudan. Specific licenses are still required for transactions related to these items if those transactions involve the Government of Sudan, any individual or entity in an area of Sudan other than the specified areas of Sudan, or to persons in third countries purchasing them specifically for resale to either of the foregoing. U.S. persons who provide brokerage services on behalf of U.S. persons for the sale and exportation or reexportation of these items to the Government of Sudan, any individual or entity in an area of Sudan other than the specified areas, or to persons in third countries purchasing specifically for resale to the foregoing may use a general license for their brokerage services if the corresponding transaction has already been authorized by a specific license. The transshipment or transit of these items through areas of Sudan other than the specified areas and any financial transactions that are routed through depository institutions located in an area of Sudan other than specified areas remain prohibited.

Those who complete these transactions must adhere to OFAC’s recordkeeping requirement for transactions subject to OFAC-administered sanctions. Specifically, all U.S. persons must maintain records for a period of not less than five years for any OFAC-related transactions.

The authorization applies to exports shipped between September 9, 2009 and September 9, 2010. At the end of this period of time, OFAC will revisit this regulation and determine whether to revoke the general license or extend it.

The new regulations will expedite trade with Sudan. Primarily, the regulations should be of interest to companies that are interested in exporting pharmaceuticals, medical devices, or agricultural commodities to Sudan, as well as freight forwarders, brokers or anyone involved in financing other activities that facilitate exportation to Sudan.