OFAC Issues General License Unblocking Most Remaining Blocked Libyan Government Property

Following Friday's decision by the United Nations Security Council to lift the sanctions on Libya's Central Bank, the Treasury Department's Office of Foreign Assets Control (OFAC) on Friday evening issued Libya GeneralLicense No. 11 (GL 11) unblocking all remaining blocked property and interests in property of the Government of Libya (including agencies, instrumentalities, and controlled entities) and the Central Bank of Libya, including the Libyan Arab Foreign Bank.

The only exception to OFAC's GL 11 is that all funds (including cash, securities, bank accounts, and investment accounts, and precious metals) of the Libyan Investment Authority (“LIA”) and entities owned or controlled by the LIA (including the Libyan Africa Investment Portfolio) remain blocked. 


While OFAC removed the LIA and Libyan Africa Investment Portfolio from the SDN List on November 18, 2011, OFAC did not unblock their assets because those entities still remain subject to United Nations sanctions. 

According to OFAC, GL 11 should lead to the unblocking of more than $30 billion in assets of the Government of Libya.  

Most Libyan Government funds and assets have now been unblocked by OFAC and few restrictions remain from the sanctions imposed by the U.S. on February 25, 2011. However, the assets of certain members of the previous Libyan regime and other persons added by OFAC to the SDN List under OFAC's Libya 2 sanctions program remain blocked. An updated list of the remaining Libya parties and entities that remain subject to the United Nations travel ban and assets freeze is provided below. 

Exports and reexports to Libya of U.S. origin products, software and technology are subject to the export controls administered by the Bureau of Industry and Security.

UN LIST OF LIBYA INDIVIDUALS AND ENTITIES (Dec. 16, 2011)

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U.S. Lifts Most Financial Sanctions on Libyan Government

Yesterday, the United States Government lifted most of the financial sanctions on Libya that were imposed on February 25, 2011 by Executive Order 13566. These actions were taken after the United Nations Security Council last Friday approved Resolution S/Res/2009 (2011) which lifted most multilateral sanctions on the Libyan Government.

The Office of Foreign Assets Control (OFAC) implemented the U.N. resolution via two additional General Licenses, General Licenses 7A and 8.

General License 7A allows all new transactions with Libya’s National Oil Company (NOC) and the affiliated companies named in the amended General License. In addition, General License 7A unblocks all previously blocked property owned or controlled by NOC and the named affiliates. General License 7A requires financial institutions to file an email report with OFAC within 10 business days of the release of any blocked funds, including cash and securities, to the email address included in the general license.

General License 8 authorizes new transactions with the Government of Libya, its agencies, instrumentalities, and controlled entities, as long as they are not included on the list of 19 persons named on the GL (and are included on OFAC’s SDN List with the [LIBYA2] designation. However, General License 8 does not allow payment of previously blocked transactions and thus any prior transactions that were blocked cannot be paid until OFAC issues a specific or general license authorizing prior transactions.

While business activities involving Libya are not likely to normalize for some time, these new general licenses will make it easier for U.S. companies and financial institutions to resume their business activities in Libya as long as they are aware of the constraints that still exist, including that a large number of transactions and funds remain blocked. Blocked transactions may not be paid or finalized until a specific license is issued by OFAC.

Libya still remains subject to export controls administered by the Department of Commerce's Bureau of Industry and Security (BIS) and all export licenses remain suspended until further notice .

In addition, exports to Libya remain subject to restrictions imposed by the Directorate of Defense Trade Controls, which includes the suspension of all export licenses for defense articles and technical data that have been issued under the ITAR. In addition, no ITAR exemptions may be utilized to export items subject to the ITAR to Libya.

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OFAC Issues Additional Syria and Libya Sanctions General Licenses

On September 9, 2011, the Treasury Department's Office of Foreign Assets Control (OFAC) issued several general licenses relating to the U.S. sanctions programs on Syria and Libya. The following is an overview of these general licenses:

Libya General License

In the biggest change involving the current round of sanctions imposed by Executive Order 13566 on Libya on February 25, 2011, OFAC issued General License No. 7 which authorizes U.S. persons and companies to engage in transactions involving the following 16 subsidiaries of the Libyan National Oil Corporation located in Libya, Germany, Netherlands and other countries without having to obtain a specific license from OFAC:

• Arabian Gulf Oil Company
• Azzawiya Oil Refining Company
• Brega Petroleum Marketing Company
• Harouge Oil Operations
• Jamahiriya Oil Well Fluids and Equipment
• Libya Oil
• Mediterranean Oil Services Company
• Mediterranean Oil Services GmbH
• National Oil Fields and Terminals Catering Company
• North African Geophysical Exploration Company
• National Oil Wells Drilling and Workover Company
• Oilinvest Netherlands B.V.
• Ras Lanuf Oil and Gas Processing Company
• Sirte Oil Company for Production of Manufacturing of Oil and Gas
• Tamoil Group
• Waha Oil Company

It is important to note that General License No. 7 does not authorize transactions with the Libyan National Oil Corporation, Zueitina Oil Company or any other persons whose property and interests in property remain blocked pursuant to Executive Order 13566.

While OFAC has issued several other Libya general licenses, including General License No. 6 on August 19, 2011 that authorizes transactions with the Transitional National Council of Libya (formally known as the National Transitional Council), a large number of companies and entities in Libya remain blocked.

A summary of Executive Order 13566 and the current sanctions on Libya can be found here.

Because of the fast moving events in Libya U.S. persons and companies should proceed with caution before engaging in any business or financial transactions with Libya.

Syria General Licenses

OFAC issued the following four narrowly tailored general licenses with respect to the U.S. sanctions imposed on Syria on August 17, 2011 under Executive Order 13582:

General License 7​ - Authorizes transactions until November 25, 2011 that are incident and necessary to wind down contracts involving the Government of Syria. Also authorizes the divestiture to foreign persons of a U.S. person's investments in Syria.

General License 8 ​ - Authorizes U.S. persons to engage in transactions and activities in Syria associated with the United Nations and related programs and funds, including the World Health Organization, IMF, UNICEF, etc. Note 1 to the General License contains a reminder on the need to comply with other U.S. legal requirements, such as the Export Administration Regulations.
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General License 9 - Authorizes U.S. persons residing in Syria ​to pay to the Government of Syria personal expenses, such as housing, utilities, goods and services, taxes and fees.

General License 10​ - Authorizes U.S. financial institutions to operate accounts for non-blocked individuals in Syria as long as the transactions are for non-commercial purposes and do not involve transfers to Syria or for the benefit of persons residing in Syria.

A summary of Executive Order 13582 and the current sanctions on Syria can be found here.

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BIS Suspends Libya Export and Reexport Licenses

Yesterday the U.S. Department of Commerce's Bureau of Industry and Security (BIS)) announced that it has suspended indefinitely all licenses that it has issued for exports or reexports to Libya.

As a result, no further shipments may be made against BIS licenses for exports or reexports to Libya by any person.

For more information on the current scope of U.S. sanctions and other restrictions on Libya see our prior post "Libya Sanctions and Restrictions: An Update for U.S. Companies" here.

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Libya Sanctions and Restrictions: An Update for U.S. Companies

As a result of the recent events in Libya the United States and United Nations have announced various sanctions and other restrictions on transactions involving Libya. The following is a summary of these actions and their impact on U.S. companies:

Executive Order 13566 and OFAC

On Friday, February 25, 2011 President Obama signed an Executive Order (EO 13566) blocking the property and interests in property on the Gaddafi (Qadhafi) family, senior officials of the Libyan Government and others involved in the human rights abuses in Libya. The members of the immediate family of Colonel Muamar Gaddafi have been added to OFAC's SDN List. OFAC will soon be adding additional persons and entities to the SDN List.

The EO also blocks property and interests in the property of the Government of Libya, including the Government of Libya's "agencies, instrumentalities, and controlled entities." As a result, no transactions involving agencies of the Libyan Government can occur (such as the Ministries of Energy and Health, Civil Aviation Authority, etc.) or companies owned or controlled by the Libyan Government (such as the Libyan National Oil Company (NOC) can take place until further notice. OFAC considers any entity in Libya that is owned 50% or more by the Government of Libya to be owned or controlled by the Government of Libya.

While OFAC issued a General License (Libya General License No. 1) authorizing transactions with third-country financial institutions owned or controlled by the Government of Libya General License it remains to be seen how this General License can used for trade-related transactions.

While the U.S. has not yet reimposed the comprehensive ban on exports/reexports to or imports of commercial items from Libya (although see BIS and DDTC information below), given the large number of state-controlled companies in Libya, particularly in the oil and gas sector, U.S. companies should seek guidance before engaging in future transactions and payments involving companies that may be owned or controlled by the Government of Libya (this also applies to sales of medical products and medical devices to Libya's Ministry of Health and government operated hospitals in Libya). Most items subject to the Export Administration Regulations that are not classified as EAR99 currently require an export or reexport license to Libya.

BIS - Suspension of Export and Reexport Licenses

On March 3, 2011 the U.S. Department of Commerce's Bureau of Industry and Security (BIS) announced that it has suspended indefinitely all licenses that it has issued for exports or reexports to Libya. As a result, no further shipments may be made against BIS licenses for exports or reexports to Libya.

DDTC Suspension of ITAR Licenses and Exemptions

On February 26, 2011, the Directorate of Defense Trade Controls announced the immediate suspension of all export licenses for defense articles and technical data that have been issued under the ITAR. In addition, no ITAR exemptions may be utilized to export items subject to the ITAR to Libya.

The Census Bureau has advised that all such shipments to Libya reported to the Automated Export System will be fatally rejected with the following response message:

Response Code: 5C1 - DDTC License Suspended For Country

While the U.S. does not permit the export of weapons to Libya, section 126.1(k) of the ITAR currently authorizes the issuance of licenses and TAAs to Libya on a case by case basis to export to Libya non-lethal defense articles and services and non-lethal safety of use defense articles as spare parts.



FAA - Notice to Operators of Civil Aircraft

The U.S. Federal Aviation Administration has issued a notice to U.S. operators of civil aircraft to "exercise extreme caution" with respect to flight operations to or from Libya. The notice indicates that "that the ongoing unrest and reported Libyan military operations, to include aerial bombardments and unplanned military flights departing the [Tripoli airports], may a post a hazard to civil aviation.

U.S. companies planning to use corporate aircraft to remove personnel working in Libya should check with their flight handling company and the FAA for further updates.

Financial Crimes Enforcement Network (FinCEN) Advisory to Financial Institutions

FinCEN has issued an advisory to U.S. financial institutions to take "reasonable risk-based steps" with respect to any movement of assets involving Libya and reminding them of their requirement to apply enhanced scrutiny for private banking accounts held by or on behalf of senior foreign political figures and to monitor transactions that could potentially represent misappropriated or diverted state assets, proceeds of bribery or other illegal payments, or other public corruption proceeds.

U.S. financial institutions that know, suspect, or have reason to suspect that a transaction relating to senior foreign political figures in Libya involves illegal or suspicious activity they are required to file a Suspicious Activity Report (SAR).

United Nations Security Resolution 1970

By a 15-0 vote, the U.N. Security Council last night adopted resolution 1970 imposing sanctions and other actions on Libya. Many of these sanctions have already been implemented by the U.S. The full text of S/RES/1970 (2011) can be found here. Among other things, Security Resolution 1970 requires U.N. members to take the following measures with respect to Libya:

1. Arms Embargo and Other Arms Restrictions:

• All U.N. member states are prohibited to provide any kind of arms to Libya and allowing the transit to Libya of mercenaries.
• Libya is prohibited from exporting any arms to any other state.
• U.N. members should inspect suspicious cargo that may contain arms. When such arms are found, states are required to seize and dispose of them.
• Should strongly discourage their nationals from traveling to Libya to contribute to human rights violations.

2. Targeted sanctions on key regime figures

• Seventeen Gaddafi loyalists are subject to an international travel ban.
• Six of these individuals, including Colonel Gaddafi and his immediate family members, are also subject to a freeze of their assets.
• The Security Council committed to ensure that any frozen assets will be made available to benefit the people of Libya.
• A Sanctions Committee is established to impose targeted sanctions on additional individuals and entities who commit serious human rights abuses, including ordering attacks and aerial bombardments on civilian populations or facilities.

Secretary of State Clinton has already directed the State Department to revoke U.S. visas held by certain Libyan officials, others responsible for human rights violations in Libya, and their immediate family members. As a matter of policy, new visa applications for Libyan Government officials will be denied.

3. Humanitarian assistance

• All U.N. members are called upon to work together to facilitate humanitarian assistance and support the return of humanitarian agencies.
• The Security Council expressed its readiness to consider additional measures to achieve the delivery of such assistance.

Other Countries

All U.N. members must implement the multilateral sanctions announced by the U.N. Security Council. The following are some links to these and other sanctions imposed by other countries on Libya:

• United Kingdom - On February 26, 2010 HM Treasury implemented the U.N. sanctions.
• Canada - In addition to the U.N. sanctions, on February 27, 2010 Canada announced that it will impose an asset freeze on, and a prohibition of financial transactions with the Government of Libya, its institutions and agencies, including the Libyan Central Bank. The Canadian implementing regulations can be found here.
• European Union - On February 28, 2011, the Council of the EU announced that it adopted a decision to implement the UN sanctions. In addition, the Council also stated that it would prohibit trade with Libya in equipment which might be used for internal repression.
• Switzerland - On February 24, 2011, Switzerland issued a regulation freezing the assets of 29 Libyans.
  
  

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