On August 14, 2023, the US State Department, the Labor Department, and the Commerce Department issued a business advisory (“Business Advisory”) highlighting key risks for companies operating in South Sudan.
While it does not impose new legal obligations on companies, the Business Advisory highlights the fact that list-based sanctions remain in force targeting certain South Sudanese persons including designations under the US Treasury Department’s Office of Foreign Assets Control’s Specially Designated Nationals and Blocked Persons List, and the US Commerce Department’s Bureau of Industry and Security’s Entity List. Our prior blog post about these risks can be reviewed here.
The Business Advisory also recommends that US financial institutions continue to submit suspicious activity reports and perform proper due diligence on South Sudanese political figures as already required and outlined in a 2017 advisory from the US Treasury Department’s Financial Crimes Enforcement Network. Annex 1 and Annex 2 of the Business Advisory provide a further overview of companies legal and due diligence obligations when dealing with South Sudan parties, including a focus on issues related to forced labor in South Sudan.
The Business Advisory focuses on the following key areas of concern:
- Government Tenders: Transparency International ranked South Sudan as the country with the world’s worst public sector corruption in its 2021 rankings of perception of corruption; South Sudan tied for second-worst in 2022.
- Oil and Gold: The Business Advisory alleges substantial diversion of revenue from the oil and gold industries to fund illicit activities or payments to government officials.
- Contracts managed by governing entities for delivery of assistance: Companies should flag for compliance review unnecessary fees, engagement with unqualified companies, and diversion of funds intended for humanitarian relief.
- Arms, Military Equipment, and Related Activity: The Business Advisory cautions companies against dealings with South Sudanese armed forces due to alleged human rights abuses.
Terry Gilroy is a partner in the New York office of Baker McKenzie and a member of the Investigations Compliance and Ethics Practice Group. Prior to joining the Firm in 2018, Terry served as Americas Head of the Financial Crime Legal function at Barclays. Terry advises businesses and individuals on white collar and financial crime issues and has significant experience conducting investigations relating to compliance with the US Foreign Corrupt Practices Act (FCPA) and related bribery and corruption statutes, economic sanctions regulations as administered by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC), and the Bank Secrecy Act and related anti-money laundering (AML) regulations and statutes. Terry spent six years on active duty in the United States Army as a Field Artillery officer.
Alexandre (Alex) Lamy
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.
Andrea practices international commercial law with a focus on cross-border transactions including post-acquisition integration IP migrations and technology licensing. She also advises companies on export controls, sanctions, customs and international corporate compliance. Andrea also has an active pro bono practice, including helping organizations with international constitutional matters and victims of domestic abuse.