Client Alert
New OFAC Sanctions on Turkey

October 18, 2019

As you are likely aware, there has been recent news regarding the U.S. economic sanctions imposed on Turkey (i.e., the “Syria-related Sanctions”).  The Treasury’s press release is available here.  Based on our review of the new sanctions, here are some things to note for both US and foreign based forwarders that do business with Turkey.

  • The New Sanctions Are Not a Country-wide Embargo.  Unlike the embargoes on Crimea, Cuba, Iran, North Korea, and Syria, the new action constitutes a set of list-based primary and secondary sanctions.  This means that U.S. companies can still conduct Turkey-related business so long as no prohibited parties are involved.  Prohibited parties here will include parties that are (1) listed on the SDN list, (2) owned or controlled by parties on the SDN list, or (3) engaged in activity described in the Executive Order relating to destabilizing Syria and human rights abuses.
  • The New Action Includes Secondary Sanctions.  Under the Executive Order of Oct. 14, 2019 (the “E.O.”), foreign companies can be subject to restrictive measures up to and including full SDN designation and blocking if they engage in activity that violates the E.O., including transactions with newly designated Turkish government ministries.  Having said that, OFAC will likely focus on activities that support Turkey’s Syria-related activity or otherwise involve important operations for the Turkish Ministries of Defense and Energy.  In addition, foreign banks can be subject to a broad range of restrictive measures for facilitating transactions for parties or activities violating the E.O.  These restrictions apply regardless of whether any U.S. parties, funds, or goods are involved. 
  • OFAC Has Designated Certain Agencies and Officials of the Turkish Government.  OFAC’s designations are available here.  To date, OFAC has designated the following parties:
    • REPUBLIC OF TURKEY MINISTRY OF ENERGY AND NATURAL RESOURCES
    • REPUBLIC OF TURKEY MINISTRY OF NATIONAL DEFENCE
    • AKAR, Hulisi (Turkish Minister of National Defense)
    • DONMEZ, Fatih (Turkish Minister of Energy)
    • SOYLU, Suleyman (Turkish Minister of Interior)

These designations also apply to any entities in which the above SDNs have a majority ownership interest.  This applies even where the majority interest is indirect, such as through holding companies.  

  • OFAC Has Provided a Wind-Down General License.  General License 2 of the Syria-related Sanctions provides companies until November 13, 2019, to wind-down any operations or agreements with the Turkish Ministries of National Defense and Energy.  It is available here.  This wind-down period is applicable to both US and foreign entities.
  • OFAC Has Provided a General License for UN-Related Activities.  General License 3 allows companies to provide services related to the official business of the UN and its agencies, funds, programmes, and organizations.  General License 3 is available here.
  • The E.O. Allows OFAC To Designate Other Parts of the Turkish Government.  The E.O. provides broad language that allows OFAC to designate other parts of the Turkish government for any reason.  Depending on the political situation between the two countries, there may be additional designations of Turkish officials and agencies in the future.  

In short, as US forwarder’s obligations remain much the same.  It should screen any transactions for prohibited parties, which now include certain parts of the Turkish government.  Any ongoing projects with the Turkish Ministries of Defense or Energy should be wound down unless they involve official business of the U.S. government or UN.

Foreign forwarders and other foreign entities, on the other hand, are now subject to additional rules prohibiting them from engaging in certain Syria-related activity set forth in the E.O., which is available here (see Section 2(a)).  And, foreign companies violating these new sanctions can be designated as an SDN for providing services to the forbidden parts of the Turkish government.  Importantly, if a foreign forwarder is designated as an SDN, its US affiliate would be considered a blocked person as well.  

We hope this is helpful, but please contact Ed Greenberg (egreenberg@gkglaw.com) know if you have any questions.  

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