July 20, 2023

The Readbook is Kharon's weekly roundup of our published pieces, upcoming events, and the best curated news feed on the intersection?of international security and global commerce.

UPCOMING EVENTS

On May 11, 2023, Canada passed new regulation to address the use of forced labor and child labor in global supply chains. In this webinar, experts will break down the new regulatory framework and its implications for organizations with operations in Canada. The speakers will also share real life case studies related to forced labor exposure in global supply chains, as well as best practices for identifying and mitigating forced labor exposure. [Register Today]

THIS WEEK ON THE KHARON BRIEF

Emerging Market Fund Managers Face Questions Over Investments Exposed To Forced Labor

Publicly traded Chinese companies that produce silicon wafers buy polysilicon from Xinjiang – a region of China subject to Western sanctions and import restrictions due to evidence of forced labor practices. While much attention has been focused on U.S. and European importers whose supply chains may be exposed to forced labor risks in Xinjiang, investors with exposure to emerging market equity and debt funds face similar risk. [Read More]

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MEDIA ROUNDUP

SANCTIONS        

New designations announced by the U.S. Department of the Treasury take measures to inhibit Russia’s access to products that support its military and war efforts, and targets revenue generators. [U.S. Treasury]

The U.S. Department of State imposed sanctions on individuals and entities, targeting those who help Russia procure sensitive material, and curtail Russia’s use of the international financial system to further its war. [U.S. State]?

The EU imposed restrictive measures against 18 individuals and 5 entities under the EU Global Human Rights Sanctions Regime, because of their responsibility for serious human rights violations and abuses in Afghanistan, South Sudan, the Central African Republic, Ukraine and Russia. [EU]?

The U.K. government announced 14 new sanctions in response to Russia’s attempts to destroy Ukrainian national identity, including 11 against those involved in the forced deportation of Ukrainian children. [U.K.]?

The U.K. government announced a wave of sanctions against individuals and businesses involved with the Wagner Group in Mali, Central African Republic (CAR) and Sudan. [U.K.]?

The U.S. Department of the Treasury designated a North Macedonia-based businessman for engaging extensively in corruption, including abuse of office, money laundering, and other offenses for more than a decade starting in the early 2000s. [U.S. Treasury]?

The U.S. Department of the Treasury sanctioned three Belgian nationals and one Mexican national for international drug trafficking, including cocaine and fentanyl. Those designated are involved in the importation and distribution of narcotics destined for U.S. and European markets. [U.S. Treasury]

The State Department announced it was imposing sanctions on two former Salvadoran presidents and dozens of other officials and judges in Central America who undermine democratic processes in El Salvador, Guatemala, Honduras and Nicaragua. [AP]?

The European Union imposed a seventh round of restrictive measures in view of the situation in Myanmar/Burma against six individuals and one entity in response to the continuing escalation of violence, grave human rights violations and threats to the peace, security and stability in Myanmar/Burma. [EU]?

As part of its efforts to beef up sanctions on Moscow, Japan is planning to expand the scope of its ban on automobile exports to Russia to include a wide range of used vehicles, which are in high demand in Russia. [Japan Times]?

Armenia has become a key stop on a booming trade route: bringing used cars to Russia, where sanctions over Moscow’s full-scale invasion of Ukraine have left western-brand cars hard to find. [FT]

Vladimir Putin ordered the seizure of Danone and Carlsberg’s Russian operations after businessmen close to the Kremlin expressed an interest in the assets, according to people close to the decision. [FT]?

Russia has announced it may give legal status to some of the many private military companies (PMCs) active within Russia, notably the Wagner Group but also lesser-known militias like Convoy, Patriot, the Moran Security Group and Shchit. [France24]?

Major American providers of oilfield services supplied Russia with millions of dollars in equipment for months after its invasion of Ukraine, helping to sustain a critical part of its economy even as Western nations launched sanctions aimed at starving the Russian war effort. [Fortune]?

U.S. government officials repeatedly warned a major energy company to avoid doing business with two mining magnates in Guyana, who face a U.S. investigation and possible U.S. sanctions on suspicions of money laundering, drug trafficking and gold smuggling. [Reuters]?

The U.S. has barred 14 Iraqi banks from conducting dollar transactions, U.S. officials said, part of a sweeping crackdown on the siphoning of U.S. currency to Iran and other sanctioned Middle East countries. [WSJ]

COMPLIANCE +?ENFORCEMENT        

The lawfulness of the U.K. sanctions regime set up in the wake of Russia’s invasion of Ukraine faces its biggest legal test when a Soviet-era oligarch and ally of Roman Abramovich seeks a court order to release his assets including two private jets. [Guardian]?

A Russian citizen with alleged ties to Russia’s Federal Security Service (FSB) was extradited from Estonia to the United States in mid-July to face charges related to providing American-made electronics and ammunition to the Russian military. [U.S. Justice]?

U.S. federal prosecutors can’t auction off 800,000 barrels of seized Iranian oil sitting in a Greek tanker off the coast of Texas because U.S. companies are reluctant to unload it, according to people familiar with the matter. [WSJ]

The Federal Reserve said on Wednesday it fined a European bank and its U.S. affiliates $186 million for failing to sufficiently address money laundering control problems and other shortcomings previously flagged by the U.S. central bank. [Reuters]?

Earlier this year, U.S. federal prosecutors made innovative use of securities-market data to bring a first-of-its-kind insider-trading case. Now, they are looking to expand their data-analytics capabilities, including by using suspicious-activity reports filed by banks to hunt for overseas bribery. [WSJ]

U.S. lawmakers expressed concerns over FinCEN's proposed rules related to beneficial ownership, hoping FinCEN will heed their suggestions for easing law enforcement access to the beneficial ownership database and reducing compliance burdens for banks. [American Banker]?

Netherlands police arrested a 41-year-old man for dodging trade sanctions against Russia by selling computers via third countries. [Dutch News]

EXPORT CONTROLS + SUPPLY CHAIN        

In Central Asia, a hidden pipeline of illicit trade supplies Russia with high-tech weapons, including Chinese drones and German electronics. [WaPo]?

The Biden administration added two new foreign technology companies to its export prohibition list, accusing the firms of selling cyber intrusion tools that pose a global threat to digital privacy and security. [WSJ]

A private plane maker with operations in the U.S. is a subsidiary of Aviation Industry Corp. of China (AVIC), a maker of fighter jets, helicopters and drones for the People’s Liberation Army. AVIC is also one of the world’s largest military contractors and is subject to U.S. sanctions. [Bloomberg]

A congressional committee focused on national security threats from China said it had “grave concerns” about a research partnership between a major U.S. university and several Chinese entities. [NYT]?

The Biden administration’s potential curbs on sales of advanced semiconductors to China could undermine huge new government investments in domestic chip-making, the U.S. chip-industry trade group said. [WSJ]

The Biden administration’s plans to restrict investments in China will be narrowly focused on cutting-edge technology, only new investments, and likely won’t go into effect until next year. [Bloomberg]

FORCED LABOR?        

The largest retailer in the United States is no longer selling a specific type of gloves on its online marketplace?— responding to allegations that a subcontractor for the glove maker relied on forced Chinese prison labor to manufacture certain models of gloves. [Wisconsin Watch]

CRYPTO        

The U.S. Department of Homeland Security has ramped up its effort to stop fentanyl and the chemicals used to make it from entering the U.S. by tracing cryptocurrency used by Mexican cartels. [NBC]

HUMAN RIGHTS        

A bill re-introduced to the U.S. Congress by two lawmakers would expand U.S. sanctions to include foreign companies that do business with entities identified as contributing to human rights violations against ethnic Uyghurs in China’s Far West. [RFA]