Although the Biden Administration has declined to preview the results of its ongoing comprehensive reviews of U.S. sanctions programs, the characteristics of sanctions programs under the Biden Administration are already taking shape. Administration officials consistently underscore the goals of supporting human rights and democratic institutions, as well as providing sanctions relief to alleviate adverse impacts on local populations where that can be done without supporting anti-democratic government actors. And at the same time, the Administration is adding to the list of sanctioned parties associated with key adversaries and deploying a whole-of-government approach to supplement sanctions in support of U.S. foreign policy goals. Across sanctions programs, the United States is closely coordinating with its allies.

Will the door to some closed markets crack open?

The Administration is looking for ways to provide sanctions relief, particularly in the context of broad embargos, to alleviate the impact of sanctions on local populations. In light of recent protests and crackdowns on protestors, there have been persistent calls on the Administration to ease the Trump-era Cuba sanctions that are the broadest of the active sanctions programs. President Biden stated on July 16, “Cuba is a — unfortunately, a failed state and repressing their citizens. There are a number of things that we would consider doing to help the people of Cuba, but it would require a different circumstance or a guarantee that they would not be taken advantage of by the government — for example, the ability to send remittances to — back to Cuba. I would not do that now because the fact is it’s highly likely that the regime would confiscate those remittances or big chunks of it.”¹ While the Administration contemplates adjustments to the sanctions program to aid the people of Cuba, it also continues to designate parties that are known to participate in human rights abuse or anti-democratic efforts on the island. On July 22, 2021, OFAC added the Cuban Minister of Defense and the Special Forces Brigade to the SDN List for their role in alleged abuses against protestors, and it reiterated that under current regulations, all Cuban nationals are blocked parties, and that all U.S. persons are prohibited from providing funds, goods, or services to or for the benefit of such persons, or receiving of funds, goods, or services from any such person.² OFAC further expanded those sanctions on July 30, when it added to the SDN List the Revolutionary National Police (“Policia Nacional Revolucionaria”), an arm of the Cuban Ministry of the Interior, as well as its Director and Deputy Director, after reviewing photographs and video recordings of the PNR arresting and using violence against peaceful demonstrators.³ Easing sanctions on Cuban nationals would bring U.S. policy into closer alignment with its allies.

Although the Cuba sanctions program has recently received the most public discussion, the same principles also may apply to the sanctions program Venezuela, suggesting that the narrowing of sanctions programs is a possibility, but it can only be done with appropriate safeguards to ensure that resources flowing into the country would not be pilfered by government officials engaged in human rights or anti-democratic abuses. U.S. officials also continue to leave the door open for Iran to come back to the negotiating table and, along with the United States, come back into compliance with JCPOA undertakings. U.S. and European allies consistently press for this, which could lead to partial market re-openings in Iran.⁴

Will future sanctions on adversaries be limited to designations, or take the form of broader sectoral sanctions?

The Biden Administration is continuing to increase pressure on adversaries not only with sharp rhetoric and by designating individuals and companies on sanctions lists, but also by implementing broader sector-focused sanctions programs to thwart identified threats to national security such as the Chinese military industrial complex and Russian hackers, as well as issuing business advisories highlighting legal risks beyond sanctions. A whole-of-government approach is being deployed to supplement sanctions and achieve foreign policy goals. Across sanctions programs, the Commerce Department’s Bureau of Industry and Security (BIS) has designated a series of actors on the Entity List, which means that an export license is required before U.S.-origin items can be exported, reexported, or transferred to them.⁵ The Commerce Department noted that the Entity List is an additional tool to monitor and control exports to bad actors and parties that are perceived to be a risk of diverting sensitive items to bad actors, stating, “We will continue to aggressively use export controls to hold governments, companies, and individuals accountable for attempting to access U.S.-origin items for subversive activities in countries like China, Iran, and Russia that threaten U.S. national security interests and are inconsistent with our values.”⁶

Where it identifies ongoing human rights abuses and threats to democracy, such as in Xinjiang and Hong Kong, the Biden Administration is coordinating inter-agency initiatives to spotlight abuses, legal risks, and business risks. In July, the Biden Administration released two business advisories back-to-back on China. First, on July 13, the State Department, in coordination with Treasury, Commerce, Homeland Security, the Office of the U.S. Trade Representative, and the Department of Labor, issued an updated Xinjiang Supply Chain Business Advisory highlighting the legal, business, and reputational risks associated with business activities connected to the Xinjiang region of China.⁷ State Department officials explained, “The advisory notes that – the Department of State’s determination that the PRC government is perpetrating genocide and crimes against humanity in Xinjiang. It cautions that given the severity and extent of these and other abuses, businesses and individuals that do not exit supply chains, ventures, and investments connected to Xinjiang could run a high risk of violating U.S. law.”⁸ The European Union issued a coordinated advisory regarding Xinjiang. Due to concerns regarding human rights abuses, including forced labor, against minority Muslim groups there, Commerce has also added government and commercial companies to the Entity List.

Then, on July 16, the Administration reacted to legal developments impacting Hong Kong. President Biden stated, “The situation in Hong Kong is deteriorating. And the Chinese government is not keeping its commitment that it made how it would deal with — with Hong Kong.”⁹ That same day, the Departments of State, Treasury, Commerce, and Homeland Security issued a joint advisory entitled “Risks and Considerations for Businesses Operating in Hong Kong,” and added seven individuals to the SDN list for their alleged role in undermining Hong Kong’s independence and China’s commitments under the Hong Kong Autonomy Act.¹⁰ The Administration stated, “On the accountability front, the State Department announced earlier today seven officials who were sanctioned for their actions — threatening the peace, stability, security, and autonomy of Hong Kong. [. . .] On the transparency front, today, the U.S. government issued a business advisory [. . .] for Hong Kong, which is intended to inform businesses and highlight the growing risk for those operating in Hong Kong. The bottom line is that businesses should be aware that the risks faced in mainland China are now increasingly present in Hong Kong.”¹¹ The Biden Administration also continues to enforce sanctions regarding non-SDN Chinese Military Industrial Complex companies.

Four Key Takeaways

Although we cannot say exactly what shape revisions to sanctions programs will take, we expect to see potential opportunities alongside novel compliance challenges.

1. The easing of embargoes may open up business opportunities in countries that have been largely shut off from parties subject to U.S. sanctions regulations, which may create opportunities. However, even if broad sanctions are lifted, targeted sanctions will remain in place, leaving behind a patchwork of sanctioned parties and restrictions to navigate.

2. As the list of bad actors subject to restrictions continues to grow and enforcement activity remains vigilant, screening and monitoring procedures for lessees and sub-lessees remain key best practices for sanctions compliance. Periodic screening during the pendency of a lease, as well as periodic checking on locations of aircraft for deviations from recorded locations and paths, will help detect potential sanctions red flags as quickly as possible.

3. To prioritize compliance resources, lessors will benefit from introducing tiered risk levels based on the country where the lessee or sub-lessee is located, and conducting more frequent screening and monitoring on the highest risk jurisdictions. Enhanced due diligence for transactions that touch higher risk jurisdictions may be advisable.

4. Global coordination may lead to greater standardization, fewer conflicts, and fewer instances of competitive disadvantages for those subject to U.S. sanctions.

^{1 See The White House, “Remarks by President Biden and Chancellor Merkel of the Federal Republic of Germany in Press Conference” ( Jul. 15, 2021).
2 See U.S. Treasury Dep’t, Office of Foreign Assets Control, Press Release, “Treasury Sanctions Cuban Minister of Defense and Special Forces Brigade for Abuses Against Protestors” (Jul. 22, 2021).
3 See U.S. Treasury Dep’t Office of Foreign Assets Control, Press Release, “Treasury Sanctions Cuban Police Force and Its Leaders in Response to Violence Against Peaceful Demonstrators” (Jul. 30, 2021).
4 See Ned Price, U.S. Dep’t of State, Office of the Spokesperson, “Department Press Briefing - July 13, 2021” (Jul. 13, 2021).
5 See U.S. Dep’t of Commerce, Bureau of Industry and Security, Press Release, “Commerce Department Adds 34 Entities to the Entity List to Target Enablers of China’s Human Rights Abuses and Military Modernization, and Unauthorized Iranian and Russian Procurement” (Jul. 9, 2021).
6 See U.S. Dep’t of Commerce, Bureau of Industry and Security, Press Release, “Commerce Department Adds 34 Entities to the Entity List to Target Enablers of China’s Human Rights Abuses and Military Modernization, and Unauthorized Iranian and Russian Procurement” (Jul. 9, 2021).
7 See U.S. Dep’t of State, Bureau of Economic and Business Affairs, Xinjiang Supply Chain Business Advisory (Jul. 13, 2021).
8 See Ned Price, U.S. Dep’t of State, Office of the Spokesperson, “Department Press Briefing - July 13, 2021” (Jul. 13, 2021).
9 See The White House, “Remarks by President Biden and Chancellor Merkel of the Federal Republic of Germany in Press Conference” (Jul. 15, 2021).
10 See U.S. Treasury Dep’t, Office of Foreign Assets Control, Hong Kong Business Advisory (Jul. 16, 2021).
11 See The White House, “Press Briefing by Press Secretary Jen Psaki” (Jul. 16, 2021).}