The US Government Rescinds Sudan’s State Sponsor of Terrorism Designation

On December 14, the US Department of State removed Sudan from the US State Sponsors of Terrorism List (“SST List”). The State Department explained that, “[t]his achievement was made possible by the efforts of Sudan’s civilian-led transitional government to chart a bold new course away from the legacy of the Bashir regime and, in particular, to meet the statutory and policy criteria for rescission” of the US designation. The full announcement is available here.

The removal of Sudan from the SST List continues the US government’s trend of removing remaining trade restrictions related to transactions involving Sudan. Previously, the US government imposed broad sanctions against Sudan, which prohibited most economic activity by US persons involving Sudan. These sanctions were imposed pursuant to Executive Order (“EO”) 13067 of November 3, 1997, and EO 13412 of October 13, 2006. However, pursuant to EO 13761 of January 13, 2017, as amended by EO 13804 of July 11, 2017, the US government revoked these sanctions on October 12, 2017. The US government explained that the revocation was the result of “a marked reduction in offensive military activity, culminating in a pledge to maintain a cessation of hostilities in conflict areas in Sudan, and steps toward the improvement of humanitarian access throughout Sudan, as well as cooperation with the United States on addressing regional conflicts and the threat of terrorism.”

Until now, even though the US government revoked these sanctions, Sudan remained on the SST List. In OFAC’s August 11, 2020 guidance, it emphasized that certain prohibitions and licensing considerations applied to Sudan because it was still designated on the SST List. Although OFAC has not yet issued revised guidance, the prohibitions described in OFAC’s August 11, 2020 guidance will generally end as a result of the removal of Sudan from the SST List.

Nevertheless, Sudan’s removal from the SST List will not affect the following prohibited conduct:

• Conducting transactions with individuals or entities designated on OFAC’s List of Specially Designated Nationals and Blocked Persons (“SDN List”) pursuant to EO 13400 of April 26, 2006, which is related to the conflict in Darfur; and
• Conducting transactions with any other Sudanese individuals or entities designated to OFAC’s SDN List, pursuant to sanctions authorities other than EO 13067 and EO 13412.

Notably, some companies continue to treat Sudan as embargoed or continue to use standard contracts that define it as such. Both US and non-US companies should review their policies related to Sudan in light of the above changes to US sanctions restrictions.

We will continue to monitor developments in this area. Please contact the authors or your usual Herbert Smith Freehills contacts for more information.