Ethiopia-Related Sanctions

E.O. of September 17, 2021 provides for the imposition of menu-based sanctions on foreign persons determined by the Secretary of the Treasury, in consultation with the Secretary of State, to meet certain criteria under the order, including foreign persons determined to be responsible for or complicit in actions or policies that expand or extend the ongoing crisis in northern Ethiopia or obstruct a ceasefire or peace process.  Section 1(a) of E.O. of September 17, 2021 provides the complete list of criteria for designation under the order. 

Section 2(a) of E.O. of September 17, 2021 lists the menu of prohibitions that can be imposed by the Secretary of the Treasury, in consultation with the Secretary of State, on a foreign person designated under the order. 

The prohibitions that may be selected include, among other things:  (1) blocking sanctions on all property and interests in property of the “sanctioned person” (as defined in E.O. of September 17, 2021), except for any entities owned, in whole or in part, directly or indirectly, by one or more sanctioned persons (unless the entity is itself a sanctioned person and the blocking sanctions have been selected); (2) a prohibition on any United States person investing in or purchasing significant amounts of equity or debt instruments of the sanctioned person; (3) a prohibition on any United States financial institution making loans or providing credit to the sanctioned person; (4) a prohibition on any transactions in foreign exchange that are subject to the jurisdiction of the United States and in which the sanctioned person has any interest; and (5) any of the above sanctions on the principal executive officer or officers of the sanctioned person, or on persons performing similar functions and with similar authorities.  Persons blocked pursuant to section 2(a)(i)(A) of E.O. of September 17, 2021 will appear on OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List), while persons sanctioned pursuant to section 2(a)(i)(B) – (E) of E.O. of September 17, 2021 will appear on to the Non-SDN Menu-Based Sanctions List (NS-MBS List).

For the purposes of E.O. of September 17, 2021, the term “sanctioned person” means a foreign person (1) that has been determined by Secretary of the Treasury, in consultation with the Secretary of State, to meet any of the designation criteria described in section 1 of E.O. of September 17, 2021; and (2) for whom the Secretary of the Treasury, in consultation with the Secretary of State, has selected one or more of the sanctions set forth in Section 2(a) of E.O. of September 17, 2021 to impose on that foreign person.  Please see Section 7(f) of E.O. of September 17, 2021.

E.O. of September 17, 2021 is designed to impose costs on actors contributing to the conflict in northern Ethiopia while mitigating potential undue harm to the people of Ethiopia, including by exempting the official business of the U.S. government by its employees, grantees, and contractors from the prohibitions under E.O. of September 17, 2021, enabling their continued support of development activity, life-saving humanitarian assistance, and longer-term assistance to address basic needs of at-risk populations.
 

No.  Unless an entity is itself a sanctioned person (as defined in E.O. of September 17, 2021) and listed separately on OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List), it is not blocked pursuant to E.O. of September 17, 2021.  OFAC’s 50 Percent Rule does not apply to persons blocked solely pursuant to section 2(a)(i)(A) of E.O. of September 17, 2021.

No.  If a person is listed on OFAC’s Non-SDN Menu-Based Sanctions List (NS-MBS List) as subject to only one or more of the sanctions described in section 2(a)(i)(B) – (E) of E.O. of September 17, 2021, these non-blocking sanctions do not apply to an entity owned in whole or in part, individually or in the aggregate, directly or indirectly, by such sanctioned person, unless OFAC separately lists the entity on the NS-MBS List as subject to sanctions. 

Ethiopia GL 2 authorizes certain transactions and activities involving nongovernmental organizations’ (NGOs) activities in Ethiopia or Eritrea, including:  activities to support humanitarian projects and to meet basic human needs (such as, among other examples provided in GL 2, shelter and settlements assistance, water, sanitation, hygiene activities, and COVID-19 related assistance); activities to support democracy building (such as, among other examples provided in GL 2, activities to support conflict mitigation); activities to support education; activities to support non-commercial development projects directly benefiting the people of Ethiopia or Eritrea, including those related to health, food security, water and sanitation; and activities to support environmental and natural resource protection.  Please see GL 2 for details.

Non-U.S. persons, including nongovernmental organizations and foreign financial institutions, generally do not risk exposure to U.S. sanctions for engaging in, or facilitating transactions or payments for, activities that would be exempt or authorized for U.S. persons pursuant to Ethiopia GL 1, GL 2, GL 3, or GL 4. 

No.  OFAC has implemented three authorizations and an exemption under Executive Order (E.O.) 14046 to ensure that humanitarian assistance can flow to the people of Ethiopia, Eritrea, and the greater Horn of Africa region.  These authorizations and exemption apply to all persons sanctioned under E.O. 14046, including Hidri Trust and RSTC.

Concurrent with the issuance of E.O. 14046, OFAC issued General Licenses (GLs) 1 and 2  to ensure that nongovernmental organizations (NGOs) and certain International Organizations (IOs) and other international entities, respectively, may continue to engage in and facilitate humanitarian-related transactions or activity to Ethiopia, Eritrea, or the greater Horn of Africa region.  OFAC also issued GL 3 , which authorizes U.S. persons to conduct all transactions and activities that are ordinarily incident and necessary to the exportation or reexportation of covered agricultural commodities, medicine, medical devices, replacement parts and components for medical devices, or software updates for medical devices to Ethiopia or Eritrea, or to persons in third countries purchasing specifically for resale to Ethiopia or Eritrea.  Please see FAQs 925 (this content is no longer available) and 926, for additional information. 

E.O. 14046 also exempts the official business of the U.S. government by its employees, grantees, and contractors from the prohibitions, enabling continued support of development activity, life-saving humanitarian assistance, and longer-term assistance to address basic needs of at-risk populations in Ethiopia, Eritrea, or the greater Horn of Africa region.

As described in FAQ 927, non-U.S. persons, including NGOs and financial institutions, would not risk exposure to sanctions for engaging in certain humanitarian-related transactions or activity with Hidri Trust and RSTC that are otherwise exempt or authorized for U.S. persons, such as transactions involving the provision of certain humanitarian assistance or export of humanitarian goods to Ethiopia, Eritrea, or the greater Horn of Africa region.

In addition, OFAC issued GL 4 , “Authorizing the Wind Down of Transactions Involving Hidri Trust or Red Sea Trading Corporation.”  GL 4 authorizes, through 12:01 a.m. eastern standard time, December 14, 2021, subject to certain exceptions, all transactions and activities prohibited E.O. 14046 that are ordinarily incident and necessary to the wind down of transactions involving Hidri Trust or RSTC.  Transactions authorized by GLs 1, 2, or 3, including transactions related to the export or reexportation of covered agricultural commodities, medicine, medical devices, replacement parts and components, or software updates, will continue to be authorized even after the expiration of GL 4.
 

No.  OFAC’s 50 Percent Rule does not apply to persons blocked solely pursuant to the blocking sanctions of E.O. 14046.  Unless an entity is itself a sanctioned person (as defined in E.O. 14046) and listed separately on OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List), it is not blocked.  For more information, please see FAQs 923 and 924.