Global Magnitsky Sanctions Primarily Target Foreign Persons, But U.S. Mulitnationals and Dual Citizens Have Sanctions Exposure for Corruption and Human Rights Abuses Under the Global Magnitsky Act
Magnitsky Laws and Sanctions Series, No. 5 | April 10, 2018 | By Hdeel Abdelhady
This publication is the fifth installment in a MassPoint PLLC series on the Global Magnitsky Act and Sanctions; earlier parts are available here. For more information about the series or MassPoint’s other publications or services, please contact the author, Hdeel Abdelhady, at email@example.com or +1-202-630-2512.
U.S. Global Magnitsky Sanctions, promulgated by Presidential Executive Order 13818 (“EO 13818“) in December 2017 and authorized in part by the Global Magnitsky Human Rights Accountability Act of 2016 (the “Global Magnitsky Act“), target corruption and human rights abuses worldwide (“Global Magnitsky Sanctions“).
As discussed in an earlier installment of this MassPoint Magnitsky Sanctions Series, under both EO 13818 and the Global Magnitsky Act, “foreign persons” are sanctionable for a wide range of conduct that constitutes corruption or human rights abuse, or the facilitation thereof, where such acts are committed wholly or substantially outside the United States.
Foreign persons (natural and legal) are the primary targets of the Global Magnitsky Sanctions. In comparison, U.S. persons have relatively limited sanctions exposure: generally U.S. persons (natural and legal) are subject to sanctions for providing certain “material” or other support and face civil and/or criminal liability for sanctions evasion. However, under the Global Magnitsky Act, certain categories of U.S. persons (natural and legal) are, by definition, also “foreign persons” and as such appear to have, relative to other U.S. persons, full sanctions exposure for corruption and human rights abuses.
The Global Magnitsky Act defines a “foreign person” as “any citizen or national of a foreign state (including any such individual who is also a citizen or national of the United States), or any entity not organized solely under the laws of the United States or existing solely in the United States.” [i] Accordingly, under the Global Magnitsky Act, individuals who are dual (or more) nationals and companies that are organized under U.S. law(s) and foreign law(s) or exist (e.g., are present, authorized to conduct business) in the United States and one or more foreign jurisdictions, like “foreign persons” completely lacking U.S. status, are apparently subject to sanctions for committing or facilitating sanctionable corrupt acts and human rights abuses. Thus, these “U.S. Persons,” when regarded as “foreign persons” under the Global Magnitsky Act, have additional sanctions exposure that would not apply to, for example, individuals holding only U.S. citizenship or companies organized only under U.S. law(s) and existing only in the United States.
EO 13818 does not define “foreign person.” However, as the Order is premised in part on the Global Magnitsky Act, U.S. persons who are also “foreign persons” presumably are within the scope of “foreign person” as used in the Order. In any case, and most notably for now, the option to treat some U.S. Persons as “foreign persons” appears to be available to enforcement authorities.
[i] Global Magnitsky Act, Pub. Law No. 114-328, § 1262(1) (importing the definition of “foreign person” from the Terrorism Sanctions Regulations at 31 C.F.R. 595.304). 31 C.F.R. 595.304 defines a “foreign person” as “any citizen or national of a foreign state (including any such individual who is also a citizen or national of the United States), or any entity not organized solely under the laws of the United States or existing solely in the United States, but does not include a foreign state.” (emphasis added)