Office of Foreign Assets Control

Sudanese Sanctions Regulations

31 C.F.R. Part 538

Guidance Regarding the Application of the Sudanese Sanctions Regulations to the NewState to be Formed by the Secession of Southern Sudan

Date: April 12, 2011

This guidance was developed in response to inquiries received by the Department of theTreasury’s Office of Foreign Assets Control (“OFAC”) concerning the application of

the Sudanese Sanctions Regulations, 31 C.F.R. Part 538 (the “SSR”), to the new state expected to beformed by the secession of Southern Sudan. In the recent referendum conducted pursuant to theComprehensive Peace Agreement of 2005, voters in Southern Sudan elected to secede from theRepublic of the Sudan. A new state is expected to be formed on July 9, 2011.

Executive Order 13067 of November 3, 1997 (“E.O. 13067”), and Executive Order13412 of October 13, 2006 (“E.O. 13412”), imposed economic sanctions against “Sudan” andthe “Government of Sudan,” pursuant to, inter alia, the International Emergency EconomicPowers Act (“IEEPA”). These Executive orders generally prohibit the exportation or reexportationof goods, technology, or services “to Sudan,” the importation of “goods or servicesof Sudanese origin,” and the dealing in “property and interests in property of the Government of Sudan.” E.O.13412 also prohibits transactions “relating to the petroleum or petrochemicalindustries in Sudan.” OFAC implements these E.O.s through the SSR, which track the scope ofthe orders by applying to Sudan and the Government of Sudan.

When the new state is formed by Southern Sudan, it will not be included in the territorialboundaries of Sudan nor be governed by the Government of Sudan. Following interagencyconsultations, OFAC has concluded that the SSR will continue to apply only to Sudan and theGovernment of Sudan, and that such a new state and its government will not be subject to them.The fact that the SSR will continue to apply only with respect to the future, smaller Sudan and itsgovernment is consistent with the fact that the President issued E.O.s 13067 and 13412 to dealwith the threat that the policies and actions of the Government of Sudan pose to the nationalsecurity and foreign policy of the United States.

While the new state formed by Southern Sudan will no longer be directly subject toOFAC sanctions, certain activities by U.S. persons in the new state will continue to be prohibitedby the SSR absent OFAC authorization given the interdependence between some sectors of theSouthern Sudanese economy and infrastructure and those of the rest of present-day Sudan. TheSSR will continue to prohibit U.S. persons from dealing in property and interests in property ofthe Government of Sudan, from performing services that benefit Sudan or the Government of Sudan, from engaging in transactions relating to the petroleum or petrochemical industry inSudan, and from participating in exports to or imports from the new state that transit throughSudan, see 31 C.F.R. §§ 538.406, 538.210, and 538.417. For example, the SSR will prohibit aU.S. company, unless authorized by OFAC, from providing services to the petroleum industry inthe new state if those services would benefit the Government of Sudan or relate to the petroleumindustry in Sudan, or from transporting exports of petroleum or petrochemical products throughSudan. Further, should a revenue-sharing arrangement between Sudan and the new state result ina situation where the government of the new state makes payments to the Government of Sudanfrom the sale of Southern Sudanese petroleum, U.S. persons generally could not engage intransactions involving the oil industry in the new state unless authorized by OFAC. Informationon applying for a license is set forth in section 501.801 of the Reporting, Procedures andPenalties Regulations, 31 C.F.R. Part 501.