In the final weeks of 2018, the United States sanctioned a retired Israel Defense Forces major general and two South Sudanese businessmen, including a brother-in-law of South Sudanese President Salva Kiir. These individuals were blacklisted, along with six associated companies in Israel and South Sudan, for their roles in perpetuating conflict in the world’s newest country. This action, carried out by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), a relatively small agency responsible for administering and enforcing economic and trade sanctions, represents only the most recent example of a paradigm shift in how sanctions and anti-money laundering measures are used to bring meaningful financial consequences to those responsible for profiting from mass atrocities in South Sudan. South Sudan-related sanctions were first put in place by the U.S. government in 2014. Until recently, all of the individuals designated in response to the country’s crisis have been South Sudanese nationals, and all of the companies have been located in South Sudan. Notably, the Treasury Department’s press release from December also publicly highlighted the involvement of the sanctioned individuals in illicit financial dealings, such as engaging in corruption and bribery and receiving payments and favorable contracts from the South Sudanese government. * This action also tripled the total number of companies the United States has targeted for sanctions since the original designations of three South Sudanese companies in 2017.
The Network Approach
The Treasury Department’s last wave of sanctions signals a new approach in the use of these measures to advance U.S. policy, applying expanded financial pressure through “network sanctions,” anti-money laundering measures, and senior-level engagement in order to incentivize a change in behavior and create leverage for peace with the powerful kleptocratic elites in South Sudan.
A strategy of using network sanctions similar to the December action has long been the model advocated by The Sentry to create meaningful pressure in South Sudan. The term “network sanctions” refers to the strategy of freezing the assets of not just one individual for whom a change in behavior is sought but also the individuals or entities who act on their behalf or provide support for the primary individual’s activities. In addition, network sanctions target the companies or properties that are “owned and/or controlled by” the primary target. Network sanctions based on these criteria are also commonly referred to as “derivative designations” because the basis for sanctioning the individuals or entities in these support networks derives from their relationship to the primary target.
In the case of this most recent action, the United State began its network sanctions approach by targeting three individuals: South Sudanese businessmen Gregory Vasili and Obac William Olawo and retired Israel Defense Forces Major General Israel Ziv. All three were designated for sanctions under primary sanctions criteria outlined in Executive Order 13664, “Blocking Property of Certain Persons With Respect to South Sudan.” Olawo and Ziv were designated for “being leaders of entities whose actions have the purpose or effect of expanding or extending the conflict in South Sudan” while Vasili was designated for “actions that have undermined peace, stability, and security in South Sudan.”
Next, the use of derivative designations was exemplified in OFAC’s simultaneous listing of three companies in Israel owned or controlled by Ziv and three companies in South Sudan owned or controlled by Olawo. By going after the business holdings of those who are targeted—as opposed to listing only the individuals—the Treasury Department has strengthened the disruptive impact of these sanctions, making it difficult for Ziv’s and Olawo’s networks to recover from losing access to the U.S. financial system.