Asia-Pacific

OFAC Sanctions Chinese Entity Over Human Rights Abuses

The XPCC is considered by OFAC to be a paramilitary organisation with large commercial operations that that are likely to be impacted by US sanctions.

OFAC (Office of Foreign Assets Control) has added the Xinjiang Production and Construction Corps (XPCC), a Chinese government entity, and two individuals to the SDN List over human rights abuses against ethnic minorities in the Xinjiang Uyghur Autonomous Region.

“As previously stated, the United States is committed to using the full breadth of its financial powers to hold human rights abusers accountable in Xinjiang and across the world,” said Secretary Steven T. Mnuchin.

OFAC’s designation of the XPCC was pursuant to Executive Order 13818, “Blocking the Property of Persons Involved in Serious Human Rights Abuse or Corruption,” which implemented the Global Magnitsky Human Rights Accountability Act.

The XPCC is considered by OFAC to be a paramilitary organisation with large commercial operations that that are likely to be impacted by US sanctions.

Chen Quanguo, the First Political Commissar of the XPCC, was designated last month, for “implementing a comprehensive surveillance, detention, and indoctrination programme targeting Uyghurs and members of other ethnic minority groups”.

The two newly designated individuals are Peng Jiarui, the Deputy Party Secretary and Commander of the XPCC; and Sun Jinlong, a former Political Commissar of the XPCC.

As a result of the designations, all property and interests in property of the XPCC and the two individuals that are in the US or in the possession or control of US persons, are blocked and must be reported to OFAC. Entities that are owned 50 percent or greater by the XPCC are also automatically blocked, and US persons are generally prohibited from engaging in transactions with them.

OFAC has issued a general licence authorising certain wind down and divestment transactions and activities related to blocked subsidiaries of the XPCC (not transactions with the XPCC itself) until 30 September.

The latest designations follow an advisory released in July which advised businesses with potential supply chain exposure to Xinjiang to consider the reputational, economic, and legal risks of “involvement with entities that engage in human rights abuses”.

As a result of OFAC’s action, all entities that are owned 50 percent or greater by the XPCC are also automatically “blocked” (the “Blocked XPCC Subsidiaries”), and U.S. persons generally are prohibited from engaging in transactions with them.

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