Risks and Considerations for U.S. Businesses and Individuals Operating in South Sudan
Summary:
The Department of State, the Department of Labor, and the Department of Commerce are issuing this advisory to highlight risks for U.S. businesses, individuals, and other persons, including academic institutions, research service providers, and investors (hereafter “businesses and individuals”) conducting or contemplating business in South Sudan. These risks continue to grow as a result of South Sudan’s transitional government’s failure to implement political and economic reforms, improve transparency and public financial management, and address pervasive, endemic corruption and human rights violations.
Businesses and individuals should be particularly wary of the associated illicit finance, reputational, economic, and potential legal risks of conducting business and utilizing supply chains of enterprises with ties to the South Sudanese government officials or their family members (hereafter, collectively referred to as “enterprises with ties to the South Sudanese government”). Businesses and individuals that operate in the oil and mining sectors are particularly exposed to such risks.
This advisory relates specifically to the Revitalized Transitional Government of National Unity (RTGoNU), companies controlled by government officials and/or their family members, and civilian-owned enterprises with ties to the South Sudanese transitional government. The U.S. government does not seek to curtail or discourage responsible investment or business activities in South Sudan with civilian-owned South Sudanese counterparts that are independent from improper ties to government institutions or officials.
Background
The transitional government has yet to meet significant commitments under the Revitalized Agreement to Resolve Conflict in South Sudan (R-ARCSS), the 2018 peace agreement that ended the country’s five-year civil war. Critically, the transitional government has failed to implement economic reforms to address endemic corruption and has made insufficient progress reforming public financial management to improve the transparency of government-managed projects. Moreover, the government continues to allocate scarce resources to fund and equip security forces loyal to political elites and implicated in human rights abuses.2 President Salva Kiir’s family and inner circle have also reportedly benefited from financial schemes designed to capture for personal gain public revenue from a credit line allegedly intended to support imports of food and other supplies for the South Sudanese people.3
In August 2022, President Salva Kiir for a second time extended the transition period, prolonging his term in office until February 2025, despite having failed for the prior four years to deliver on the commitments made in the R-ARCSS.4 The extension of the transitional period enables the entrenched government and political elite to reap rewards from established economic networks. According to an April 2022 report from the UN Security Council Panel of Experts on South Sudan,
Rather than breaking the violent cycle of elite political bargaining in South Sudan, the 2018 Revitalized Agreement on the Resolution of the Conflict in South Sudan (the peace agreement) has become part of it. Almost every component of the peace agreement is now hostage to the political calculations of the country’s military and security elites, who use a combination of violence, misappropriated public resources and patronage to pursue their own narrow interests.5
Risk Vectors
Specific activities and sectors within South Sudan that are of concern include the following:
government tenders,
oil and gold,
contracts managed by government entities for the delivery of assistance, and
arms, military equipment, and related activity.
U.S. government analysts, journalists, researchers, and others have identified these entities and sectors as primary industries providing economic resources or benefits to members of the entrenched transitional government and other elites operating with insufficient transparency.6 A 2023 report by the U.S.-based investigative and policy organization, The Sentry, warned that both state officials and businesspeople operate in an “environment of impunity” that incentivizes both negligence and illegal activity.7 U.S. businesses and individuals involved in operations or supply chains tied to the transitional government of South Sudan or involved with private enterprises in these specific sectors should exercise caution. Businesses and individuals that do not conduct appropriate due diligence run the risk of engaging in conduct that may expose them to significant reputational, financial, and legal risks, including violations of U.S. anti-bribery and anti-money laundering laws and economic sanctions programs. U.S. financial institutions should have familiarized themselves with their due diligence and suspicious activity report (SAR) filing obligations related to senior South Sudanese political figures, as is already required and outlined in a 2017 advisory from the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). U.S. financial institutions should also refer to the 2020 joint guidance FinCEN issued with the Federal Banking Agencies on Bank Secrecy Act (BSA) “Due Diligence Requirements for Customers Who May Be Considered Politically Exposed Persons.”
Businesses and individuals that operate or consider operating in South Sudan should be aware that the government’s failure to implement its own commitments on public financial management reform leaves insufficient protection against revenue generated from South Sudan’s natural resources being diverted to the enrichment of political elites. To raise awareness, on June 22, 2023, the United States, along with United Kingdom and Norwegian Special Envoys for Sudan and South Sudan convened a discussion with companies and associations operating in or providing services in South Sudan’s oil sector. The meeting focused on South Sudan’s law, its commitments under the R-ARCRSS to manage the country’s oil revenue transparently and for the benefit of the South Sudanese people, and due-diligence standards that can help ensure that companies’ activities do not provide revenue to malign actors in South Sudan.8
Businesses and individuals that operate in South Sudan should also be aware that the lack of progress on political and judicial reforms means that the economy operates without critical structures and mechanisms, such as a permanent constitution, a competent and operational Anti-Corruption Commission, updated and enacted revenue management legislation, and an impartial, rule-of-law-based, judicial system. The lack of such structures and mechanisms not only enables corrupt and nontransparent activity, it also increases the risks to U.S. businesses and individuals of third parties’ nonpayment, corruption, breach of contract, violation of internationally recognized worker rights, and other actions.
A September 2021 UN Human Rights Commission (UNHRCSS) report highlights the link between economic crimes and human rights concerns, including the rights to freedom of expression and opinion, of peaceful assembly, to life, and from arbitrary detention.9 Any financial or technical assistance provided by U.S. companies via government tenders or concessions to the South Sudanese transitional government and/or the network of companies that it controls risks association with human rights abuses and with actors impeding the country’s democratic transformation. To mitigate risk, U.S. businesses and individuals operating in South Sudan should undertake due diligence related to human rights issues and be aware of the potential reputational and legal risks of conducting certain business activities and/or transactions with some government-controlled companies, and civilian-owned enterprises with ties to the South Sudanese government.
Businesses and individuals should also avoid all dealings (including transactions transiting the United States) that involve any property or interests in property of persons listed on the Department of the Treasury’s Office of Foreign Assets Control’s (OFAC) list of Specially Designated Nationals and Blocked Persons (SDN List) and any persons whose property and interests in property are otherwise blocked, unless authorized or exempt. Additionally, the UN Security Council has imposed a sanctions regime on South Sudan, including an arms embargo, travel ban and financial measures. Therefore, U.S. persons should continue to avoid prohibited interactions with the individuals and entities designated by the United Nations (UN) pursuant to resolutions 2206 (2015), 2521 (2020), and 2577 (2021), noting the exceptions therein. This advisory also highlights for all persons, both U.S. persons and non-U.S. persons, special licensing requirements that apply to certain transactions involving U.S.-origin items that are destined for or involve 15 companies located in South Sudan that are listed on the Entity List maintained by the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce under the Export Administration Regulations (EAR).
I. Government tenders
Businesses and individuals bidding on government tenders face reputational risk from the perception they may be participating in corruption or supporting or facilitating the diversion of resources from South Sudan’s ongoing humanitarian crisis, in violation of the 2018 peace agreement.
Perception of Corruption, Lack of Transparency
Transparency International, a non-governmental organization, ranked South Sudan as the country with the world’s worst public sector corruption in its 2021 rankings of perception of corruption; South Sudan tied for second-worst in 2022.10 The lack of progress on public financial management reform and the transitional government’s extension of the transitional period increases the perception and opportunity for corrupt deals. The UN Panel of Experts on South Sudan, the UN Commission on Human Rights in South Sudan, the Sentry, and other nongovernmental organizations have documented allegations of corruption particularly in government tenders for oil cargos. In addition, UN Panel of Experts in its reports noted that the government has employed a years-long practice of oil-for-roads tendered deals — “allocat[ing] 30,000 barrels of crude oil per day for the development of infrastructure.”11
Diversion of Resources
The UNHRCSS report describes extensive economic crimes, including the misuse of oil revenue, off-book investments by South Sudan’s intelligence service and military, kick-back contracts for currency printing, and misuse of non-oil revenue by the National Revenue Authority and Customs.12 The contracts described in the report demonstrate not only the potential for mismanagement and corruption when entering into agreements with the government of South Sudan, but also the reputational and legal risk of doing business that results in the diversion of resources that could otherwise be used to provide urgently needed food and supplies.13
II. OIL and GOLD
Oil
Data on the website of South Sudan’s Ministry of Finance’s website reported $1.6 billion in 2021-22 revenue generated by the country’s oil wealth. This figure fluctuates with the price of oil, but accounts for more than 90% of government’s revenue. A lack of transparent accounting for oil revenues and loans collateralized with oil cargo facilitates significant revenue leakage and diversion by corrupt actors, undermines the already negligible financing of basic services for South Sudanese people.14 As stated by UNHRCSS, “Sudan Sudan’s oil revenues are reportedly paid into Government accounts located outside of South Sudan,” and the country “suffers from an informal unregulated system of oil revenue collection that lacks independent oversight and transparency, thus providing opportunities for the misappropriation of these funds.”15 The report further concludes that “significant amounts of accrued oil revenues have also been stolen by political elites.”
The transitional government’s now-standard practice of requiring advance payment/loans for oil cargos contracted through government tenders decreases the transitional government’s revenue to meet existing budgetary obligations due to steep discounts offered on these sales and the interest charged on the loans. Requiring advanced payment/loans, intermittent monetary financing from the Central Bank, and limited external budget support to cover previous exigencies and debt generate more debt. Former Minister of Finance Agak Achuil brought this problem to light in May 2022, stating that the Ministry of Finance and Planning was unable to pay civil servants’ salaries because the government had already sold the rights to the country’s oil proceeds through 2027 to cover repayments on domestic loans and previous oil advances.16
South Sudan’s use of opaque loans further calls into question the government’s capacity to meet the terms of any new contracts. Businesses and individuals should be aware of the transitional government’s severe constraints on financing before entering into contracts with the government.
In March 2018, the Department of Commerce’s Bureau of Industry and Security added 15 South Sudanese entities (a mix of private and government entities) involved in South Sudan’s oil trade to the Entity List, Supp. No. 4 to Part 744 of the Export Administration Regulations, 15 CFR Parts 730-774 following a determination that the entities were involved in activities contrary to the foreign policy interests of the United States. (See 83 FR 12475 March 22, 2018.) All persons (natural persons, companies), whether U.S. persons or non-U.S. persons, must obtain licenses from BIS to engage in export, reexport, and transfer (in-country) transactions involving items (commodities, software, technology) that are subject to the EAR and destined to these 15 entities, or in situations in which such entities are parties to a contemplated export, reexport, or transfer (in-country) transaction involving items subject to the EAR.
U.S. banks and insurance companies should review their due diligence practices with respect to providing banking or insurance services for purchases of South Sudanese oil and may wish to consider contractual provisions requiring compliance with South Sudanese petroleum management and procurement legislation.
Gold
U.S. businesses and individuals should be aware of the connection between the gold sector and the potential for corruption involving political actors and other criminal activity. The Global Initiative Against Transnational Organized Crime (GITOC), an international non-governmental organization, reports that “allegations of the involvement of military officers and politicians at the highest levels of government abound” in South Sudan and other countries in the region.17 According to GITOC, “gold production profits are mostly captured by bigger players, providing substantial financing to people active in the illicit market, including political elites, foreigners and non-state armed groups.” In 2020, The Sentry documented the existence of gold and mineral extraction companies, whose shareholders and part-owners included family members of South Sudanese current and former high-level government officials.18
III. CONTRACTS MANAGED BY GOVERNMENT ENTITIES FOR THE DELIVERY OF ASSISTANCE
South Sudan’s transitional government depends on the international community for assistance to provide a basic social safety net for the people of South Sudan and for limited development funding. The delivery of lifesaving humanitarian assistance offers another avenue for South Sudanese actors to divert resources through rents, requirements for payment of unnecessary fees, and other schemes. Businesses and individuals should be cognizant of the potential that any involvement of enterprises with ties to the South Sudanese transitional government at any point in the delivery of humanitarian assistance could be manipulated for corrupt or other illicit purposes.
In October 2022, The Sentry released a report on its three-year investigation into a line of credit scheme it claims the transitional government used to siphon millions of U.S. dollars to political elites that was originally intended to provide critical relief to the South Sudanese people.19 According to the report, “between 2012 and 2015, the government of South Sudan received a credit line of nearly one billion dollars from Qatar National Bank and CfC Stanbic Bank in Kenya to support efforts to import” food, fuel, and medicine. The credit line was issued in U.S. dollars in the form of letters of credit (LCs) that were to be used to pay exporters upon confirmation of delivery of goods. The Sentry “found that multimillion-dollar contracts were awarded to foreign-run companies, companies that only existed on paper, and inexperienced middlemen” and that “millions of dollars’ worth of essential pharmaceuticals, fuel, and food were not delivered.” These payments — essentially loans for goods and services that were never delivered — added to the public debt. According to The Sentry, almost one billion dollars were lost.20
The humanitarian assistance supply chain also includes frequent opportunities for potential diversion. A December 2021 report of the International Peace Information Service (IPIS) noted arbitrary and unofficial checkpoints that required bribes, making transport in South Sudan among the most expensive in the world.21 South Sudan is also the most dangerous country in the world for humanitarian workers according to a 2021 analysis by CARE International, based on data from the Humanitarian Outcomes Aid Worker Security Database.22 While humanitarian assistance is crucial for South Sudan, and the United States is the single largest donor of aid, U.S. businesses and individuals should exercise caution in conducting humanitarian operations in South Sudan, particularly in the unlikely scenario where there is direct engagement with enterprises with ties to the South Sudanese transitional government.23 While humanitarian assistance is crucial for South Sudan, and the United States is the single largest donor of aid, U.S. businesses and individuals should exercise caution in conducting humanitarian operations in South Sudan, particularly in the unlikely scenario where there is direct engagement with enterprises with ties to the South Sudanese transitional government.
IV. ARMS, MILITARY EQUIPMENT, AND RELATED ACTIVITY
There is a UN arms embargo on the supply of arms and related materiel and any related technical training or assistance in relation to actors in South Sudan. The UN arms embargo is implemented by the U.S. Government in the International Traffic in Arms Regulations, which reflects the United States policy of denial on the export of defense articles and defense services to South Sudan with certain exceptions listed in ITAR § 126.1(w).
U.S. businesses and individuals are advised not to conduct any business with any forces of the RTGoNU, including Necessary Unified Forces, the South Sudanese People’s Defense Force, the National Security Services or any other armed state or non-state actors, except in full compliance with applicable law and sanctions regimes, including Executive Order 13664, which references activities including but not limited to human rights abuse and other activities that threaten the peace of South Sudan. South Sudanese security forces have been implicated in reports of human rights violations and abuses and violations of international humanitarian law repeatedly and historically with impunity. For example, a September 2022 joint report from the UN Mission in South Sudan (UNMISS) and the Office of the UN High Commissioner for Human Rights (OHCHR) included the findings of UNMISS Human Rights Division investigations into human rights violations and abuses and violations of international humanitarian law in Unity State during fighting between South Sudan’s joint government forces and affiliated armed militias/groups in the first half of 2022. The joint report concludes that many of the killings, injuries, and cases of rape were perpetrated by joint government forces and allied militias or groups, which allegedly used scorched-earth tactics during the attacks, stormed villages and settlements in broad daylight, and randomly attacking unarmed local populations, including women, children, and older persons. The UNCHRSS report attaches responsibility for these actions to specific individuals and entities that have not been punished, highlighting the degree to which impunity prevails in South Sudan.24
Annex 1: Additional U.S. Government Reports and Resources
U.S. Department of the Treasury
The U.S. Department of the Treasury has designated certain individuals and entities in or in relation to South Sudan under various sanctions authorities, including Executive Order 13664 (“Blocking Property of Certain Persons with Respect to South Sudan”) and Global Magnitsky Sanctions under Executive Order 13818 (“Blocking the Property of Persons Involved in Serious Human Rights Abuse or Corruption”).
Designated persons are listed on the SDN List, which can be searched utilizing OFAC’s public SDN List search tool.
All property and interests in property of designated persons that are in the United States or are in the possession or control of a U.S. person are blocked. Additionally, in most cases, any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked. U.S. individuals and entities, including businesses, are prohibited from engaging in transactions with designated persons absent a general or specific OFAC license or other exemption or authorization. Failure to comply with U.S. sanctions may result in civil and criminal penalties under U.S. law. OFAC strongly encourages organizations subject to U.S. jurisdiction, as well as foreign entities, including foreign financial institutions, that conduct business in or with the United States or U.S. persons, or deal in U.S. origin goods or services, including the U.S. financial system, to employ an appropriately tailored risk-based approach to sanctions compliance by developing, implementing, reviewing and routinely updating their sanctions compliance policies and procedures.
Updates on the Financial Action Task Force-Identified Jurisdictions with Anti-Money Laundering and Combating the Financing of Terrorism and Counter-Proliferation Deficiencies
South Sudan faces significant money laundering risks and gaps in implementing its anti-money laundering (AML) and counter financing of terrorism (CFT) legal framework. The Financial Action Task Force (FATF) publicly identified South Sudan on its list of jurisdictions under increased monitoring in June 2021. The most current information on South Sudan in the FATF process can be found on FATF’s website.
FinCEN issues press releases after every FATF plenary, informing U.S. financial institutions of updates to the FATF lists and reminding financial institutions of their reporting obligations. Please see FinCEN’s website for more information.
U.S. Department of Commerce
In situations in which there is reasonable cause to believe that a foreign entity is involved or poses a significant risk of being or becoming involved in activities contrary to the national security or foreign policy interests of the United States, the Department of Commerce may add such entity to the Entity List (Supp. No. 4 to Part 744 of the EAR) thereby imposing licensing requirements. Exports, reexports, or transfers (in-country) of items (commodities, software, technology) subject to the EAR in which listed entities are a party to the transaction (e.g., end-user, purchaser, intermediate or ultimate consignee) require a license from the Department of Commerce’s BIS. Applications for such licenses are generally reviewed under a policy of a presumption of denial.
March 22, 2018 – 15 South Sudanese Entities Added to the Entity List.
U.S. Department of Labor
List of Goods Produced by Child Labor or Forced Labor
The Department of Labor maintains a list of goods and their source countries that it has reason to believe are produced by child labor or forced labor in violation of international standards (the TVPRA List). Currently, cattle from South Sudan is included on the List for child labor and forced labor.
List of Products Produced by Forced or Indentured Child Labor
The Department of Labor maintains a list of products and their source countries which it has a reasonable basis to believe are produced by forced or indentured child labor, pursuant to Executive Order 13126. This List is intended to ensure that U.S. federal agencies do not procure goods made by forced or indentured child labor. Under procurement regulations, federal contractors who supply products on the List must certify that they have made a good faith effort to determine whether forced or indentured child labor was used to produce the items supplied. Currently, cattle from South Sudan is included on the List for forced child labor.
Cattle is a significant industry in South Sudan with potential to expose U.S. business and individuals to significant reputational and legal risks due to the use of child labor, forced child labor, and forced labor. The inclusion of cattle on the Department of Labor’s lists should be viewed as a warning to businesses to review their supply chains and take reasonable measures to guard against complicity in labor violations. We urge companies engaging in cattle-related business in South Sudan or whose industry suppliers source raw materials from South Sudan to adopt due diligence practices in line with the OECD-FAO Guidance for Responsible Agricultural Supply Chains.
Findings on the Worst Forms of Child Labor
The Department of Labor’s annual Findings on the Worst Forms of Child Labor report focuses on the efforts of certain U.S. trade beneficiary countries and territories to eliminate the worst forms of child labor through legislation, enforcement mechanisms, policies and social programs. For 2021, South Sudan received an assessment of no advancement.25 Despite limited initiatives to address child labor, South Sudan is assessed as having made no advancement because it demonstrated a practice of being complicit in the use of forced child labor. In particular, South Sudan’s military forces continued to recruit children, sometimes forcibly, to fight opposition groups. The 2022 report will be released in September 2023. The Department of Labor’s reporting on international child labor and forced labor is available at: https://www.dol.gov/agencies/ilab/our-work/child-forced-labor-trafficking.
Comply Chain: Business Tools for Labor Compliance in Global Supply Chains
The Department of Labor’s web-based platform provides information on due diligence measures specific to forced labor and child labor in supply chains, offering an interactive resource to help companies assess risks and impacts and draw on lessons and good practices from over 50 real-life examples of due diligence in various sectors. Comply Chain is available in English, French, Malay, and Spanish and can be accessed at https://www.dol.gov/general/apps/ilab-comply-chain.
Better Trade Tool
The Department of Labor’s the Better Trade Tool is a web-based platform that links trade data to available information on labor exploitation around the world. It offers users an additional level of detail that has been a missing piece in the global supply chain puzzle, empowering users to make strategic decisions based on better data. This tool incorporates data on goods and country pairings that the Department of Labor has reason to believe are produced by child labor, forced labor, or forced or indentured child labor in violation of international standards; U.S. Census Bureau import trade data; and classification and mapping to the Harmonized Tariff Schedule of the United States. The Better Trade Tool is available at: https://www.dol.gov/general/apps/ilab-comply-chain.
U.S. Department of Homeland Security
The Forced Labor Division of U.S. Customs and Border Protection, a component of the Department of Homeland Security, investigates allegations of forced labor. Where CBP finds evidence that reasonably indicates that merchandise is being mined, produced, or manufactured in whole or in part with forced labor in a foreign country and such merchandise is being or is likely to be imported into the United States, it will issue a Withhold Release Order (WRO), preventing the merchandise from entering at our ports.
U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) conducts criminal investigations into business entities or individuals with a nexus to the United States who participate in a venture knowingly or in reckless disregard that the venture has engaged in forced labor and who knowingly benefit, financially or by receiving anything of value, from such a forced labor venture. HSI does not require a CBP WRO to investigate a given company.
Allegations of forced labor connected to importations into the United States will be investigated through HSI’s Operation FLORA (Forced Labor Outreach and Targeting Initiative), an aggressive outreach campaign to raise the level of awareness, both domestically and internationally, of trade practitioners and employers to the negative effects of forced labor practices. This strategy seeks to enable partnerships with foreign government officials, civil society organizations, and private industry to increase collaboration with these groups to identify and combat forced labor worldwide. Additionally, HSI Special Agents stationed in Nairobi and South Africa will work with their domestic and international law enforcement counterparts to investigate and dismantle organizations engaging in forced labor practices within the region.
Operation FLORA brings HSI’s full authorities to bear through coordinated outreach and investigative efforts to secure supply chain networks to identify and assist victims of child labor and forced labor, while also prosecuting human trafficking and illicit trade networks to the fullest extent of the law.
Office of the U.S. Trade Representative
South Sudan was removed from eligibility for cooperation benefits under the African Growth and Opportunity Act (AGOA) in 2014 following the outbreak of civil war. The United States Trade Representative (USTR) Ambassador Katherine Tai noted in 2022, “Government of South Sudan is in financial distress and regularly accumulates arrears on its commitments. South Sudan’s economy continued to be riddled with corruption and non-transparent transactions throughout the review period.” USTR also cautions, “The Government of South Sudan has a general lack of due process, and applies the law in an arbitrary manner, often targeting opponents of the political elite.” “Corruption and bribery remain widespread, and oversight institutions do not receive the funding necessary to function at a basic level.”26
U.S. Department of State
2022 Trafficking in Persons Report and Child Soldier Prevention Act List
The Department of State publishes the Trafficking in Persons Report annually to highlight the state of human trafficking across the globe and calls on governments to join the United States in improving our collective efforts to comprehensively address the issue. South Sudan remains in Tier 3 of the 2022 Trafficking in Persons Report as well as the Child Soldier Prevention Act List. Government security and law enforcement officers forcibly recruit and use child soldiers and do not hold any members of the South Sudan People’s Defense Forces or South Sudan National Police Services criminally accountable for these unlawful acts. Authorities do not report investigating or prosecuting any forced labor or sex trafficking crimes and penalize victims for unlawful acts their traffickers compelled them to commit.
2022 Investment Climate Statement: South Sudan
As reported in the State Department’s Investment Climate Statement, South Sudan’s legal system is underfunded, dysfunctional, and subject to corrupt practices and interference. Government entities do not enforce laws equitably or consistently. Corrupt government officials operate with impunity. The legal framework governing investment and private enterprises remains underdeveloped. Contract dispute litigants are sometimes arrested and imprisoned until they agree to pay a financial settlement even when never charged an offense or brought to court. Other factors inhibiting investment in South Sudan include a lack of skilled and unskilled labor and limited physical infrastructure riddled with arbitrary checkpoints. The International Peace Information Service (IPIS) published a December 2021 report that found checkpoints make transport in South Sudan among the most expensive in the world.2022 Investment Climate Statement: South Sudan
2022 Fiscal Transparency Report: South Sudan
South Sudan – United States Department of State
2022 Country Report on Human Rights Practices: South Sudan
South Sudan – United States Department of State
Annex 2: Due Diligence
There are many publicly available resources for businesses on due diligence for human rights abuses and related issues. The UN Guiding Principles on Business and Human Rights, the OECD Guidelines for Multinational Enterprises, the International Labour Organization (ILO) publication, “Combating Forced Labour: A Handbook for Employers and Business,” and the Office of the High Commissioner for Human Rights guide on “The Corporate Responsibility to Respect Human Rights” (OHCHR guide) and others provide guidance for heightened due diligence in high-risk regions and factors to be considered in determining appropriate action, including whether and how to responsibly end relationships when a business lacks the leverage to prevent or mitigate adverse impacts, and how to mitigate the risk of human rights abuses through the business value chain.
The U.S. Department of Labor’s web-based platform – Comply Chain: Business Tools for Labor Compliance – provides information on due diligence measures specific to forced labor and child labor in supply chains, offering an interactive resource to help companies assess risks and impacts and draw on lessons and good practices from over 50 real-life examples of due diligence in various sectors.
Businesses engaged with public and private security around their operations are encouraged to implement initiatives such as the Voluntary Principles on Security and Human Rights (VPI), a multistakeholder initiative that includes governments, NGOs, businesses, and observers, providing security around business operations in a manner that respects human rights, including engagement with public and private security providers. VPI has made available on its website several public risk assessment tools and resources which businesses can use to mitigate risk and help that any of their business operations in South Sudan which involve the use of public and private security forces are undertaken in a manner that incorporates respect for human rights and fundamental freedoms. Businesses that hire private security are encouraged to hire private security companies that are members or affiliates of the International Code of Conduct for Private Security Providers’ Association (ICoCA). Contracting ICoCA member and affiliate companies can provide increased confidence that security providers are operating in a manner that is consistent with international human rights law and international humanitarian law and the UN Guiding Principles on Business and Human Rights.
Businesses exporting products, and services with surveillance capabilities are encouraged to implement the U.S. Department of State Guidance on Implementing the UN Guiding Principles for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities. The Guidance provides practical and accessible human rights guidance to U.S. businesses to prevent their products or services from being misused by regime end-users to commit human rights abuses.
With respect to U.S. sanctions programs and export controls, the U.S. government strongly encourages persons subject to U.S. jurisdiction, as well as foreign persons who conduct transactions with or involving the United States and/or U.S. persons or items subject to U.S. export controls, including exportation and reexportation of items and services, to employ a risk-based approach to sanctions compliance, by developing and implementing robust compliance programs and routinely updating such programs. While each risk-based sanctions compliance program will vary depending on a variety of factors — including the company’s size and sophistication, products and services, customers and counterparties, and geographic locations — each program should be predicated on and incorporate at least five essential components of compliance:
Management commitment;
Risk assessment;
Internal controls;
Testing and auditing; and
Training. Please refer to A Framework for OFAC Compliance Commitments for additional information.
With respect to activities that are subject to regulation by OFAC, including U.S. persons’ financial services, please refer to A Framework for OFAC Compliance Commitments for additional information. Persons engaging in export transactions involving items subject to the EAR should consult BIS’s website, which contains detailed guidelines on export controls, including key elements of any export controls compliance program. See https://www.bis.doc.gov/index.php/documents/pdfs/1641-ecp/file.
Entities with ties to the U.S. financial system should be aware that U.S. financial institutions have AML/CFT compliance requirements under the BSA. In complying with these AML/CFT requirements, financial institutions are expected to take a risk-based approach to identify, assess, and mitigate the money laundering and terrorist financing risks to which they are exposed and take measures commensurate with those risks in order to mitigate them effectively. Compliance with the BSA is essential to detecting, investigating, and deterring criminal activity. The BSA imposes a range of obligations across a wide sector of financial institutions, including establishing AML programs,27 filing currency transaction reports,28 and reporting suspicious activity to FinCEN.29 As appropriate, U.S. financial institutions should assess their illicit finance risk, implement AML and sanctions compliance programs, and meet existing due diligence program requirements relevant to their institution.
[1] This advisory is explanatory only and does not have the force of law. It does not supplement or modify statutory authorities, executive orders, or regulations. It is not intended to be, nor should it be interpreted as, comprehensive or as imposing requirements under U.S. law, drawing any legal conclusions about specific fact scenarios regarding particular businesses or individuals, or otherwise addressing any particular requirements under applicable law. Its purpose is to provide information to businesses and individuals that they may consider as part of a risk-based approach to due diligence in assessing their potential involvement with entities engaged in human rights abuses, corruption, or other illicit activity. [back to 1]
[2] “Human rights violations and related economic crimes in the Republic of South Sudan,” Conference room paper of the Commission on Human Rights in South Sudan,] September 23, 2021. [back to 2]
[3] The Sentry: Cash Grab, How a Billion-Dollar Credit Scam Robbed South Sudan of Fuel, Food, and Medicine – October 2022 [Cash Grab | Billion-Dollar Letters of Credit Scam in South Sudan (thesentry.org)]
[4] Martin Elia Lomuro, the minister of cabinet affairs, said the decision was taken “to address the challenges that impede the implementation of the peace agreement,” cited in South Sudan extends transitional government by two years Arab News, August 5, 2022. [back to 4]
[5] Final report of the Panel of Experts on South Sudan submitted pursuant to resolution 2577 (2021) – April 2022 [Reports | United Nations Security Council] [back to 5]
[6] The Crisis Group. “Oil or Nothing: Dealing with South Sudan’s Bleeding Finances.” [back to 6]
[7] The Sentry. “Crude Dealings.” February 2023. [https://thesentry.org/reports/crudedealings/ [back to 7]
[8] “State Department, U.K. Foreign, Commonwealth & Development Office, and Norwegian Foreign Office Engage with Companies Operating in the South Sudanese Oil Market Regarding Sanctions and Due Diligence,” State Department Media Note, Office of the Spokesperson, June 22, 2023. [back to 8]
[9] Human Rights Council Forty-eighth session: Human rights violations and related economic crimes in the Republic of South Sudan – September 2021 [Human rights violations and related economic crimes in the Republic of South Sudan (A/HRC/48/CRP.3) – South Sudan | ReliefWeb] [back to 9]
[10] Transparency International: CORRUPTION PERCEPTIONS INDEX – January 2022 [2021 Corruption Perceptions Index – Explore the… – Transparency.org] https://www.transparency.org/en/cpi/2022 [back to 10]
[11] Final report of the Panel of Experts on South Sudan submitted pursuant to resolution 2521 (2020) – April 2021 [Reports | United Nations Security Council] [back to 11]
[12] Human Rights Council Forty-eighth session: Human rights violations and related economic crimes in the Republic of South Sudan – September 2021 [Human rights violations and related economic crimes in the Republic of South Sudan (A/HRC/48/CRP.3) – South Sudan | ReliefWeb] [back to 12]
[13] The population of South Sudan faces a fourth year of massive flooding, displacement, and recurring incidents of violence that regularly leave nearly eight million people (approx. two-thirds of the population) in acute food insecurity and an estimated 9.4 million in need of humanitarian assistance. United Nations Office for the Coordination of Humanitarian Affairs: Periodic reports [] and “A New Strategy for Tackling Food and Nutrition Security Crises in South Sudan,” the World Bank, June 16, 2023.South Sudan | OCHA (unocha.org)] and “A New Strategy for Tackling Food and Nutrition Security Crises in South Sudan,” the World Bank, June 16, 2023. [back to 13]
[14] U.S. Department of State 2022 Investment Climate Statement: South Sudan, 2022 Investment Climate Report for South Sudan [back to 14]
[15] Human Rights Council Forty-eighth session: Human rights violations and related economic crimes in the Republic of South Sudan – September 2021 [Human rights violations and related economic crimes in the Republic of South Sudan (A/HRC/48/CRP.3) – South Sudan | ReliefWeb] [back to 15]
[16] Why we have no cash to pay salaries: Agak – The City Review South Sudan (cityreviewss.com), May 6, 2022. Achuil quickly retracted his statement, he was replaced within a few months. [back to 16]
[17] GITOC, ”Illicit Gold Market in East Southern Africa,” Marcena Hunter, Mukasiri Sibanda, Ken Opala, Julius Kaka and Lucy P. Modi, May 2021, and ”Tarnished Hope: Crime and Corruption in South Sudan’s Gold Sector,“ Marcena Hunter and Ken Opala, May 2023. [The Global Initiative against Transnational Organized Crime] [back to 17]
[18] The Sentry:“Untapped and Unprepared Dirty Deals Threaten South Sudan’s Mining Sector” – April 2020 [Untapped and Unprepared – The Sentry] [back to 18]
[19] The Sentry: Cash Grab – How a Billion-Dollar Credit Scam Robbed South Sudan of Fuel, Food, and Medicine – October 2022 [Cash Grab | Billion-Dollar Letters of Credit Scam in South Sudan (thesentry.org)] [back to 19]
[20] The Sentry: Cash Grab – How a Billion-Dollar Credit Scam Robbed South Sudan of Fuel, Food, and Medicine – October 2022 [Cash Grab | Billion-Dollar Letters of Credit Scam in South Sudan (thesentry.org)] [back to 20]
[21] “Checkpoint economy: the political economy of checkpoints in South Sudan, ten years after independence,” Ken Matthysen, Peer Schouten, Dec. 10, 2021. [back to 21]
[22] The Aid Worker Security Database is a global compilation of reports on major security incidents involving deliberate acts of violence affecting aid workers, published at AidWorkerSecurity.org (https://aidworkersecurity.org/incidents) [back to 22]
[23] ”10 Years From Independence and South Sudan is One of the Deadliest Places to Be an Aid Worker,” August 16, 2021. [back to 23]
[24] UNMISS: “Attacks against civilians in southern Unity State, South Sudan February – May 2022” – September 2022 [Attacks against civilians in southern Unity State, South Sudan (February – May 2022) | UNMISS (unmissions.org)] [back to 24]
[25] Each country in this report receives an assessment to indicate the U.S. Department of Labor’s findings on the country’s level of advancement in efforts to eliminate the worst forms of child labor during the reporting period. There are five possible assessment levels: Significant Advancement, Moderate Advancement, Minimal Advancement, No Advancement, or No Assessment. [back to 25]
[26] USTR: 2022 BIENNIAL REPORT ON THE IMPLEMENTATION OF THE AFRICAN GROWTH AND OPPORTUNITY ACT – June 2022 [Biennial Reports | United States Trade Representative (ustr.gov)] [back to 26]
[27] See 31 U.S.C. § 5318(h)(4)(A) and 31 CFR 1010.201, See 31 CFR 1020.210(a) (banks with a Federal functional regulator, 31 CFR 1020.210(b) (banks without a Federal functional regulator); 31 CFR 1021.210 (casinos and card clubs); 31 CFR 1022.210 (money services businesses); 31 CFR 1023.210 (brokers or dealers in securities); 31 CFR 1024.210 (mutual funds); 31 CFR 1025.210 (insurance companies); 31 CFR 1026.210 (futures commission merchants and introducing brokers in commodities); 31 CFR 1027.210 (dealers in precious metals, precious stones, or jewels); 31 CFR 1028.210 (operators of credit card systems); 31 CFR 1029.210 (loan or finance companies); and 31 CFR 1030.210 (housing government sponsored enterprises). [back to 27]
[28] See generally 31 CFR 1010.310. [back to 28]
[29] See generally 31 CFR 1010.320, 1020.320, 1021.320, 1022.320, 1023.320, 1024.320, 1025.320, 1026.320, 1029.320, and 1030.320. [back to 29]
