OFAC

On June 16, 2017, President Trump issued a National Security Presidential Memorandum on Strengthening the Policy of the United States Toward Cuba.  The Memorandum outlined a framework for agencies such as the Treasury Department’s Office of Foreign Assets Control (OFAC) and the Department of Commerce’s Bureau of Industry and Security (BIS) to update and implement an expanded range of sanctions directed at Cuba and the Castro regime.  The most significant changes concern authorized individual travel and transactions with entities related to Cuban military or intelligence services. While the current administration seeks to roll back Obama-era Cuba policy that was geared towards reducing sanctions and normalizing relations, OFAC has yet to implement any regulatory amendments called for in the June Memorandum. For more information on the practical effect of the Presidential Memorandum and the future of Cuba sanctions, see our Cuba Sanctions 2017 update in Global Trade Magazine.

On October 12, 2017, the Treasury Department’s Office of Foreign Assets Control (OFAC) revoked certain parts of its economic sanctions regime with respect to Sudan and the Government of Sudan.  OFAC issued a General License on January 17 authorizing transactions formerly banned under the Sudanese Sanctions Regulations (SSR), and that General License will no longer be needed after October 12 to engage in such previously prohibited transactions. While the decision reflects progress towards the normalization of bilateral relations between the U.S. and Sudan, U.S. companies and multi-national exporters should remain wary of the sanctions regimes and trade restrictions that remain in force through authorities in the U.S., the European Union, and the United Nations.  Comprehensive due diligence remains a necessity for doing business in the region, particularly for the defense industry.  Notably, OFAC can and will investigate business activities that violated the SSR before the issuance of the January 2017  General License.  For more information on the revocation of the SSR and recent enforcement action, see our Sudan Sanctions 2017 update in Global Trade Magazine.

President Trump’s October 13 speech denounced Iran’s “fanatical regime” as a “menace,” and threatened to terminate the 2015 Iran nuclear deal negotiated by Barack Obama and formally known as the Joint Comprehensive Plan of Action (JCPOA). He accused the “rogue” Iranian government of financing terror organizations, imprisoning Americans and fomenting vicious civil wars. (more…)

On Thursday September 21st, President Trump signed Executive Order 13810 Imposing Additional Sanctions with Respect to North Korea (” the E.O.” or “E.O. 13810”).  E.O. 13810 significantly expands the U.S. Treasury Department’s authority to impose a broad range of sanctions unlike those we’ve seen before. The expansion of authority includes the ability to impose “secondary sanctions” on non-U.S. parties who take part in foreign activities involving certain North Korean sectors or entities.  For example, OFAC now has the power to block U.S. correspondent account access to any foreign bank that knowingly conducts or facilitates significant transactions tied to trade with North Korea. (more…)

American Honda Finance Corporation (American Honda) has settled with the Office of Foreign Assets Control (OFAC) over potential civil liability for 13 violations of the Cuban Assets Control Regulations (CACR), which allegedly occurred between 2011 and 2014. What’s notable is that the matter involved the Canadian affiliate of the global company which was acting entirely independently and outside of the U.S. (more…)

A recent OFAC enforcement case illustrates that even non-U.S. companies that do business with sanctioned jurisdictions under the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) face significant risks when using U.S. dollar payments. This means that OFAC is claiming jurisdiction over any transaction that’s in U.S. dollars. (more…)

A D.C. Circuit Court of Appeal’s panel recently issued a key opinion affirming the U.S. Treasury Department’s broad ability to enforce sanctions regulations through its Office of Foreign Assets Control (“OFAC”).  While the court ultimately set aside a $4.07 million penalty, the decision established critical precedent for export compliance and future OFAC enforcement actions.  Significantly, the court ruled that OFAC does not have to prove that a company’s exports actually reached a sanctioned destination in order to impose penalties for sanctions violations. Rather, OFAC simply has to show that a company knew or had reason to know that through its third-party distributor, the company’s exported goods would ultimately end up in a sanctioned country.  (more…)

You may not have heard of the Office of Export Enforcement (OEE), but if you or your subsidiary are doing business abroad, you should take note. Last month, the OEE, which is part of the Department of Commerce’s Bureau for Industry and Security (BIS), raided the U.S. headquarters of a company whose European subsidiary is suspected of violating U.S. export control and sanctions laws. (more…)

On March 7, we learned that Zhongxing Telecommunications Equipment Corporation (ZTE) concluded 3 settlement agreements that could result in penalties as high as $1.2 billion for its violations of U.S. sanctions and export controls laws. Although the amount of the fines results from particularly egregious conduct on the part of ZTE to conceal its violations even during the period of investigation,  the case highlights three valuable lessons for all exporters. This is especially true given Secretary of Commerce Wilbur Ross’s pronouncement that the case signals the new Administration will be “aggressively enforcing strong trade policies with the dual purpose of protecting American national security and protecting American workers.” (more…)

If you are a foreign company that wants access to the U.S. financial markets, make sure you  understand the U.S. Iran Transactions and Sanctions Regulations (ITSR). Administered by the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC), the ITSR, unlike other sanctions programs, contain secondary sanctions that apply to non-U.S. persons for wholly non-U.S. conduct that may occur entirely outside U.S. jurisdiction. Even if you are not doing business with Iran, several companies and individuals, many of whom are not Iranian, have been listed under the sanctions program, including 25 more added earlier this month. (more…)