OFAC

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…)

In the final weeks of December, President Obama amended sanctions to both the Iran and Russia programs. These changes further relaxed sanctions on Iran while they tightened sanctions on Russia (see our client advisory). Yet, just three days from the inauguration of President-elect Donald Trump, exporters are no doubt wondering what the new president will do with regard to these changes and other sanctions relief that has come to pass under the Obama administration. (more…)

Sanctions against Cuba continue to lift. Effective this week, the Department of Treasury’s Office of Foreign Assets Control (OFAC) and the Department of Commerce’s Bureau of Industry and Security (BIS) have relaxed controls in several areas of trade and commerce with Cuba, including loosening restrictions on exporting to and importing from Cuba, carving out new allowances for U.S. persons entering into contingent contracts with Cubans, and opening new opportunities for American entrepreneurs in the civil aviation, construction, and health sectors. Among the changes is also a provision that will allow Americans to travel to Cuba to attend professional meetings and conferences related to tourism. (more…)

Further weakening secondary sanctions, the Department of Treasury’s Office of Foreign Assets Control has issued a new license to allow non-U.S. persons to fly some U.S. aircraft to Iran for temporary  sojourn. While General License J only applies to fixed-wing airplanes and imposes a number of conditions that must be met in order for non U.S.-persons to fly to Iran, the new license may mark the start of new opportunities for the civil aviation industry in Iran. (more…)