Over the past month, we have closely monitored efforts by the U.S. Congress to tie the president’s hands over sanctions on Russia.  Today, the president signed the Countering America’s Adversaries Through Sanctions Act (CAATSA or the Act), which will have a significant impact on numerous U.S. industries operating in Russia.  And Russia’s response to the legislation indicates that further tensions between the United States and Russia – and possibly additional sanctions on both sides – are likely to follow.

Continue Reading New Law Extends U.S. Sanctions Against Russia

  • Penalty imposed against Exxon related to contracts with Russian oil company Rosneft
  • Rosneft is not a prohibited party but its president is
  • OFAC alleges that “senior-most” Exxon management were involved
  • Exxon responds with suit against OFAC

On July 20, 2017, the U.S. Treasury Department Office of Foreign Assets Control (OFAC) announced that ExxonMobil (Exxon) must pay a $2 million penalty for violating U.S. sanctions on Russia.  On the same day, Exxon responded by suing OFAC.

Continue Reading U.S. Penalizes Exxon for Violating U.S. Sanctions on Russia, May Have Complicated How U.S. Companies do Business in Russia

  • Proposed legislation would extend sanctions on Russia and Iran
  • New restrictions aimed at Russian energy sector and cybercriminals
  • Legislation may pit Senate against House and the president

On June 19, 2017, the U.S. Senate overwhelmingly passed a bill mandating sanctions against Russia and Iran and a 30-day congressional review period should the president attempt to reduce those sanctions.

The bill remains in the House after congressional leaders challenged the fact that the revenue-raising bill did not originate in the House. The White House nonetheless is in the unenviable position of having to defend (or oppose) the implementation of sanctions against both Iran and Russia while attempting to conduct diplomacy with the Kremlin.  With a veto-proof majority in at least one chamber, the president’s options appear limited.

Continue Reading Senate Passes Russia and Iran Sanctions Legislation

On April 18, 2017, Donald Trump signed a Presidential Executive Order on Buy American and Hire American (EO). As we reported at the time, Section 3 of the EO directed the heads of all federal agencies to, among other things: (1) assess the monitoring of, enforcement of, implementation of, and compliance with Buy American laws within their agencies; (2) assess the use of BAA waivers within their agencies; and (3) develop and propose policies to ensure federal funds maximize the use of materials produced in the United States. It also ordered the Department of Commerce (DOC) and the Office of Management and Budget (OMB) to issues guidance to agencies about how to comply with their obligations.

Continue Reading U.S. Government Guidance on Buy American Executive Order Could Signal Impending Headaches for Government Contractors

  • California company accused of sanctions violations challenges U.S. Treasury Department
  • Appeals court generally sides with government but remands because of arbitrary and capricious decision related to five alleged violations
  • Traditional interpretation of “inventory exception” is considered by Court

It is rare for companies to go to court to fight penalties imposed by the Office of Foreign Assets Control (OFAC) for violations of U.S. sanctions. It is even more rare for a court to make any sort of finding against the agency.  Yet that is exactly what happened when the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) recently considered OFAC’s imposition of penalties against Epsilon Electronics (Epsilon) for alleged violations of U.S. sanctions against Iran.

Continue Reading Rare Court Case Sheds Light on U.S. Sanctions Enforcement

  • American Honda Finance Corporation pays for alleged violations of U.S. sanctions on Cuba
  • Violation committed by American Honda’s subsidiary in Canada
  • Penalty underscores breadth of U.S. jurisdiction, importance of compliance reviews

On June 8, the Office of Foreign Assets Control (OFAC) announced a monetary penalty against American Honda Finance Corporation (American Honda) for alleged violations of the Cuban Assets Control Regulations (CACR), the primary regulations by which the United States imposes economic sanctions on Cuba.  A copy of the OFAC press release announcing the penalty is available here.

Continue Reading The Long Arm of U.S. Sanctions: Penalty Imposed Against Canadian Subsidiary of U.S. Subsidiary of Japanese Company

  • Proposed legislation targets current gaps in U.S. financial crime law and enforcement
  • Bi-partisan Senate legislation would likely expand compliance obligations for banks and others in financial services industry
  • Proposed legislation is in line with U.S. and international efforts to fight terrorism and trafficking through economic sanctions and anti-money laundering (AML) rules

On May 25, 2017, Sen. Chuck Grassley (R-IA) introduced the “Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017” (the “Act”).  The full text of the bill is available here.

Continue Reading Proposed Legislation Would Combat Terrorist Financing, Money Laundering

On April 18, President Trump signed the “Presidential Executive Order on Buy American and Hire American” (the Order), which declares the Executive branch’s policy to buy American goods and rigorously enforce and administer laws governing entry into the United States of workers from abroad.  The Order is keeping with President Trump’s campaign promises regarding hiring American workers and promoting U.S. manufacturing, and signals a renewed focus on domestic sourcing requirements as well as the likelihood of greater restrictions on work visas for non-U.S. citizens.

Continue Reading Buy American Executive Order Means Renewed Obligations for Government Contractors

  • Boeing announces deal to sell aircraft to Iran Aseman
  • The deal was apparently authorized by the U.S. Treasury Department, but Congressional foes fight to block it
  • If the deal goes through, further loosening of sanctions could follow

This story begins in July 2015, when the United States and its allies entered into a now-famous nuclear agreement with Iran which, among other things, paved the way for the United States to scale back economic sanctions on Iran – including those relating to commercial aircraft.  Executing that deal, in January 2016, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued a new, favorable licensing policy for many transactions relating to the sale of commercial passenger aircraft and related parts and services to Iran.

Continue Reading The Long Road: Boeing Continues the March into Iran

  • One of largest export and sanctions penalties ever imposed
  • Reminder of U.S. government’s broad jurisdiction over export and sanctions matters
  • Cooperation could have helped ease the penalty significantly

On March 7, 2017, Chinese telecommunications company, Zhongxing Telecommunications Equipment Corp. (ZTE), signed on to three separate settlement agreements with the United States, agreeing to pay $892 million for violations of U.S. sanctions and export controls. Even more could be due if ZTE strays from the commitments it has made under the settlement agreements.  This is one of the largest penalties ever imposed by the U.S. government for export and sanctions violations.

It is impossible in the space of this blog article to provide a detailed summary of this matter.  In addition, while the details of the matter would make good copy, we think (hope!) that this is something of an isolated incident.  At the same time, we think several lessons can be derived from this action.

Continue Reading Lessons from the Historic ZTE Enforcement Action