The U.S. government continues to take action in an effort to slow the spread of the COVID-19 virus.  In so doing, the government has provided insight into those industries and operations deemed to be essential to U.S. national security.  Lessons learned from these actions will almost certainly help inform U.S. policymakers and regulators when the current crisis has eased, particularly with respect to reviewing foreign investment in the United States.  (Such investment, when it could implicate U.S. national security, is subject to review and approval by the Committee on Foreign Investment in the United States.)

DHS Outlines Essential Businesses for Quarantine Purposes

On March 19, the Department of Homeland Security (DHS) issued guidance to identify those industries and businesses considered to be “essential” for U.S. continued operational purposes.  That Guidance on the Essential Critical Infrastructure Workforce was published by the Cybersecurity and Infrastructure Security Agency (CISA), which forms part of DHS.  The guidance is available here.


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  • Humanitarian exports to Iran are permitted – within limits.
  • Corruption can flourish in the midst of crisis.
  • Export controls limit sharing technical data related to the virus with some countries.
  • Compliance professionals should be proactive and visible during a time of crisis.

Despite the sobering news reports on the global spread of COVID-19, companies are

In case you missed it, I provided insight on U.S. sanctions risks in the context of international supply chains to Supply Chain Management Now last month.

Citing examples, such as e.l.f. Cosmetics’s 2019 settlement for nearly $1 million for sanctions violations, I asserted in the article that both U.S. and non-U.S. companies need to understand how broadly U.S. sanctions are enforced.

In the article, I provided an overview of the current sanctions landscape in the U.S. and highlights particular challenges such as avoiding dealing with specially designated nationals (SDNs). The SDN list is vast and includes parties that reside nearly everywhere in the world. As I said in the article, “this creates a challenge because many of them are in countries not otherwise subject to U.S. sanctions.”


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  • $2 million penalty against Exxon overturned
  • Court concluded that OFAC failed to provide clear notice of violative conduct
  • Companies are at risk when acting in context of ambiguous agency guidance

At the end of December 2019, the U.S. District Court for the Northern District of Texas vacated a $2 million penalty that the U.S. Treasury Department, Office of Foreign Assets Control (OFAC) had imposed against ExxonMobil for alleged violations of U.S. sanctions related to Russia and Ukraine.  OFAC is the U.S. government agency that administers most U.S. sanctions.

This matter has been of interest since the penalty was first announced in July 2017 – read our July 2017 blog post detailing the matter.  As described below, the district court’s reasoning in vacating the penalty against Exxon is worthy of interest, too.


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  • U.S. government continues to impose sanctions on parties supporting Iran
  • One Cypriot and three Panamanian companies sanctioned for connection to Venezuela
  • European bank fined for prohibited transactions involving Sudan

The U.S. Treasury Department, Office of Foreign Assets Control (OFAC), the main U.S. government body that administers U.S. economic sanctions and embargoes, continues to be busy.  In September 2019 alone, OFAC has announced new sanctions designations, new penalties, and new regulations on a nearly daily basis.

Many of these actions are largely administrative in nature.  For example, in the September 4 Federal Register, OFAC announced new U.S. sanctions on Nicaragua.  While the regulations (at 31 CFR Part 582) are in fact new, the prohibitions contained in the regulations are not: the regulations merely implement Executive Order 13,851, which was issued by President Trump in November 2018.

We nonetheless want to briefly summarize three actions taken by OFAC to date in September 2019.  As described below, we think these actions provide useful insight into how OFAC is operating currently.


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  • Virtually all transactions with government prohibited
  • Most transactions with private sector parties still permitted
  • Practical challenges make Venezuela transactions difficult, including for non-U.S. parties

On August 5, 2019, President Trump issued Executive Order 13,884 (EO 13,884), which significantly expands existing U.S. sanctions on Venezuela.

Pursuant to EO 13,884, virtually all transactions with the government of Venezuela are now prohibited.  There are some important exceptions to that prohibition, and those are discussed below.

While this is not an absolute embargo on Venezuela, it is quite close.  And even when a transaction with Venezuela may be lawfully permitted, the practical challenges and the risk of conducting the transaction may make it nearly impossible to complete successfully.


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  • OFAC proposes new reporting requirement for rejected transactions
  • Agency issues guidance on dealing with Iran
  • Additional parties designated under Magnitsky sanctions program
  • Careful diligence of international transactions and business partners is essential

On a regular basis over the past several months, the U.S. Treasury Department, Office of Foreign Assets Control (OFAC) has introduced new sanctions requirements, guidance, and restrictions.  OFAC is the U.S. government agency which administers most U.S. sanctions programs.

Many of these measures have been quite targeted.  For instance, on July 29, 2019, OFAC designated Kim Su Il as a Specially Designated National (SDN) of North Korea.  According to the SDN listing, Kim Su Il is a resident of Vietnam.  Thus the designation, while limited to Kim Su Il, demonstrates one of the challenges of U.S. sanctions compliance: many SDNs reside in or are nationals of countries against which the United States does not otherwise maintain sanctions.


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What are "secondary sanctions"? How do they enforce U.S. sanctions & embargoes against non-U.S. parties? Thad McBride explains to the Society of Corporate Compliance and Ethics. Read more.I recently discussed how the United States uses “secondary sanctions” to enforce U.S. sanctions and embargoes against non-U.S. parties. Under secondary sanctions, the U.S. government restricts U.S. companies and individuals from conducting business with non-U.S. companies and individuals because of those parties’ affiliation with a sanctioned business or person.

As I explained, “[Secondary sanctions] are an example of U.S. extraterritorial jurisdiction at its most extreme. Even if there is no U.S. actor, no goods or parts of U.S. origin, no direct connection whatsoever, the U.S. wants to nevertheless strongly discourage non-U.S. companies from doing business with [sanctioned entities] by, for example, restricting their access to the U.S. market.”


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  • Company committed multiple apparent violations of U.S. sanctions on North Korea
  • Penalty imposed in part because of company’s “non-existent” sanctions compliance program
  • Settlement underscores need to address supply chain risks

On January 31, 2019, U.S. Treasury Department, Office of Foreign Assets Control (OFAC)announced a $996,080 settlement agreement with e.l.f. Cosmetics, Inc. (ELF) to settle ELF’s potential civil liability for 156 violations of the North Korea Sanctions Regulations.  According to OFAC, fake eyelash kits that ELF believed to be from China were in fact supplied from North Korea.

Presumably very few Americans awake in the middle of the night worrying that North Korean fake eyelashes pose a threat to U.S. national security.  Yet in pursuing this action vigorously, OFAC made clear that it is willing to seek penalties against any U.S. business that directly or indirectly benefits the North Korean economy.  In announcing the settlement, OFAC highlighted the importance of conducting “full-spectrum supply chain due diligence when sourcing products from overseas, particularly in a region in which the DPRK, as well as other comprehensively sanctioned countries or regions, is known to export goods.”


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  • Russian corporations de-listed through significant specific steps agreed to with OFAC
  • Exporter settles for $7.7 million and agrees to comprehensive compliance measures
  • OFAC outlines sanctions compliance best practices, expands oversight

As 2018 came to a close, the U.S. Treasury Department, Office of Foreign Assets Control (OFAC) announced two actions that should be studied by any party subject to U.S. economic sanctions. OFAC is the U.S. government agency with principal responsibility for administering U.S. sanctions regulations.

First, on December 19, OFAC published a letter to members of the U.S. Congress announcing the agency’s intention to remove a group of Russian corporations from the List of Specially Designated and Blocked Persons List (SDN List) that OFAC maintains. As a general matter, U.S. individuals and entities are prohibited from engaging in any transaction with an SDN.

Then, on December 20, OFAC released its settlement agreement with Zoltek Companies, Inc. (Zoltek) for violations of the Belarus Sanctions Regulations. According to OFAC, the violations consisted of at least 26 transactions with an SDN.

These actions are quite different. But as described below, each includes very useful guidance about OFAC’s current view of sanctions compliance best practices.
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