Bass, Berry & Sims attorney Thad McBride provided insight on the sanctions evasion techniques being used by foreign owners of seemingly legitimate money services businesses (MSBs) to move funds illicitly. The article provides examples of foreign entities – such as those in countries faced with strict U.S. sanctions, such as Iran or North Korea – taking control of MSBs in foreign jurisdictions and then using the ownership status to pass money and convert funds to U.S. dollars. Because entities in sanctioned countries are severely restricted related to the amount of money that can be brought into or moved within the United States, ownership of these MSBs can be a profitable way of avoiding detection.
- Ericsson Caused Violation by Having U.S. Party Ship Equipment to Sudan
- U.S. Employee Facilitated Sudan Business
- OFAC Expects Parties Conducting International Business to Have Robust Compliance Processes
In June 2018, the U.S. Treasury Department, Office of Foreign Assets Control (OFAC) announced that Ericsson, a Swedish telecommunications company, agreed to pay approximately $145,000 for violating U.S. sanctions on Sudan. Among other things, this is one of the few OFAC enforcement actions explicitly premised on a non-U.S. actor causing a U.S. company to violate U.S. sanctions.
- Many medical products can be exported to Iran – so long as a license is obtained
- Imposition of successor liability underscores importance of pre-transaction due diligence
- OFAC enforcement, as in the past, continues to take a long time
In December 2017, the U.S. Office of Foreign Assets Control (OFAC) announced a penalty of $1.2 million against DENTSPLY SIRONA Inc. (DSI), one of the world’s largest manufacturers of dental products, for violating U.S. sanctions on Iran. DSI, which is publicly traded in the United States, is based in York, Pennsylvania, and maintains operations around the world.
I am presenting a Clear Law Institute (CLI) webinar titled, “Hot Topics in U.S. Sanctions.” The United States continues to use economic sanctions and embargoes to limit trade with countries, entities, and individuals that are deemed to pose a threat to U.S. national security. Yet the sanctions maintained by the U.S. government can change quickly.
In this webinar, you will learn more about the current landscape, including possible business opportunities that are available in countries subject to U.S. sanctions. In particular, you will learn about:
- The Primary U.S. sanctions laws and regulations
- Penalties and recent sanctions enforcement action
- Key compliance challenges, such as Specially Designated Nationals, facilitation and the export of services, and the fluidity of current sanctions on Cuba, Iran, Russia and Venezuela
- Compliance best practices to prevent and detect violations
The webinar will be held on Tuesday, December 12 from 1:00 p.m. – 2:15 p.m. EST. This webinar has been approved for 1.25 hours of general Tennessee CLE credit. For more information and registration, visit the CLI website.
*Receive a 35% discount by using the promo code: thmc35
In a November 10 article published by PaymentsCompliance, I commented on expanded sanctions the United States has imposed against North Korea. These newest sanctions prohibit access to the U.S. financial system for certain entities found to be aiding North Korea. In the article I note that, “the recent U.S. sanctions actions related to North Korea seem to target non-North Korean actors that are operating in the country — especially Chinese entities and individuals, though also several Russian actors. The U.S. government seems to be applying pressure to countries and entities that continue to trade with North Korea, and making it harder for those countries or entities to do business with U.S. and European financial institutions.”
The full article, “Firms Under Pressure as U.S. Extends North Korea Sanctions,” was published by PaymentsCompliance on November 10, 2017, and is available online.
U.S. Sanctions on Iran continue to be in a state of flux. Yet the opportunities in Iran mean that more and more companies are considering the possibility of entering the Iranian market. The continued uncertainty regarding the future of U.S. Sanctions on Iran implies the need for international companies to be prepared for any possible outcomes. Much business can now be done in Iran, but it is critical to proceed with caution.
I will be presenting a live webinar along with a panel of distinguished professionals and thought leaders organized by The Knowledge Group that will help parties conducting business with Iran understand the important aspects of this significant topic. We will provide an in-depth discussion of the Countering Iran’s Destabilizing Activities Act of 2017 as well as President Trump’s potential approach to JCPOA enforcement and implementation. We will also offer best practices in avoiding common pitfalls and risk issues as U.S.-Iran tensions rise.
Key topics include:
- Countering Iran’s Destabilizing Activities Act of 2017
- The Future of JCPOA
- Iran’s Program to Counter U.S. Sanctions
- Additional Sanctions – Implications to Businesses
- Best Practices to Avoid Pitfalls
The webinar will be held on Thursday, November 9 from 3:00 p.m. – 5:00 p.m. EST. Click here for more information or to register.
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.
- 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.
I provided insight for an article published by The New York Times on the $2 million fine that the U.S. Treasury Department charged Exxon Mobil for violating Russian sanctions. Exxon apparently entered into eight contracts with Rosneft, the Russian state oil company, signed by Rosneft CEO Igor Sechin, who is a prohibited party under U.S. sanctions on Russia. Exxon was apparently under the impression that the Rosneft CEO could sign the contracts so long as the company was not doing business with him individually. The Treasury Department’s announcement of the penalty refers to the involvement in the matter of Exxon’s “senior-most” executives, which would seem to include Rex Tillerson, who was Exxon’s CEO at the time and is now the U.S. Secretary of State. Exxon has subsequently sued the Treasury Department related to this matter.
The full article, “Stakes for Exxon in Sanctions Case Go Far Beyond a $2 Million Fine,” was published by The New York Times on July 21, 2017, and is available online.
- 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.