Sanctions (OFAC)

Please note that this post has been updated with information as of late evening on Thursday, February 24. Click here for the latest updates.

This post is to summarize the situation as of late evening on Wednesday, February 23, concerning current U.S. sanctions and export restrictions related to Russia and Ukraine. It is important to note that these new measures add to the existing framework of restrictions that the United States has maintained beginning in 2014 when Russia first invaded the eastern part of Ukraine. In addition, the EU, the UK, and Canada – among others – are imposing restrictions, many of which are comparable to the restrictions imposed by the United States.

The situation is likely to change quickly – and almost certainly in the direction of greater restrictions. We will provide updated guidance as the situation progresses.Continue Reading Russia, Ukraine: Update as of the Evening of February 23

On December 23, 2021, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and TD Bank, N.A. (TD) reached a settlement to resolve TD’s violations of the North Korea Sanctions Regulations and the Foreign Narcotics Kingpin Sanctions Regulations.  On January 12, OFAC and Sojitz Hong Kong (Sojitz HK) reached a settlement agreement in connection with Sojitz’s violations of the Iranian Transaction and Sanction Regulations (ITSR).  These two resolutions, reached only a few weeks apart, serve as a reminder of OFAC’s broad remit to administer and enforce U.S. sanctions regulations.

TD Bank Violated North Korea and Narcotics Kingpin Sanctions

The United States maintains comprehensive sanctions on North Korea, and most transactions with the country and nationals of the country, wherever located, are prohibited without a license.  While a license authorizes banks in the United States to conduct certain transactions with the North Korean Mission to the United Nations, that license does not extend to maintaining accounts for employees of the North Korean Mission.

According to OFAC, TD processed 1,479 transactions and maintained nine accounts on behalf of five employees of the North Korean Mission without a license from OFAC.  OFAC noted that TD’s sanctions screening did not pick up individual employees of the government of North Korea.  OFAC also noted that TD employees apparently misclassified North Korean Mission personnel when processing passports by filling in the South Korean country code or leaving the citizenship identification field blank.Continue Reading OFAC Enforcement Update: Settlements Show Value of Internal Controls, Disclosure

Two recent enforcement actions taken by the U.S. Treasury Department, Office of Foreign Assets Control (OFAC) serve as a reminder of the long-arm and broad scope of U.S. economic sanctions jurisdiction.  (Separately, perhaps nothing illustrates the breadth of OFAC’s purview as well as the agency’s recent Advisory on Potential Sanctions Risks Arising from Dealings in High-Value Artwork.)  OFAC is the main U.S. government agency that administers U.S. sanctions.

Berkshire Hathaway Agrees to Settlement for Violations of U.S. Sanctions on Iran

On October 20, 2020, OFAC announced a settlement with Berkshire Hathaway related to alleged violations of U.S. sanctions on Iran committed by Berkshire’s Turkish subsidiary.  Berkshire is the multinational holding company headed by billionaire Warren Buffett.

According to OFAC, Berkshire’s Turkish subsidiary made 144 shipments of cutting tools and related products to Turkish distributors with knowledge that the goods would be shipped on to Iran.  The products were valued at approximately $383,000.Continue Reading OFAC Enforcement Update: November 2020

  • 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…

A bill was recently introduced by U.S. Representative Bryan Steil (R-Wisconsin) that would allow the U.S. Treasury Department to target European financial intuitions conducting business with Iran through the Instrument in Support of Trade Exchanges (INSTEX) vehicle in order to avoid U.S. sanctions.

While there have been a low number of actions against European institutions,…

  • Actions underscore long arm of U.S. sanctions jurisdiction
  • Voluntary disclosures and cooperation can lead to significant penalty reductions
  • Facilitation of a violation is treated the same as a direct violation

In two recent enforcement actions, the U.S. Treasury Department, Office of Foreign Assets Control (OFAC) demonstrated the long-arm of U.S. economic sanctions jurisdiction.  One matter involved Société Internationale de Télécommunications Aéronautiques SCRL (SITA), a Swiss firm that provides commercial telecommunications network and information technology services to the civilian air transport industry.  The other involved Eagle Shipping International (Eagle), a U.S.-based shipping and logistics company.

Each action serves as a reminder of the U.S. government’s willingness to enforce U.S. sanctions in the context of what is primarily non-U.S. conduct.  The resolutions also illustrate the potential benefits of voluntarily disclosing sanctions violations to OFAC.Continue Reading Sanctions Enforcement Update: Penalties for Logistics, Telecom Companies

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.”Continue Reading U.S. Sanctions Risk to International Supply Chains

In case you missed it, we ended 2019 with a webinar on current topics in U.S. economic sanctions.  Below are key points from the webinar:

  1. Types of sanctions vary. Broad country-based sanctions prohibit transactions between a U.S. individual or company and a party or company located in certain countries (current examples include Cuba, Iran, North Korea and Syria). These types of sanctions involve U.S. individuals wherever they are located, any company based or headquartered in the United States, subsidiaries of non-U.S. companies, and any person in the United States regardless of nationality.
    Continue Reading 5 Key Takeaways from Our Sanctions Update Webinar
  • $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.Continue Reading U.S. District Court Deals Rare Defeat to OFAC in U.S. Sanctions Matter

From the Bass, Berry & Sims Blog Network
From the Bass, Berry & Sims Blog Network

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