Archive for the ‘Embargoes’ Category

OFAC Amends Cuban Assets Control Regulations

Tuesday, November 15th, 2016 by Danielle McClellan

Effective October 17, 2016 OFAC has made the following changes to the Cuban Assets Control Regulations.

Health: Joint medical research

  • OFAC is amending section 515.547 to authorize persons subject to U.S. jurisdiction to engage in joint medical research projects with Cuban nationals. This general license expands the scope of joint research projects that are authorized to include both non-commercial and commercial medical research. Cuban-origin pharmaceuticals.
  • OFAC is also amending section 515.547 to add new authorizations related to Cuban- origin pharmaceuticals. Specifically, section 515.547 now authorizes transactions incident to obtaining approval from the U.S. Food and Drug Administration (FDA) of Cuban-origin pharmaceuticals. The general license includes discovery and development, pre-clinical research, clinical research, regulatory review, regulatory approval and licensing, regulatory post-market activities, and the importation into the United States of Cuban-origin pharmaceuticals.
  • Section 515.547 also now authorizes the importation into the United States, and the marketing, sale, or other distribution in the United States, of FDA-approved Cuban-origin pharmaceuticals.
  • In addition, revised section 515.547 authorizes persons subject to U.S. jurisdiction who are engaging in such authorized activities to open, maintain, and close bank accounts at Cuban financial institutions as long as such accounts are used solely for the authorized activities.
  • The statement of licensing policy previously contained in section 515.547 for the importation of Cuban-origin commodities for bona-fide research purposes in sample quantities remains in effect for items that would not be authorized by the new general license in section 515.547(b).

Trade and Commerce: Transactions incident to exports and reexports to Cuba

  • Section 515.533(a) of the Regulations authorizes transactions ordinarily incident to certain exportations of items from the United States, as well as certain reexportations of items from a third country, to Cuba, provided that the exportations or reexportations are authorized by the Department of Commerce.
  • OFAC is removing references to ‘‘100% U.S.- origin items’’ in this section for clarity and to minimize the circumstances under which persons authorized by Commerce to export or reexport items to Cuba are required to obtain a specific license from OFAC.
  •  Consistent with Section 1706 of the Cuban Democracy Act of 1992 (22 U.S.C. 6005) (CDA), this general license does not authorize any transaction between a U.S.-owned or -controlled firm in a third country and Cuba for the exportation to Cuba of commodities produced in a country other than the United States or Cuba. Such transactions must be specifically licensed pursuant to section 515.559 in addition to any required authorization from the Department of Commerce. There are also restrictions imposed by the CDA on the types of transactions that may be licensed pursuant to that section.
  • OFAC is also making a technical correction to section 515.533(a) to remove references to ‘‘agricultural items’’ so that only ‘‘agricultural commodities,’’ as defined in 15 CFR part 772, are subject to the limitations on payment and financing terms required by the Trade Sanctions Reform and Export Enhancement Act of 2000, 22 U.S.C. 7207(b)(1). OFAC is making a conforming edit with respect to section 515.584(f) and also expanding that authorization to apply to any banking institution.
  • Finally, OFAC is adding a note to section 515.533(a) to clarify that this paragraph authorizes the importation into the United States of items from a third country for exportation to Cuba pursuant to a license or other authorization by the Department of Commerce.
  • OFAC is making additional technical and conforming changes to remove certain obsolete language and consolidate all of the conditions applicable to this general license in a single paragraph. Importation of certain items previously exported or reexported to Cuba and servicing and repair of such items.
  • OFAC is further amending section 515.533 to add a new general license authorizing the importation into the United States or a third country of items previously exported or reexported to Cuba pursuant to section 515.533 or 515.559. This authorization will allow recipients of authorized exports or reexports to Cuba to return the items to the United States or a third country, including for service and repair. Irrespective of involvement in the importation of these items, persons subject to U.S. jurisdiction are authorized to service and repair such items. The exportation or reexportation of serviced, repaired, or replacement items to Cuba, however, must be separately authorized pursuant to section 515.533(a) or 515.559, in addition to any Department of Commerce authorization that may be required.
  • Certain vessel transactions:
    • Section 515.207(a) prohibits foreign vessels that call on Cuban ports for trade purposes from entering U.S. ports for the purpose of loading or unloading freight for 180 days from the date they depart Cuba, absent OFAC authorization.
    • OFAC is amending section 515.550 to add an additional exception to the prohibition in section 515.207(a) for foreign vessels that have carried from a third country to Cuba only items that, were they subject to the Export Administration Regulations (15 CFR parts 730 through 774) (EAR), would be designated as EAR99 or would be controlled on the Commerce Control List only for anti- terrorism reasons.
  • Contingent contracts.
    •  OFAC is adding a new general license in section 515.534 authorizing persons subject to U.S. jurisdiction to enter into certain contingent contracts for transactions prohibited by the Regulations and to engage in transactions ordinarily incident to negotiating and entering into such contracts. The performance of such contracts—making deposits, receiving payments, providing certain services or goods, etc.—must be made contingent on OFAC authorizing the underlying transactions or authorization no longer being required. Furthermore, if the transaction implicates another Federal agency’s licensing requirements, then the contract must make obtaining the necessary license(s) from such agency or the removal of that licensing requirement an additional precondition of performance.
    • OFAC is making a conforming change to section 515.533 to remove a provision in that section authorizing certain contingent contracts that are now authorized by this new general license.

Civil Aviation Safety: Civil aviation safety-related services.

  • OFAC is amending section 515.572 to add a new general license authorizing persons subject to U.S. jurisdiction to provide Cuba and Cuban nationals, wherever located, with services aimed at ensuring safety in civil aviation and the safe operation of commercial aircraft.

Travel and Related Transactions: OFAC is making several changes to rules related to the importation of Cuban-origin merchandise as accompanied baggage and certain travel- related authorizations.

  • Importation of Cuban Merchandise
    • Section 515.560 previously authorized persons subject to U.S. jurisdiction engaging in authorized travel to Cuba to acquire merchandise in Cuba and import it into the United States as accompanied baggage, provided that the merchandise was for personal use only and had a value of $400 or less (with no more than $100 of such merchandise consisting of alcohol or tobacco products).
    • OFAC is now removing these monetary value limits, which means that the normal limits on duty and tax exemptions for merchandise imported as accompanied baggage and for personal use will apply. OFAC will continue to require that such merchandise be imported as accompanied baggage and for personal use. Certain transactions in third countries.
    • Previously, section 515.585 authorized persons who are subject to U.S. jurisdiction but located in countries other than the United States or Cuba to, among other things, purchase or acquire merchandise subject to the prohibitions in section 515.204 provided that the merchandise was for personal consumption while in a third country.
    • OFAC is amending section 515.585 to remove the limitation that the merchandise be consumed while abroad, to authorize the importation of such merchandise into the United States as accompanied baggage provided that the merchandise is for personal use only, and to clarify that this authorization is applicable to persons subject to U.S. jurisdiction who are present in a third country, such as when traveling in or through the third country. Foreign passengers’ baggage.
    • Previously, section 515.569 authorized foreign passengers to import Cuban- origin goods, excluding Cuban-origin alcohol and tobacco products, as accompanied baggage, provided that the goods were not in commercial quantities and not imported for resale.
  • OFAC is now removing the exclusion for alcohol and tobacco products while retaining the conditions that the goods not be in commercial quantities and not be imported for resale.
  • Professional research and professional meetings in Cuba: Section 515.564 includes a general license authorizing persons subject to U.S. jurisdiction to travel to Cuba for purposes of attending or organizing professional meetings or conferences in Cuba.
    • OFAC is removing the restriction in section 515.564(a)(2)(i) that the purpose of such meeting or conference not be for the promotion of tourism in Cuba, and making additional conforming edits.
    • OFAC is also taking this opportunity to clarify section 515.564 by removing paragraphs (a)(1)(ii) and (a)(2)(iii), which included language inconsistent with adjacent paragraphs. Remittances for third-country national travel.
    • OFAC is amending section 515.570 to authorize persons subject to the jurisdiction of the United States to make remittances to third- country nationals for travel by third- country nationals to, from, and within Cuba, provided that such travel would be authorized by a general license if the traveler were a person subject to U.S. jurisdiction.
    • OFAC is also making a clarifying change in section 515.420 to make clear that the interpretation in that section relates only to persons subject to U.S. jurisdiction.
  • Recordkeeping requirements for providers of travel and carrier services: In the case of customers traveling pursuant to a specific license, in order to ease the burden on persons subject to U.S. jurisdiction that provide authorized travel or carrier services pursuant to section 515.572.
    • OFAC is amending section 515.572(b)(1) to make clear that such service providers may collect and retain either a copy of the traveler’s specific license or the traveler’s specific license number.

Humanitarian-Related Transactions Additional grants, scholarships, and awards

  • Sections 515.565 and 515.575 previously authorized the provision of grants, scholarships, and awards in which Cuba or Cuban nationals have an interest (including as recipients) with respect to educational and humanitarian activities, respectively.
    • OFAC is now expanding that authorization to authorize the provision of grants, scholarships, and awards in two additional categories of activities: scientific research and religious activities. OFAC is consolidating these authorizations in new section 515.590 and making conforming edits to sections 515.565 and 515.575.
  • Services related to developing Cuban infrastructure. OFAC is adding section 515.591 to authorize persons subject to the jurisdiction of the United States to provide Cuba or Cuban nationals with services related to developing, repairing, maintaining, and enhancing Cuban infrastructure, consistent with the export or reexport licensing policy of the Department of Commerce. ‘‘Infrastructure’’ in this case means systems and assets used to provide the Cuban people with goods and services produced by the public transportation, water management, waste management, non-nuclear electricity generation, and electricity distribution sectors, as well as hospitals, public housing, and primary and secondary schools.

Other Amendments

  • Definition of prohibited officials of the Government of Cuba and prohibited members of the Cuban Communist Party.
    • OFAC is amending sections 515.337 and 515.338 to narrow the definitions in these sections.
  • Additional technical and conforming edits.
    • OFAC is also making several technical and conforming edits, including adjusting a cross-reference in the note to section 515.421(a)(4) to reflect that the payment and financing terms for agricultural commodities are now located in section 515.533(a)(4);
      • Removing sections 515.531 and 515.803 as obsolete; adding the word ‘‘repair’’ to the general licenses for certain travel- related transactions in sections 515.533 and 515.559 to clarify that travel for such purposes has been within the scope of the existing authorizations;
      • Removing paragraphs (a) and (b) of section 515.536, as all activities described in such paragraphs are authorized by the general license in section 515.562 relating to official business of the U.S. government;
      • Correcting the cross-reference in section 515.560(c)(6)(ii) to the definition of depository institution to be section 515.333; adding the words ‘‘paragraphs (a)(1) through (a)(4)’’ in the first sentence of section 515.572(b)(1) to clarify that records pertaining to passengers do not need to be maintained for transactions authorized pursuant to paragraph (a)(5) of section 515.572;
      • Removing a duplicative ‘‘subject’’ from Note 1 to section 515.578(a); and adding the word ‘‘authorized’’ to complete the sentence in section 515.584(c).

Federal Register Notice: https://www.gpo.gov/fdsys/pkg/FR-2016-10-17/pdf/2016-25032.pdf

For additional information, please review the rule, the Department of Commerce and Department of the Treasury’s joint fact sheet, and BIS’s updated Frequently Asked Questions, For any specific questions regarding exports or reexports to Cuba, please contact the Foreign Policy Division at (202) 482-4252.

Lebanon Company Fined $450,000 for Reexporting Items to Syria

Tuesday, November 15th, 2016 by Danielle McClellan

By: Danielle McClellan

Tecnoline SAL (Tecnoline )of Sin El Fil, Beirut, Lebanon pled guilty to 7 charges of Causing, Aiding, or Abetting a Violation of the Regulations and will pay a civil penalty of $450,000. Tecnoline reexported US-origin mass spectrometers, gas chromatographs and consumables, liquid chromatograph-mass spectrometer systems, and liquid chromatograph modules (ECCN 3A999), controlled for anti-terrorism reasons, to Syria. There is a long standing US Embargo against Syria which makes a BIS license required for all exports/reexports subject to the EAR with the only exception being food and certain medicines).

The items were manufactured by Agilent Technologies (Agilent), a US company, and Technoline was an authorized distributor and reseller of Agilent’s products. In 2004, Technoline signed an agreement with Agilent that acknowledged their awareness of US export control laws and regulations and agreed to comply with them as a reseller and distributor of controlled products. Between August 2009 and October 2010, Technoline negotiated price discounts on the items with Agilent and eventually ordered the items for the Syrian Government ministries or entities. Technoline falsely identified the ultimate destination of the items as being Iraq or Lebanon (BIS license not required) and on one or more occasions they failed to disclose the ultimate destination of the items. Agilent shipped the items to TEchnoline in Beirut, Lebanon via Agilent’s German subsidiary. Once Technoline received the items they transferred them to Syria, there they were installed at Syrian Government ministries within a month or so. There were never any authorizations from BIS to export the items from the US to Syria, or to reexport them from Germany to Syria.

View Order: https://efoia.bis.doc.gov/index.php/documents/export-violations/export-violations-2015/1080-e2474/file

3 Men & Illegal Exports to Syria

Tuesday, July 12th, 2016 by Danielle McClellan

By: Danielle McClellan

In November 2012, three individuals and one company were indicted with charges of criminal conspiracy, wire fraud, illegal export of goods, money laundering, and false statements. Until now the indictment remained under seal pending the arrest of the defendants.

Between 2003 and 2012, d-Deri Contracting & Trading (owned by Ahmad Feras Diri of London) was exporting goods originally from the US from Global Parts Supply (owned by Harold Rinko of Hallstead, PA) to his brother and business partner Moawea Deri who was located in Syria.  The goods purchased from Rinko’s US company were done so based on false invoices, undervalued and mislabeled goods.  Then the purchased goods were exported by falsely listing their identity and final geographic location on all documentation. The items would be shipped from the US to Jordan, the UAE, and the UK, and finally transshipped to Syria.

The items exported allegedly included:

  • a portable gas scanner used for detection of chemical warfare agents by civil defense, military, police and border control agencies;
  • a handheld instrument for field detection and classification of chemical warfare agents and toxic industrial chemicals;
  • a laboratory source for detection of chemical warfare agents and toxic industrial chemicals in research, public safety and industrial environments;
  • a rubber mask for civil defense against chemicals and gases;
  • a meter used to measure chemicals and their composition;
  • flowmeters for measuring gas streams;
  • a stirrer for mixing and testing liquid chemical compounds;
  • industrial engines for use in oil and gas field operations and a device used to accurately locate buried pipelines

Note: Nearly all exports to Syria will be denied, other than a few items categorized under humanitarian food and medicine. The goal of the embargo on Syria is to shut down the supply chain used by the Syrian state to support terrorism and create proliferate weapons of mass destruction, and in this specific case, chemical weapons.

Fast forward to this month, Ahmad Feras Diri (age 43) of London has plead guilty to conspiracy to illegally export items used to detect chemical warfare agents to Syria. He lost his extradition fight in the UK in November 2015 at which point he was brought to the US to face the charges. Diri admitted that he conspired to export items from the US through third party countries to customers in Syria without obtaining the required US Commerce Department licenses.

Harold Rinko (age 73 of Hallstead, PA) was indicted by a grand jury in November 2012 and admitted in court that he conspired to export the items from the US through third party countries to customers in Syria without an export license.

Moawea Deri remains at large and is considered a fugitive but will likely remain in Syria as extradition is unlikely to occur.

“This extradition demonstrates HSI’s commitment to use all its resources to prevent sensitive and restricted technology from being exported to Syria through the black market,” said HSI Philadelphia Special Agent in Charge John Kelleghan. “No good comes of illegal exports to Syria, especially during this time of gross misgovernment and civil strife. As the principal enforcer of export controls, HSI will continue to do everything in its power to ensure that sensitive technology doesn’t fall into the wrong hands in Syria. I applaud our colleagues at the Department of Commerce, the U.S. Attorney’s Office for the Middle District of Pennsylvania, along with our law enforcement counterparts in the United Kingdom. This coordinated effort helped us make this complex investigation a success.”

More Information: https://www.ice.gov/news/releases/uk-resident-connected-syrian-export-scheme-extradited-us-face-federal-charges

It’s Pho Real! Obama Lifts US Arms Embargo on Vietnam

Friday, May 27th, 2016 by Danielle McClellan

By: John Black

During his visit to Vietnam, President Obama announced that the US was lifting its long standing arms embargo on Vietnam.   While this may not result in an immediate flood of US weapons to Vietnam, it paves the way for US exporters and foreign companies who sell US military items to seek new, yet perhaps relatively modest, business opportunities in Vietnam.

On May 23, 2016, the Department of State’s Directorate of Defense Trade Controls announced is it ending its policy prohibiting the sale or transfer of lethal weapons to Vietnam.   DDTC said it will review on case-by-case basis applications for licenses to export or temporarily import defense articles and defense services to or from Vietnam under the International Traffic in Arms Regulations (ITAR). DDTC will soon publish a rule in the Federal Register to implement a conforming change to ITAR §126.1.

While the US Commerce Department’s Bureau of Industry and Security (BIS) has not yet officially announced it will make corresponding changes to the Export Administration Regulations (EAR) to remove the EAR/ ITAR-lite arms embargo on Vietnam, it is reasonable to assume that BIS will do so in approximately the same “soon” timeframe as DDTC’s ITAR change.

“The decision to lift the ban was not based on China… but on our desire to complete what has been a lengthy process moving towards normalization with Vietnam,” Obama said at a joint press conference alongside his Vietnamese counterpart President Tran Dai Quang.   A casual observer like me, however, cannot help but think that to a certain extent this US action is intended to send a clear symbolic, and perhaps tangible, signal to China in response to China’s recent empire expanding actions in the South China Sea including, for example, building a military air base on the Spratly Islands, which most of the world do not recognize to be Chinese territory.

Vietnam’s economy has been growing at an impressive rate compared to other countries in the region in recent years as it has begun to be a low cost manufacturing source that is taking some manufacturing opportunities away from China as Chinese manufacturing costs increase.  According to the latest CIA statistics, Vietnam has the 36th highest GDP in the world and its industrial production growth rate of 7.5% is the 15th highest in the world.  This is not to say that Vietnam soon will be cranking out  a high volume of low cost ITAR and EAR controlled military parts as it becomes a regional military manufacturing powerhouse.  It is unlikely that the US Government is prepared to approve the transfer of technology for the production of sophisticated military items to Vietnam anytime soon and equally unlikely that Vietnam has the capability to do so.  Nonetheless, this shift in US-Vietnam economic relations removes the US arms embargo as a cloud hanging over trade between the two countries and is another step in improving US-Vietnam relations.  Certainly too, some extent this enhances Vietnams status in the region.

North Korean Ruler Kim Jong-un was unavailable for comment.

Fiji or Bust!

Tuesday, July 14th, 2015 by Danielle McClellan

By: Danielle McClellan

On May 29, 2015, the Department of State revised the International Traffic in Arms Regulations (ITAR) to withdraw the previous policy of denying the export of defense articles and services to Fiji. Fiji’s acting government honored its longstanding pledge to hold democratic elections and the United States as well as 14 other countries have characterized these elections as being credible.

The Department of State has determined that it is in the best interest of US foreign policy, national security, and human rights concerns to lift the denial of exports of defense articles and services to Fiji.

FOR FURTHER INFORMATION CONTACT: Mr. C. Edward Peartree, Director, Office of Defense Trade Controls Policy, Department of State, telephone (202) 663-2792; email DDTCPublicComments@state.gov. ATTN: Regulatory Change, Exports to Fiji.

BIS Embargoes Crimea: No Vodka for You!

Wednesday, February 4th, 2015 by Brooke Driver

By: John Black

In the January 29, 2015 Federal Register the Bureau of Industry and Security (BIS) amended the Export Administration Regulations to impose a comprehensive embargo on exports and reexports to, and transfers inside, “the Crimea region of Ukraine (CRU”).  The EAR now requires a license for all items destined to or moving inside CRU, except for medicine and food classified as EAR99.

In an unprecedented assault on a famous stereotypical hobby of Russians in Crimea and around the world, the EAR requires a license for exports and reexports to, and transfers inside, CRU of alcoholic beverages.  The EAR definition of food that does not require a license explicitly excludes alcoholic beverages from the definition of food, thus extending the US embargo to apply to any kind of booze, in addition to machine tools, military aircraft parts, and teflon-lined valves.

The EAR defines CRU to include “the land territory in that region as well as any maritime area over which sovereignty, sovereign rights, or jurisdiction is claimed based on purported sovereignty over that land territory.”

In addition to the new license requirement, the EAR prohibits the use of license exceptions except when the new 746.6 specifically authorizes license exceptions.  EAR 746.6(c) authorizes these license exceptions:

  • TMP for items for use by news media (including booze)
  • GOV for the US Government (but not to the other national governments typically GOV-eligible) , the International Atomic Energy Agency, or the European Atomic Energy Community (including booze)
  • GFT for gift parcels and humanitarian donations (not including booze)
  • TSU for operation technology and software (not including booze, but including instructions on how to open and consume booze previously lawfully exported or reexported to, or transferred within, CRU)
  • BAG for exports by people leaving the United States (including booze, but BAG requires the items be for use by the traveler, so don’t get any ideas)
  • AVS for civil aircraft and vessels (not including booze)

While generally speaking the EAR has imposed a comprehensive embargo on CRU, there are important differences between the long-standing EAR embargoes on Cuba, Iran, North Korea, Sudan and Syria and the new embargo on CRU.  For example, for CRU, there is a 25% US controlled content de minimis rule for foreign items with US content, compared to the 10% level for the long standing embargoed countries.
This new regulation partially implements the December 19, 2014 executive order in which President Obama targeted the Russian-occupied region of Ukraine, Crimea. In the first section of this order, Obama effectively shut down any trade or business relationship between the United States and Crimea, stating that imports, exports, new investments—any kind of business transaction—between the U.S. and Crimea is strictly prohibited. Likewise, the president froze all U.S. assets of entities operating in the Crimea region or associated with individuals or entities in that region. As an extra measure of precaution, Obama also prohibits these entities from entering the United States.

Red Bull’s Cuban Documentary Violates the CACR

Thursday, August 28th, 2014 by Brooke Driver

By: Brooke Driver

Red Bull might give you wings, but that doesn’t mean you should fly (without a license). The energy drink company Red Bull North America, Inc. has agreed to settle with OFAC for $89,775 over its alleged seven violations of the Cuban Assets Control Regulations. Specifically, the company violated 31 C.F.R. part 515 of the CACR when it authorized seven Red Bull representatives to travel to Cuba in order to film a documentary between the dates of June 8 and June 18, 2009.

While the maximum penalty in this instance is $455,000, the base penalty is $105,000, and OFAC chose even to significantly reduce that fine despite the facts that:

  • Red Bull did not disclose its violations
  • Red Bull had prior knowledge of U.S. sanctions on Cuba and took steps to conceal the transactions
  • Red Bull is a U.S. subsidiary of a sophisticated multinational company with extensive experience in international trade (in other words, “you should have known better!”)

And considering the facts that:

  • The case was deemed non-egregious
  • Red Bull had not committed a violation in the five years prior to the incident
  • Red Bull immediately took remedial action in implementing an OFAC compliance program

Red Bull’s mishap acts as a forceful reminder that “export” applies to many more situations than a clear cut shipment of an item and that companywide training is essential for your protection. Marketing, in this case, and many other seemingly unrelated departments often perform or are involved in some form of exporting. Be sure to arm them with at least a high level awareness of the compliance risks they face.

BNPP Pays Nearly $9 Billion for Repeated Sanctions Violations

Thursday, August 28th, 2014 by Brooke Driver

By: Brooke Driver

The French bank BNP Paribas SA has agreed to pay $8.97 billion for its (get ready for this number) 3,897 apparent violations of the Sudanese Sanctions Regulations, Iranian Transactions and Sanctions Regulations, Cuban Assets Control Regulations and Burmese Sanction Regulations, a record breaking penalty for American sanctions violations. The enormity and global nature of the case prompted collaboration between OFAC, the U.S. Department of Justice, the New York County District Attorney’s Office, the Federal Reserve Board of Governors and the Department of Financial Services of the State of New York in the process of investigating BNPP’s violations and arriving at an appropriate consequence.

For a number of years prior to and including 2012, BNPP processed—and concealed—thousands of transactions to or through U.S. financial institutions involving parties subject to the aforementioned sanctions programs. In executing these illegal transactions, BNPP concealed, removed, omitted or obscured references to the sanctioned parties in related paperwork.

Specifically, between the dates of September 6, 2005 and July 24, 2009, BNPP processed 2,663 wire transfers totaling approximately $8,370,372,624 involving Sudanese entities, 318 wire transfers with a total value of $1,182,075,543 involving Iranian entities between July 15, 2005 and November 27, 2012, seven wire transfers for Burmese parties (totaling $1,478,371) between November 3, 2005 and sometime in May 2009 and 909 Cuba-related wire transfers between July 18, 2005 and September 10, 2012 with a total value of $689,237,183. The severity of the fine and year-long ban from conducting certain U.S. dollar transactions is a clear message to other financial institutions that might not take U.S. sanctions seriously.

OFAC claims that the settlement amount reflects the following factors:

  • BNPP had knowledge that its conduct might have violated U.S. law
  • At least one member of BNPP senior management and multiple supervisors  were aware of the company’s illegal conduct
  • The violations are numerous and span many years
  • The illegal transactions were large monetary transfers
  • BNPP had not received a violation notice in the five years leading up to the settlement
  • BNPP cooperated with OFAC’s investigation
  • BNPP has taken remedial action to prevent further U.S. sanctions violations

Commerzbank OFAC’s Next Target for Large Sanctions Violation Penalty

Thursday, August 28th, 2014 by Brooke Driver

By: Brooke Driver

Currently, the French bank BNP Paribas is receiving a lot of attention, due to its record breaking fine of nearly $9 billion for breaking U.S. sanctions laws. However, it seems that the German-based Commerzbank will serve as the U.S.’s next example of what can happen to a financial intuition that foolishly ignores U.S. law.

The bank, which has entered into settlement negotiations with the combined forces of OFAC, the Department of Justice, the Treasury Department, the Federal Reserve and the Manhattan District Attorney, is expected to pay between $600 million and $800 million to resolve its violations of sanctions regulations, including Iranian transactions, amongst others.

Among the actions in question are Commerzbank’s business transactions with the Islamic Republic of Iran Shipping Lines, which was designated for economic sanctions in 2008 for allegedly supporting Iran’s proliferation of weapons of mass destruction. Apparently, Commerzbank continued to work with the company, despite the fact that it had prior knowledge of the sanction. ECTI will keep you updated as the case unfolds.

Washington State Resident Targeted by OFAC for Exporting Unlicensed Medical Goods to Iran

Wednesday, July 16th, 2014 by Brooke Driver

By: Brooke Driver

OFAC recently announced that Concord, CA company Sea Tel, Inc. has agreed to pay a settlement of $85,113 for its apparent violations of the Iranian Transactions and Sanctions Regulations. According to OFAC, between the dates of November 20, 2007 and February 26, 2009, Sea Tel invoiced a South Korean distributor for 16 orders of marine antenna systems totaling $378,281 in value. The California-based company then exported these products to South Korea with knowledge or reason to believe that they were intended for use on vessels owned by the National Iranian Tanker Company. Although OFAC emphasized that the illegal shipments caused significant harm to the American sanctions program and that Sea Tel’s actions revealed a pattern of reckless disregard for said sanctions, luckily for Sea Tel, OFAC chose to significantly lower its fine from the base penalty of $189,141, due to the facts that:

  • This was Sea Tel’s first offense
  • Sea Tel disclosed the violations to OFAC and cooperated throughout the investigation
  • Sea Tel had an OFAC compliance program in place when the violations occurred (although, obviously not a very good one)