Archive for the ‘Sanctions’ Category

$232 Million Penalty? Soit Cacahuètes! French Bank Agrees to Pay $8.9 Billion for Violating US Sanctions

Tuesday, June 2nd, 2015 by Danielle McClellan

By: Danielle McClellan

BNP Paribas SA, a French bank, has been fined $8.9 billion and sentenced to five years of probation for violating sanctions against Sudan, Cuba and Iran. This case marks the first time a global bank has plead guilty to violations of US economic sanctions, BNP’s general counsel explained that the bank accepted “full responsibility for its conduct” and is currently improving its policies as we speak.

Records indicated that BNP was a central bank for the government of Sudan and concealed its tracks and initially failed to cooperate with law enforcement. The bank also evaded sanctions against Iran and Cuba by stripping information from wire transfers so that they could pass through US systems without raising red flags.

The US Justice Department announced that some of the $8.9 billion could go to a new program to assist people who have been harmed by the regimes of the three sanctioned countries.

Information: http://www.reuters.com/article/2015/05/01/us-bnp-paribas-settlement-sentencing-idUSKBN0NM41K20150501

$232+ Million Fine for Lack of US Sanctions Training

Tuesday, June 2nd, 2015 by Danielle McClellan

By: Danielle McClellan

The highest fine in the history of US Sanctions violations has been handed to Schlumberger Oilfield Holdings Ltd. (Schlumberger). The company entered into a plea agreement forcing them to pay a $232,708,356 penalty for willfully facilitating transactions with Iran and Sudan.

Court documents explain that in early 2004, through June 2010, Drilling & Measurements (a US-based Schlumberger business) provided oilfield services to customers in Iran and Sudan through non-US subsidiaries of Schlumberger.  These documents also indicate that the company failed to properly train employees located in the US (US persons and non-US citizens residing in the US) on how to comply with Schlumberger’s sanction and compliance procedures. Schlumberger employees residing in the US violated the US sanctions against Iran and Sudan by:

  • Approving and disguising the company’s capital expenditure requests from Iran and Sudan for drilling tools etc.;
  • Making and implementing business decisions concerning Iran and Sudan;
  • Providing technical services and expertise in order to troubleshoot mechanical failures and to sustain tools and equipment in Iran and Sudan.

Schlumberger is now the poster child for US sanctions violations. In addition to the massive monetary penalty they have submitted to a three-year period of corporate probation and must continue to cooperate with the government and NOT commit any additional felony violations of US federal law. Schlumberger must also hire an outside consultant to review their parent company’s internal sanctions policies and procedures as well as their internal audits focusing on sanctions compliance. This is a great example on the importance of training…the cost of the initial training probably will never be near the cost of not training, and breaking the law.

Information: http://www.justice.gov/opa/pr/federal-court-issues-written-judgment-accepting-guilty-plea-schlumberger-oilfield-holdings

Denied Party Screening Failures: PayPal Pays $7.7 Million

Monday, April 27th, 2015 by Brooke Driver

By: Brooke Driver

It turns out that one of the world’s most-trusted money services provider, Paypal, Inc., out of San Jose, California, may have committed nearly 500 violations of U.S. Sanctions programs, including the Weapons of Mass Destruction Proliferators Sanctions Regulations, the Iranian Transactions and Sanctions Regulations, the Cuban Assets Control Regulations, the Global Terrorism Sanctions Regulations and the Sudanese Sanctions Regulations.

Due to inadequate screening procedures, between the years of 2009 and 2013, PayPal processed 98 transactions totaling $19,344.89 in violation of the CACR, 125 transactions totaling $8,257.66 in violation of the ITSR, 94 transactions totaling $5,925.27 in violation of the GTSR and 33 transactions totaling $3,314.43 in violation of the SSR. It also participated in transactions involving an account in which Specially Designated Terrorists Interpal or Kahane Chai had an interest.

The company also processed 136 transactions totaling $7,091.77 to or from an account registered to Kursad Zafer Cire, an individual designated in the 2005 executive order “Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters.” Apparently, while an automated interdiction filter flagged Cire’s account five times, on each occasion, a PayPal Risk Operations Agent dismissed the alert.

Although the cumulative base penalty for these charges was $17,018,443, OFAC chose to significantly reduce the fine, due to PayPal’s cooperation throughout and the fact that the company took immediate measures to restructure and strengthen its compliance program.

Commerzbank to Pay $258,660,796 for Violating Multiple Sanctions Programs

Monday, March 30th, 2015 by Brooke Driver

By: Brooke Driver

Commerzbank AG recently agreed to settle with OFAC regarding its 1,596 apparent violations of multiple U.S. sanctions programs, including the Iranian Transactions and Sanctions Regulations, the Sudanese Sanctions Regulations, the June 28, 2005 Executive Order 13382, “Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters,” the Weapons of Mass Destruction Proliferators Sanctions Regulations, the Burmese Sanctions Regulations and the Cuban Assets Control Regulations.

The bank’s massive $258,660,796 fine reflects the number and enormity of the apparent violations, as does the large scale of its case, with 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.

Canada Expands Sanctions against Russia to Target Russian Oil Industry

Wednesday, February 4th, 2015 by Brooke Driver

By: Brooke Driver

In solidarity with U.S. and EU energy sector restrictions placed on Russia, Canada announced this December its decision to impose restrictions on the export of certain goods and services related to Artic shale oil exploration or production. The December order reflects the August 6, 2014 Harper government announcement that it would impose export restrictions on technologies used in Russian oil exploration activities. Specifically, the sanction prohibits entities located in Canada or Canadian entities located outside the country from exporting or supplying any listed goods that to a Russian entity that would be used in offshore oil exploration or production at a depth greater than 500 meters, in oil exploration or production in the Arctic or in shale oil exploration or production. Canada has also added 20 Russian and Ukrainian individuals to its lists of designated persons.

US Relaxes Export Controls on India: Bayonets, Shields and Pepper Spray No Longer Require a License

Wednesday, February 4th, 2015 by Brooke Driver

By: John Black

In the January 23, 2015 Federal Register the Commerce Department revised the Export Administration Regulations (EAR) to reduce US export controls on exports and reexports to India of certain items on the Commerce Control List controlled for regional stability and crime control reasons.  Despite the hoopla and the pageantry of the “US-India Bilateral Understanding,” the impact of this relaxation is focused on a relatively small group of products.

Specifically, the regional stability RS 2 and crime control CC 1 and CC 3 license requirements no longer apply to exports and reexports to India.  Here are some examples of items now eligible for export and reexport to India as no license required:

  • 0A918 Bayonets
  • 0A979 Police helmets and shields
  • 1A984 Tear gas, pepper spray, smoke bombs
  • 0A984 Shotguns with barrels over 18 inches and related items
  • 0A987 Optical sighting devices
  • 3A980 Voice print analysis equipment
  • 3A981 Polygraphs
  • 6A002 police infrared viewers
  • 0A606.b Unarmed military vehicles derived from commercial vehicles
  • 1A004.d Explosive detection equipment
  • 2A293 Explosive or detonator detection equipment
  • 2A294 Concealed object detection equipment
  • 6A002.c police infrared viewers
  • 6A003 certain cameras

New Export Clearance Requirements:  Before you have the party for your license-free million dollar export of bayonets, shields, pepper spray and smoke bombs to India, make sure you note that the EAR has new special rules related AES filing and destination control statements.

Specifically, 758.1(b)(9) requires that you always  file your Electronic Export Information through the Automated Export System for all RS2, CC1 and CC2 exports to India even though such exports no longer require an export license.

BIS Announces Significant Amendments to Cuba Sanctions

Wednesday, February 4th, 2015 by Brooke Driver

Source: Commerce.gov

On December 17, 2014 the President announced a set of diplomatic and economic changes to chart a new course in U.S. relations with Cuba and to further engage and empower the Cuban people. The U.S. Department of the Treasury and the U.S. Department of Commerce today are announcing the forthcoming publication of the revised Cuban Assets Control Regulations (CACR) and Export Administration Regulations (EAR), which implement the changes announced on December 17 to the sanctions administered by Treasury’s Office of Foreign Assets Control (OFAC) and Commerce’s Bureau of Industry and Security (BIS). The changes take effect tomorrow, when the regulations are published in the Federal Register.

These measures will facilitate travel to Cuba for authorized purposes, facilitate the provision by travel agents and airlines of authorized travel services and the forwarding by certain entities of authorized remittances, raise the limits on and generally authorize certain categories of remittances to Cuba, allow U.S. financial institutions to open correspondent accounts at Cuban financial institutions to facilitate the processing of authorized transactions, authorize certain transactions with Cuban nationals located outside of Cuba, and allow a number of other activities related to, among other areas, telecommunications, financial services, trade, and shipping. Persons must comply with all provisions of the revised regulations; violations of the terms and conditions could result in penalties under U.S. law.

To see the Treasury regulations, which can be found at 31 Code of Federal Regulations (CFR), part 515, please see here. To see the Commerce regulations, which can be found at 15 CFR parts 730-774, please see here. The regulations will be effective as of Friday, January 16. Major elements of the changes in the revised regulations include:

Travel –

  • In all 12 existing categories of authorized travel, travel previously authorized by specific license will be authorized by general license, subject to appropriate conditions.  This means that individuals who meet the conditions laid out in the regulations will not need to apply for a license to travel to Cuba.
  • These categories are: family visits; official business of the U.S. government, foreign governments, and certain intergovernmental organizations; journalistic activity; professional research and professional meetings; educational activities; religious activities; public performances, clinics, workshops, athletic and other competitions, and exhibitions; support for the Cuban people; humanitarian projects; activities of private foundations or research or educational institutes; exportation, importation, or transmission of information or information materials; and certain authorized export transactions.
  • The per diem rate previously imposed on authorized travelers will no longer apply, and there is no specific dollar limit on authorized expenses. Authorized travelers will be allowed to engage in transactions ordinarily incident to travel within Cuba, including payment of living expenses and the acquisition in Cuba of goods for personal consumption there.
  • Additionally, travelers will now be allowed to use U.S. credit and debit cards in Cuba.

Travel and Carrier Services

  • Travel agents and airlines will be authorized to provide authorized travel and air carrier services without the need for a specific license from OFAC.

Insurance –

  • U.S. insurers will be authorized to provide coverage for global health, life, or travel insurance policies for individuals ordinarily resident in a third country who travel to or within Cuba. Health, life, and travel insurance-related services will continue to be permitted for authorized U.S. travelers to Cuba.

Importation of Goods

  • Authorized U.S. travelers to Cuba will be allowed to import up to $400 worth of goods acquired in Cuba for personal use. This includes no more than $100 of alcohol or tobacco products.

Telecommunications –

  • In order to better provide efficient and adequate telecommunications services between the United States and Cuba, a new OFAC general license will facilitate the establishment of commercial telecommunications facilities linking third countries and Cuba and in Cuba.
  • The commercial export of certain items that will contribute to the ability of the Cuban people to communicate with people within Cuba, in the United States, and the rest of the world will be authorized under a new Commerce license exception (Support for the Cuban People (SCP)) without requiring a license. This will include the commercial sale of certain consumer communications devices, related software, applications, hardware, and services, and items for the establishment and update of communications-related systems.
  • Additional services incident to internet-based communications and related to certain exportations and reexportations of communications items will also be authorized by OFAC general license.

Consumer Communications Devices –

  • Commercial sales, as well as donations, of the export and reexport of consumer communications devices that enable the flow of information to from and among the Cuban peoplesuch as personal computers, mobile phones, televisions, memory devices, recording devices, and consumer software – will be authorized under Commerce’s Consumer Communication Devices (CCD) license exception instead of requiring licenses.

Financial Services

  • Depository institutions will be permitted to open and maintain correspondent accounts at a financial institution that is a national of Cuba to facilitate the processing of authorized transactions.
  • U.S. financial institutions will be authorized to enroll merchants and process credit and debit card transactions for travel-related and other transactions consistent with section 515.560 of the CACR. These measures will improve the speed and efficiency of authorized payments between the United States and Cuba.

Remittances –

  • The limits on generally licensed remittances to Cuban nationals other than certain prohibited Cuban Government and Cuban Communist Party officials will be increased from $500 to $2,000 per quarter.
  • Certain remittances to Cuban nationals for humanitarian projects, support for the Cuban people, or development of private businesses will be generally authorized without limitation. These general licenses will allow remittances for humanitarian projects in or related to Cuba that are designed to directly benefit the Cuban people; to support the Cuban people through activities of recognized human rights organizations, independent organizations designed to promote a rapid, peaceful transition to democracy, and activities of individuals and non-governmental organizations that promote independent activity intended to strengthen civil society in Cuba; and to support the development of private businesses, including small farms.
  • Authorized travelers will be allowed to carry with them to Cuba $10,000 in total family remittances, periodic remittances, remittances to religious organizations in Cuba, and remittances to students in Cuba pursuant to an educational license.
  • Under an expanded general license, banking institutions, including U.S.-registered brokers or dealers in securities and U.S.-registered money transmitters, will be permitted to process authorized remittances to Cuba without having to apply for a specific license.

Third-Country Effects

  • U.S.-owned or -controlled entities in third countries, including banks, will be authorized to provide goods and services to an individual Cuban national located outside of Cuba, provided the transaction does not involve a commercial exportation of goods or services to or from Cuba.
  • OFAC will generally authorize the unblocking of accounts of Cuban nationals who have permanently relocated outside of Cuba.
  • OFAC is issuing a general license that will authorize transactions related to third-country conferences attended by Cuban nationals.
  • In addition, a general license will authorize foreign vessels to enter the United States after engaging in certain trade with Cuba.

Small Business Growth –

  • Certain micro-financing projects and entrepreneurial and business training, such as for private business and agricultural operations, will be authorized.
  • Also, commercial imports of certain independent Cuban entrepreneur-produced goods and services, as determined by the State Department on a list to be published on its website, will be authorized.

“Cash in Advance” –

  • The regulatory interpretation of “cash in advance” is being redefined from “cash before shipment” to “cash before transfer of title to, and control of,” the exported items to allow expanded financing of authorized trade with Cuba.

Supporting Diplomatic Relations and USG Official Business –

  • The President announced the reestablishment of diplomatic relations with Cuba. To facilitate that process, OFAC is adding a general license authorizing transactions with Cuban official missions and their employees in the United States.
  • In addition, in an effort to support important U.S. government interests, an expanded general license will authorize Cuba-related transactions by employees, grantees, and contractors of the U.S. government, foreign governments, and certain international organizations in their official capacities.

Support for the Cuban People –

  • Exports and reexports to provide support for the Cuban people in three areas:  improving living conditions and supporting independent economic activity; strengthening civil society; and improving communications – will be eligible under Commerce’s SCP license exception.
  • To improve living conditions and support independent economic activity, SCP will authorize: (1) building materials, equipment, and tools for use by the private sector to construct or renovate privately-owned buildings, including privately-owned residences, businesses, places of worship, and building for private sector social or recreational use; (2) tools and equipment for private agricultural activity; and (3) tools, equipment, supplies, and instruments for use by private sector entrepreneurs.
  • To strengthen civil society, SCP will authorize export and reexport of donated items and temporary export and reexport by travelers to Cuba of items for use in scientific, archaeological, cultural, ecological, educational, historic preservation, or sporting activities. SCP will also authorize exports and reexports to human rights organizations, individuals, or non-governmental organizations that promote independent activity intended to strengthen civil society.
  • Travelers will also be able to export temporarily items for use in professional research in the traveler’s profession or full time field of study under SCP. The activities or research must not be related to items on the United States Munitions List or items controlled for sensitive reasons on the Commerce Control List.
  • To improve communications, SCP will authorize exports and reexports of items for use by news media personnel and U.S. news bureaus.
  • SCP will not authorize the export of items on the Commerce Control List for sensitive reasons such as national security, nuclear proliferation, regional stability, missile technology, and other reasons of similar sensitivity.

Gift Parcels –

  • Consolidated shipments of gift parcels will be eligible for the same Commerce license exception that authorizes individual gift parcels.

Liberalizing License Application Review Policy –

  • Commerce will set forth a general policy of approval for applications to export or reexport items necessary for the environmental protection or enhancement of U.S. and international air and water quality or coastlines (including items that enhance environmental quality through energy efficiency).

Senate Bill Extends U.S. Sanctions against Russia to Include Non-U.S. Persons

Tuesday, December 30th, 2014 by Brooke Driver

By: Brooke Driver

On December 2, 2014, U.S. Senator Bob Corker introduced Senate Floor Amendment No. 3966 to S. 2828 Ukraine Freedom Support Act of 2014. If imposed, the amendment would significantly expand the scope of U.S. sanctions against Russia; the current sanctions only affect U.S. entities or shipments consisting of a certain amount of U.S. content, but the proposed amendment would alter them to impose severe sanctions on foreign persons if the President of the United States “determines that the foreign person knowingly makes a significant investment in a special Russian crude oil project.” The only comparable U.S. sanctions currently are those imposed against non-U.S. banks and companies participating in transactions with Iran.

The proposed amendment does not specify what “significant” or “investment” mean, and, if passed, would grant the President a great deal of control in determining the meaning of these terms and in doling out corresponding punishments, which could include:

  • Revocation of Export-Import Bank Assistance: The President could demand that the Export-Import Bank of the United States not approve any transaction with the foreign person.
  • Procurement Sanction: The President may prohibit the head of any executive agency from doing business with the foreign person.
  • Arms Export Prohibition: The President may prohibit the issuance of any export license or suspend any license for the foreign person.
  • Property Transactions: The President may prohibit the foreign person from
  1. acquiring, holding, withholding, using, transferring, withdrawing, transporting, or exporting any property that is subject to the jurisdiction of the United States and with respect to which the foreign person has any interest;
  2. dealing in or exercising any right, power, or privilege with respect to such property; or
  3. conducting any transaction involving such property.
  • Banking Transactions: The President may prohibit any transfers of credit or payments between financial institutions or by, through, or to any financial institution, to the extent that such transfers or payments are subject to the jurisdiction of the United States and involve any interest of the foreign person.
  • Prohibition on Investment in Equity or Debt of a Sanctioned Person: The President may  prohibit any U.S. person from transacting in, providing financing for or otherwise dealing in debt:
  1. of longer than 30 days’ maturity of a foreign person, with respect to which sanctions are imposed under subsection (a) or of longer than 90 days’ maturity of a foreign person, with respect to which sanctions are imposed under subsection (b); and
  2. issued on or after the date on which such sanctions are imposed with respect to the foreign person.
  3. equity of the foreign person issued on or after that date.
  • Exclusion from the United States and Revocation of Visa or Other Documentation: In the case of a foreign person who is an individual, the President may direct the Secretary of State to deny a visa to, and the Secretary of Homeland Security to exclude from the United States, the foreign person, subject to regulatory exceptions to permit the United States to comply with the agreement regarding the headquarters of the United Nations, signed at Lake Success on June 26, 1947 and entered into force on November 21, 1947, between the United Nations and the United States, or other applicable international obligations.
  • Sanctions on Principal Executive Officers: In the case of a foreign person that is an entity, the President may impose on the principal executive officer or officers of the foreign person, or on individuals performing similar functions and with similar authorities as such officer or officers, any of the sanctions described in this subsection applicable to individuals.

Currently, there is no scheduled vote for the amendment, but if the House and Senate do not vote on the proposed legislation before the lame duck session of Congress ends, it will likely be reintroduced for a vote in the new Republican-weighted Congress in January 2015.

Foreign Subsidiary of Robbins & Myers Pleads Guilty to Illegal Export of Drilling Equipment to Syria

Monday, November 24th, 2014 by Brooke Driver

By: Brooke Driver

Robbins & Myers Belgium S.A., a subsidiary of Myers & Robbins Inc. has agreed to pay a total of $1 million in criminal fines and to serve a term of corporate probation for four separate violations of the International Emergency Economic Powers Act and the Export Administration Regulations.

Around the date of May 2006, an internal auditor of the U.S. parent company to the Belgium branch discovered that Robbins & Myers Belgium had illegally shipped stators made from U.S. steel to a Syrian customer. Although, after this discovery, the parent company informed the foreign branch of the violation and ordered that it stop these shipments, the subsidiary to do business with the Syrian customer between August and October 2006 and attempted to hide related documents from government investigators.

Under Secretary of Commerce Eric L. Hirschhorn said of the case that it:

“…shows that the United States will vigorously enforce its export laws against companies doing business with Syria, a state-sponsor of terrorism and home to one of the most brutal regimes on earth…The Department of Justice will hit companies that do business with Syria where it hurts most: the bottom line. This company will pay fines, penalties, and forfeitures more than 50 times greater than the proceeds of the sales.”

“The significant civil and criminal penalties in this case show our resolve to pursue and prosecute those who flout our export control laws. We will continue to work in concert with our partner agencies to ensure that U.S. technology stays out of the wrong hands.”

Commerce Department Tells Specific Exporters Not to Use STA for Arabsat

Monday, November 24th, 2014 by Brooke Driver

By: John Black

Over the past month or so, the Bureau of Industry and Security in the US Department of Commerce has been sending letters to individual exporters informing them that they may not use License Exception STA to export for 9X515 items for use in the Arab Satellite Communications Organization (Arabsat) 6th Generation satellite project.  BIS sent the letters to individual addresses of specific exporters, and not necessarily to their corporate headquarters.  If a single location of your corporation received this notice, it should be passing the warning on to all other locations who could be involved in similar activities.

If your location received this letter, you would be well advised to share it with any other location of your corporation that may be dealing with Arabsat 6th Generation satellite.  Nothing in the letter says, after all, that it is applicable only to the location at the address at the top of the letter.