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OFAC clarifies impact of sanctions on humanitarian assistance and trade
On June 14, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued a Fact Sheet for “Provision of Humanitarian Assistance and Trade to Combat COVID-19.” The Fact Sheet, among other things, highlights Treasury’s humanitarian-related or other general licenses (GL) issued to support people impacted by Covid-19 across Iran, Venezuela, North Korea, Syria, Cuba, and Russia. Relatedly, OFAC issued Iran-related GL N-2, Venezuela-related GL 39B, and Syria-related GL 21B to authorize transactions and activities related to the prevention, diagnosis, or treatment of Covid-19, as well as several amended FAQs.
OFAC sanctions network supporting Iran’s missile and military programs
On June 6, the U.S. Treasury Department’s Office of Foreign Assets Control announced sanctions, pursuant to Executive Order 13382, against seven individuals and six entities in Iran, China, and Hong Kong for supporting Iran’s ballistic missile program. These sanctions build on OFAC’s March 30, 2022, designations against other supporters of the Iran-based missile program (covered by InfoBytes here) in an effort to target weapons of mass destruction proliferators and their supporters. OFAC explained that the designated individuals and entities have done business with and supported the procurement of critical parts and technology for Iran’s ballistic missile development.
As a result of the sanctions, all property and interests in property belonging to the sanctioned individuals and entities that are in the U.S. or in the possession or control of U.S. persons are blocked and must be reported to OFAC. Further, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons. Persons that engage in certain transactions with the designated individuals or entities may themselves be exposed to sanctions, and “any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the individuals or entities designated today pursuant to E.O. 13382 could be subject to U.S. sanctions.”
OFAC sanctions entities connected to Mexican cartel
On June 6, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions, pursuant to Executive Order 14059, against three individuals and one entity connected to the Cartel de Jalisco Nueva Generación (CJNG). The CJNG is a Mexico-based organization responsible for a significant proportion of fentanyl and other drugs trafficked into the U.S. OFAC explained that two individuals are senior members of CJNG who engaged in trafficking firearms into the U.S. and fuel theft in Mexico. These sanctions follow similar actions taken earlier this year against other Mexican arms dealers working in collaboration with the CJNG (covered by InfoBytes here). Additionally, one individual and her currency exchange house (responsible for laundering over $6 million between 2020 and 2022) have been identified for laundering money on behalf of the CJNG, OFAC stated.
As a result of the sanctions, all property and interests in property of the designated persons located in the U.S. or held by U.S. persons are blocked and must be reported to OFAC. Further, “any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons unless authorized by an OFAC-issued general or specific license, or an exemption. OFAC further warned that “U.S. persons may face civil or criminal penalties for violations of E.O. 14059 and the Kingpin Act.”
OFAC sanctions Iranian tech company and employees
On June 2, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions, pursuant to Executive Order 13846, against an Iran-based technology company, two senior employees, and an affiliate based in the UAE. According to OFAC, the sanctioned persons and entities partook in facilitating the Iranian regime’s censorship of the internet in Iran. The technology company is a key partner in Iran’s development of the National Information Network, which, OFAC states is, “a countrywide intranet that is being used to disconnect the Iranian people from the global internet.” As a result of the sanctions, all property and interests in property belonging to the sanctioned individuals and entities subject to U.S. jurisdiction are blocked and must be reported to OFAC. U.S. persons are also generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons. Additionally, OFAC warned that “persons that engage in certain transactions with the individuals and entities designated today may themselves be exposed to sanctions or subject to an enforcement action.” Also, OFAC noted that unless an exception applies, any foreign financial institution that knowingly takes part in a significant transaction or provides significant financial services for any of the persons designated could also be subject to U.S. sanctions.
In conjunction with the sanctions, OFAC issued several Iran-related general licenses (see General License P).
OFAC sanctions entities in China and Mexico tied to illicit drugs
On May 30, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions, pursuant to Executive Order 14059, against 17 individuals and entities for their involvement in the rapid increase of equipment used to make illicit drugs. OFAC detailed the impact of the drugs the equipment produces and explained that the counterfeit pills are often laced with fentanyl and ultimately end up in U.S. markets. Targeting every stage of the pill production process, OFAC designated seven entities and six individuals based in China and three individuals based in Mexico for perpetuating the trafficking of illicit drugs through the sale, manufacturing, and/or shipment of pill press equipment.
As a result of these sanctions, all property and interests in property belonging to the sanctioned persons subject to U.S. jurisdiction are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are also generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons unless authorized by a general or specific license or exempt. Further, financial institutions and persons that engage in certain transactions with the designated persons may themselves be exposed to sanctions or subject to enforcement.
SEC fines tech company $2.5 million to settle FCPA charges
On May 26, the SEC announced that a Connecticut-headquartered tech research and consulting company (the “settling company”) agreed to pay nearly $2.5 million to settle claims that it violated the anti-bribery, books and records, and internal accounting controls provisions of the FCPA. According to the SEC’s order, from roughly December 2014 through August 2015 the settling company allegedly entered into a scheme with several private South African companies through which a South African IT consulting company was paid substantial amounts of money even though the settling company “knew or consciously disregarded the possibility” that all or part of this money would go to South African government officials to influence the award of multi-million-dollar contracts to the settling company. During this time, the SEC found that the settling company’s policy regarding third-party consultants failed to adequately address anti-corruption risks, and the settling company lacked sufficient internal accounting controls to document payments made to third parties. The settling company also failed to implement anti-corruption vendor onboarding procedures and lacked adequate monitoring procedures, the SEC said.
The settling company consented to the SEC’s order without admitting or denying the allegations and agreed to pay a $1.6 million civil money penalty and $856,764 in disgorgement and prejudgment interest. The SEC recognized the company’s cooperation and remedial efforts.
OFAC sanctions Russian paramilitary leader in Mali
Recently, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions, pursuant to Executive Order 14024, against a Mali-based principal administrator and head of a Russian private military company’s paramilitary units. Aside from acting as a key player in Russia’s war against Ukraine, the private military company “has meddled in and destabilized countries in Africa, committing widespread human rights abuses and appropriating natural resources,” OFAC said, noting that the sanctioned individual worked with the Malian government to support incoming paramilitary forces to Mali, including preparing living quarters and arranging meetings with officials from several African nations. The action follows previous sanctions issued against those working with or supporting the private military company’s destabilizing activities, involving human rights abuses, and appropriating natural resources.
As a result of the sanctions, all property and interests in property belonging to the sanctioned persons that are in the U.S. or in the possession or control of U.S. persons are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons, unless authorized by a general or specific OFAC license, or otherwise exempt.
OFAC sanctions cut cash flow supporting violence in Sudan
On June 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions, pursuant to Executive Order 14098, against four companies for generating revenue from, and contributing to, the conflict in Sudan. Two of the companies are affiliated with the paramilitary Rapid Support Forces and two companies are affiliated with the Sudanese Armed Forces. OFAC stated that sanctions against those who have “directly or indirectly engaged or attempted to engage in actions or policies that threaten the peace, security, or stability of Sudan” will hinder the financial support for the entities waging war in Sudan.
As a result of the sanctions, all property and interests in property belonging to the sanctioned persons that are in the U.S. or in the possession or control of U.S. persons are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons, unless authorized by a general or specific OFAC license, or otherwise exempt.
In conjunction with the sanctions, OFAC issued several Sudan-related general licenses (see General Licenses 1, 2, 3 and 4).
OFAC sanctions target IRGC
On June 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) designated members and affiliates of Iran’s Islamic Revolutionary Guard Corps and its external operations arm, the IRGC-Qods Force (IRGC-QF), pursuant to Executive Order 13224, for participating in a series of plots against former U.S. officials, dual U.S. and Iranian nationals, and Iranian dissidents.
The following were specifically designated: (i) two operatives designated “for having acted for or on behalf of, directly or indirectly, the IRGC-QF”; (ii) an IRGC-QF official designated “for acting or on behalf of the IRGC-QF”; and (iii) a dual Iranian and Turkish national designated “for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, the IRGC-QF” by using his Turkey-based airline to support the IRGC-QF covert operations. (The airline is separately designated.)
As a result of the sanctions, all property and interests in property of the individuals and entities named above, and of any entities that are owned, directly or indirectly, 50 percent or more by them, individually, or with other blocked persons, that are in the U.S. or in the possession or control of U.S. persons, must be blocked and reported to OFAC. OFAC’s announcement further noted that its regulations “generally prohibit” U.S. persons from participating in transactions with designated persons unless exempt or otherwise authorized by a general or specific license. The prohibitions include the making or receiving of any contribution of funds, goods, or services to or for the benefit of those persons.
OFAC issues new general licenses related to Russia and Venezuela sanctions
The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) recently released two general licenses relating to Russia and Venezuela. Newly issued Russia-related General License (GL) 69 authorizes certain debt securities servicing transactions issued by an identified bank that would otherwise be prohibited by Executive Order (E.O.) 14024. Interest or principal payments on the authorized transactions cannot be made to persons located in the Russian Federation, and any payments made to a blocked person must be done in accordance with the Russian Harmful Foreign Activities Sanctions Regulations regardless of where the person is located.
Additionally, OFAC also issued GL 8L, which authorizes transactions involving Petróleos de Venezuela, S.A. (PdVSA) that are deemed necessary for the wind down of operations in Venezuela for certain entities. While authorizing some transactions, GL 8L also includes a comprehensive list of transactions that are not authorized, including “[a]ny loans to, accrual of additional debt by, or subsidization of PdVSA, or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest, including in kind, prohibited by E.O. 13808 of August 24, 2017, as amended by E.O. 13857, and incorporated into the [Venezuela Sanctions Regulations].”