Authors: John O’Donnell, Jonathan Cross, Geng Li, Christopher Milazzo, Susannah Cogman and Daniel Hudson
Further emphasizing its expectation that all companies whose business touches on the United States should maintain a robust, risk-based US economic sanctions compliance program (“SCP”), the US Treasury’s Office of Foreign Assets Control (“OFAC”) has published a detailed “Framework for OFAC Compliance Commitments” (the “Framework”) setting forth the key components of an adequate SCP. OFAC’s release of the Framework heightens the need for US and international companies to review their existing policies, procedures and controls relating to sanctions compliance, and to make appropriate changes to update relevant policies in line with OFAC’s guidance. As the number and scale of US sanctions enforcement actions increase, maintaining an effective SCP is an essential tool for managing sanctions risk; conversely, the Framework makes clear that the absence of an adequate SCP will be viewed negatively by OFAC pursuant to its Economic Sanctions Enforcement Guidelines.
The Framework includes a discussion of the typical “root causes” of sanctions violations leading to OFAC enforcement action; in most cases, SCP deficiencies are key elements in these examples. Thus, all companies whose business directly or indirectly involves the US or US persons should review their SCP carefully in consideration of these identified root causes.
Authors: Kyle Wombolt, Jeremy Birch, Antony Crockett and Emily Purvis.
A recent enforcement action by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) against US company e.l.f Cosmetics Inc (ELF) highlights the importance of supply chain due diligence in conducting cross border business. The action against ELF reflects a global trend of increased regulatory focus on supply chains in relation to a range of business conduct issues, including corruption, modern slavery, and other human rights violations. To mitigate sanction violation risk, companies should verify the country of origin of goods and services in their supply chains.
Following President Trump’s decision on May 8, 2018 to withdraw the United States from the Joint Comprehensive Plan of Action (“JCPOA”), the US government announced that it would re-impose pre-JCPOA nuclear-related Iran sanctions (both primary and secondary) that were lifted under the JCPOA. As we reported previously, two “wind-down” periods—of 90 and 180 days respectively—commenced from the day of the announcement, during which non-US, non-Iranian companies were encouraged by the US government to withdraw from operations in Iran that would be affected by re-imposed sanctions. OFAC’s guidance discouraged non-US persons from engaging in new activity during the wind down periods, and stated that any such new activity may be a factor in connection with future enforcement action for actions taken after the wind-down period.
On May 8, 2018, President Trump announced that the United States will completely withdraw from the Joint Comprehensive Plan of Action (the “JCPOA“). The JCPOA, signed in July 2015 and implemented on January 16, 2016, lifted most US nuclear related secondary sanctions and certain US primary sanctions targeting Iran. Prior to the JCPOA, the US had also imposed a broad range of “secondary sanctions” – applicable to dealings of non-US persons with sanctioned Iranian parties – in a number of key economic sectors in Iran, including automobile, energy and finance. The President’s announcement today states that all pre-JCPOA nuclear related sanctions will be re-imposed (both primary and secondary), and indicates that the US may impose new and additional sanctions in the future, going beyond the already highly restrictive sanctions regime which preceded the JCPOA. Continue reading
On April 6, 2018, the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) announced new designations of seven high-net-worth Russian individuals and 12 companies they own or control, 17 senior Russian government officials, and a state-owned Russian weapons trading company and its subsidiary, a Russian bank. Continue reading
On 13 November 2017, the EU Council unanimously voted to impose a wide range of targeted sanctions on Venezuela in response to the growing political crisis in the country. Notably, the new EU sanctions go further than current US measures against Venezuela by including an arms embargo, as well as a travel ban and an asset freeze.
Further to a similar regime being imposed on Mali in order to target those seeking to derail the 2015 peace agreement, the UK has laid the legal groundwork for financial sanctions to be imposed once relevant individuals have been identified. Please click here for our full briefing.
Following our earlier bulletin, on October 31, 2017, the US Department of State and Department of Treasury’s Office of Foreign Assets Control (“OFAC”) posted comprehensive guidance related to the Countering America’s Adversaries Through Sanctions Act of 2017 (“CAATSA”). The new guidance addresses multiple provisions of CAATSA, mainly the provisions concerning secondary sanctions targeting Russia. The new guidance significantly limits and clarifies the scope of these secondary sanctions.
As detailed in our prior alert, on August 2, 2017, President Trump signed CAATSA into law. The legislation provided several new categories of primary and secondary sanctions relating to Russia, Iran and North Korea.
On August 24, 2017, President Trump issued a new Executive Order targeting the current Venezuela regime. The next day, the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) announced the implementation of broad new “sectoral” sanctions applicable to the Government of Venezuela and Venezuelan state-owned entities, including state-owned oil producer Petroleos de Venezuela, S.A. (PdVSA). While the new Venezuelan sanctions fall well short of an embargo, and are patterned after the limited sectoral sanctions applicable to certain Russian entities, these developments represent a major change in US policy towards Venezuela and are likely to impact a broad range of international companies dealing in debt or other securities of Venezuelan state entities. Please click here for further details.
On June 16, 2017, President Trump announced a policy framework for the re-imposition of certain US sanctions with respect to Cuba. In particular, the United States' new policy will restore certain restrictions with respect to American investments in the Cuban private sector and the ability to travel outside of pre-arranged groups for American visitors to Cuba. While many of the details will become apparent only as regulations are promulgated implementing President Trump's new policy, the announcement suggests that the Administration will execute only a partial shift from the previous Administration's loosening of Cuba sanctions.
On February 3, 2017, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) added a number individuals and entities to its Specially Designated Nationals ("SDNs") list of blocked persons. OFAC stated that such actions were taken in response to Iran's development of a ballistic missile program.