Monthly Archives: August 2015

August 31, 2015

Cyber Designations: What to Expect and How to Respond

Chinaby Jeremy Paner

Recent press reports indicate that the U.S. Treasury Department is preparing designations under its malicious cyber-enabled activities authority. Prior to these reports, which cite anonymous administration sources, there were clear signs that this sanctions authority would probably remain dormant.

Empty Executive Order, Without Regulations

First, Executive Order 13694 is “an empty E.O.,” in that it does not contain an annex of designees. OFAC utilizes derivative designations of individuals and entities listed in an annex to effectively and efficiently block vast networks. With no annex, the Office of Foreign Assets Control (OFAC) has to start the designations of networks with identifications of key nodes and then derivatively designate those that act for or on behalf of, or provide services to key actors.

Secondly, OFAC has yet to implement regulations for this sanctions program. Although such regulations are not necessary for the designation process, the licensing, enforcement and compliance aspects of the program will need regulatory guidance. Therefore, expect OFAC to issue regulations concurrently with, or shortly after the announcement of designations.

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August 5, 2015

OFAC Fires Warning Shots

by Jeremy Paner

cautionLast week the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) signaled that it will step up its enforcement of the sanctions aimed at Russia and continue to rigorously enforce the Iran sanctions. U.S. businesses and foreign entities conducting business through the United States should assess their risk appetite in light of these very clear messages and ensure that they have the adequate controls to address this risk.

Crimea Sanctions Advisory

OFAC released a Crimea Sanctions Advisory to warn of the schemes used to circumvent or evade the embargo against the Crimea region of Ukraine.  The advisory serves to clarify the widely misunderstood nature of the embargo and expose the techniques that exploit this misunderstanding. Crimea is a geographical region, and will typically not appear by name in payment instructions, letters of credit, or trade documents. It is therefore imperative that U.S. businesses screen locations within the Crimea region, to include cities, towns and ports. Like all other sanctions programs, businesses should take a risk-based approach to compliance with this embargo.

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