Monthly Archives: December 2015

December 31, 2015

Boilerplate Cyber Sanctions Regulations Portend Coming Actions

by Jeremy Paner

boilerplate-cyber-sanctionsEarlier today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued regulations for the Cyber-related sanctions program, now available at 31 C.F.R. Part 578. These regulations are currently in abbreviated form and are limited to the boilerplate provisions contained in all other targeted sanctions programs. As such, there are currently still no program-specific definitions, interpretive guidance, or general licenses. We expect OFAC to supplement the regulations in the near future, and define “cyber-enabled” activities to include “any act that is primarily accomplished through or facilitated by computers or other electronic devices.” Interpretive guidance will likely explain “malicious cyber-enabled activities as “deliberate activities accomplished through unauthorized access to a computer system, including by remote access; circumventing one or more protection measures, including by bypassing a firewall; or compromising the security of hardware or software in the supply chain.” OFAC provided this definition and guidance in an FAQ concurrently with the release of the Executive Order authorizing the sanctions program in April. Continue reading

December 29, 2015

The Most Significant Sanctions Executive Order of 2015? The Answer May Surprise You.

by Jeremy Paner

crystal-ballU.S. economic sanctions are largely guided by the President’s National Security Council staff. The White House determines strategy, while it is the responsibility of the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) to make the tactical decisions that implement these goals. With this in mind, one way to anticipate the policy direction of U.S. sanctions is to consider recent Executive Orders that address continuing threats to the national security, foreign policy, and economy of the United States. President Obama issued six such Executive Orders in 2015 that terminate, create, and enhance existing sanctions programs. In light of the probable limitations of the  new programs, the most significant sanctions-related Executive Order of 2015 may very likely be the one that received the least attention: a modification to the North Korea sanctions program.

Removal of Sanctions

Two of the 2015 orders ended existing “emergencies”  involving the Former Liberian Regime of Charles Taylor, as well as the transfer and transition of Highly Enriched Uranium. Executive Order 13710 of November 12, 2015 terminated the Liberia program. Victor Bout, the “Merchant of Death,” was one of the more infamous designees under these regulations. He remains designated pursuant to the Democratic Republic of the Congo Sanctions Regulations. As a result, any of his assets blocked under the DRC program should remain blocked.

Executive Order 13695 of May 26, 2015 terminated the Highly Enriched Uranium program. The Highly Enriched Uranium (HEU) Agreement Assets Control Regulations, 31 C.F.R. Part 540, was a unique protective sanctions program. It was directed at the property used to carry out international agreements between the United States and the Russian Federation for the conversion of highly enriched uranium extracted from Russian nuclear weapons into low-enriched uranium for use in commercial nuclear reactors.

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December 22, 2015

OFAC Actions Against Russia Increase Certainty for Compliance Programs

by Jeremy Paner

russiaToday, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) sent a clear message to Putin: cease hostilities in eastern Ukraine in compliance with the Minsk Agreements, and withdraw from the Crimea region of Ukraine. The designations and identifications sent an equally clear message to U.S. and international businesses: OFAC will facilitate compliance with these sanctions, but do not anticipate a lifting of the Crimea embargo in the near future.

In the press release announcing the designation and identification of 34 individuals and entities under various Ukraine/Russia sanctions authorities, OFAC warns that the targeted sanctions will remain until Russia withdraws to its internationally recognized border, and the embargo on the Crimea region of Ukraine will remain until “Russia ends its occupation of the peninsula.” Businesses should therefore not take steps to re-engage in prohibited trade with the Crimea region or designated Ukrainian/Russian individuals or companies. In fact, U.S. businesses should expect the embargo to last for the foreseeable future.

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December 8, 2015

Unintended Consequences of Vigilant Compliance Brings Change to Burmese Sanctions

burmaby Jeremy Paner

Yesterday, the U.S. Department of the Treasury’s Office of Foreign Assets Control issued General License 20 to the Burmese Sanctions Regulations (31 CFR Part 537). This General License (GL) will expire on June 7, 2016, unless it is withdrawn or extended. The GL facilitates trade with Burma by authorizing certain transactions ordinarily incident to exports of goods, technology, or non-financial services  to or from Burma involving designated persons and the entities they own.

This GL allows U.S. businesses to export authorized goods and technology to and from Burma through infrastructure such as ports, toll roads, and airports, and pay associated fees that would otherwise be prohibited under the Burmese sanctions. U.S. financial institutions are also authorized to unblock transactions that occurred on or after April 1, 2015, if those transactions would have been authorized under GL 20.

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