Monthly Archives: April 2016

April 19, 2016

New Sanctions Regulations Threaten Foreign Financial Institutions with Severance from the U.S. Financial System

by Jeremy Paner

scissor-1568316Last Friday, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) published regulations that implement the Hizballah International Financing Prevention Act of 2015.  The listing criteria for these regulations echo those  in the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010  (CISADA), which was largely responsible for economically isolating Iran.  Although frequently mischaracterized as extraterritorial in nature, the prohibitions of secondary sanctions are limited to domestic financial institutions.

The Hizballah Financial Sanctions Regulations, 31 CFR 566, prohibit U.S. financial institutions from opening or maintaining certain accounts for foreign financial institutions listed for knowingly providing significant transactions for Hizballah, or any person designated for acting for or on behalf of, or being owned or controlled by that terrorist organization.  OFAC identifies  Hizballah-related designated persons with the text [‘‘Subject to secondary sanctions pursuant to the Hizballah Financial Sanctions Regulations’’] in their respective List of Specially Designated Nationals (SDN List) entries. Continue reading