Monthly Archives: May 2016

May 19, 2016

U.S. Treasury Facilitates Trade with Burma, but Money Laundering and North Korean Risks Remain

by Jeremy Paner

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Earlier this week, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) continued the transition of the Burmese sanctions program from comprehensive prohibitions to targeted, more limited “smart sanctions.”  The revised Burmese Sanctions Regulations contain General Licenses authorizing U.S. persons to reside in Burma and incorporate a separate General License authorizing 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.  As noted in a prior entry, OFAC made this original temporary authorization in early December 2015 after U.S. trade with Burma nearly came to a halt following the refusal of several banks to engage in trade finance involving a Rangoon port associated with Asia World Co. Ltd.  The revised sanctions program further increases pressure on Asia World through the designations of six companies in which it owns a 50 percent or greater interest.

In addition to the regulatory amendments and new designations, OFAC removed seven state-owned enterprises and three state-owned banks from the list of Specially Designated Nationals (SDN List).  Along with the bank de-listings, OFAC issued a General License authorizing most transactions involving the four remaining designated Burmese banks.[1]  The designation removals and General License allow U.S. financial institutions to provide Burmese banks with correspondent and payable through accounts, irrespective of the Section 311 Special Measures that remain imposed against Burma.  Continue reading

May 6, 2016

U.S. Designations Targeting a Major Panamanian Money Laundering Organization Not Aided by the Panama Papers Leak

by Jeremy Paner

flag-of-panama-1452444-1279x1705Yesterday, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced designations against the Panama-based Waked Money Laundering Organization, including its leaders, network of supporters and associates, and companies. According to press reports, Colombian law enforcement arrested the organization’s leader, Nidal Ahmed Waked Hatum, at a Bogota airport the day prior to the designations.

In total, OFAC added 8 individuals and 68 business entities to the List of Specially Designated Nationals (SDN List) pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act). The United States Government alleged that narcotics traffickers have used these businesses to obscure the source of drug money through a variety of means, including trade-based money laundering, bulk cash smuggling, real estate development, and illicit financial services.  The designation of Balboa Bank & Trust is particularly noteworthy, as it reflects Treasury’s continued willingness to use the Kingpin Act against financial institutions.  As noted in a previous entry, OFAC had not designated a bank pursuant to the Kingpin Act prior to November 2015.

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May 4, 2016

Recent Court Decision Provides Insight Into Enforcement of OFAC Sanctions

by Jeremy Paner

gavel-3-1236445On March 7, the District Court for the District of Columbia issued a Memorandum Opinion granting the government’s Motion for Summary Judgment in the matter of Epsilon Electronics, Inc. v. United States Department of the Treasury, Office of Foreign Assets Control, et al., Civil Action No. 14-2220 (RBW), __ F.Supp.3d __ (D.D.C. 2016).  The case arises from a $4,073,000 civil penalty the Office of Foreign Assets Control (OFAC) assessed against Epsilon Electronics (the plaintiff)  in July 2014 for violations of the embargo on Iran.  According to the announcement of this penalty, the plaintiff violated the Iran Transactions and Sanctions Regulations by shipping car audio and video equipment that it knew or had reason to know would be reexported to Iran.  The opinion dismissing the challenge to this penalty serves as a cautionary tale of how OFAC may assess significant civil penalties with the aid of a few administrative subpoenas and circumstantial evidence provided by financial institutions and simple internet research.

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