Monthly Archives: September 2016

September 27, 2016

U.S. Department of Justice and OFAC Take Action Against Chinese Network of Alleged Sanctions Evaders

by Jeremy Paner

spiderwebYesterday, the U.S. Department of Justice and the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced actions against four Chinese nationals and a China-based network of companies alleged to have provided North Korea with access to the U.S. financial system. The announcements followed months of steadily increasing pressure on North Korea and its economic partner, China.

Although the charges were announced yesterday, a New Jersey District Magistrate Judge signed a criminal complaint in August 2016 charging the Chinese nationals and China-based company with conspiracy to evade U.S. sanctions, violations of sanctions regulations, and conspiracy to launder money instruments. The Justice Department’s Asset Forfeiture and Money Laundering Section also filed a civil forfeiture complaint to seize funds contained in 25 bank accounts held for the alleged front company network. OFAC concurrently designated Dandong Hongxiang Industrial Development Company Ltd (DHID), and the Chinese individuals for illicitly providing a designated North Korean bank access to the U.S. financial system.   Continue reading

September 15, 2016

Lessons Learned from OFAC’s Rapidly Increasing Enforcement Response

by Jeremy Paner

school_desks_istock_000023345571largeLast month, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) concurrently announced Findings of Violation against two insurance companies. According to the announcements, AXA Equitable Life Insurance Company issued health insurance policies to designated individuals. A subsidiary of Humana, Inc. serviced these policies as a Third Party Administrator in violation of sanctions regulations.

While there is no direct monetary penalty from a Finding of Violation, businesses are nonetheless advised to modify their compliance programs in response to OFAC’s articulations of compliance expectations. The agency will likely determine that a significant civil monetary penalty is appropriate for similar future apparent violations by other businesses.

OFAC typically issues Findings of Violation to promote certain aspects of compliance. The agency’s increasing issuance of Findings of Violation makes failure to heed these warnings especially reckless. To date, OFAC has only issued nine such penalties, but seven of these announcements occurred in the past year. Continue reading

September 14, 2016

POTUS Lifts Sanctions on the Ivory Coast and Provides Highly Unusual Preview of Upcoming Burmese Sanctions Removal

by Jeremy Paner

white-houseEarlier today, President Obama issued an Executive Order lifting sanctions against Côte d’Ivoire (the Ivory Coast). This removal follows similar action by the United Nations, which in April 2016 lifted international arms, travel and financial measures though UN Security Council Resolution 2283.

U.S. individuals and companies that may have violated the Ivory Coast-related sanctions are not absolved from their apparent violations. The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) will continue to investigate and penalize prohibited dealings, even years after the underlying sanctions authority is lifted. For example, in March 2015 OFAC announced a $780,000 settlement to resolve apparent violations of the former Iraq sanctions program that occurred between 2002 and 2003. President Bush lifted the former Iraq sanctions program through a 2004 Executive Order, while the OFAC removed the regulations in September 2010.

Coming Sanctions Relief for Burma

President Obama also announced today “that the United States is now prepared to lift sanctions we’ve imposed upon Burma.” Current U.S. sanctions prohibit the importation of Burmese rubies and jadeite, certain new investment, and dealings with designated individuals and entities. These prohibitions will continue until their removal by Executive Order. OFAC issued an FAQ today to clarify this point. The President’s comments did not specify if all sanctions will be removed. Continue reading