Monthly Archives: June 2017

June 29, 2017

U.S. Treasury Announces First Money Laundering Designation Against Mainland Chinese Bank

by Jeremy Paner

Today, the U.S. Department of the Treasury announced significant actions targeting Chinese companies and individuals for their commercial involvement with North Korea.  These actions follow Trump’s vague tweet on June 20, in which he stated “[w]hile I greatly appreciate the efforts of President Xi & China to help with North Korea, it has not worked out.  At least I know China tried!”  In light of today’s designations and proposed rulemaking, that message appears to signal a willingness by the United States to directly target China.  Non-U.S. companies should carefully consider this dramatic policy shift with an understanding of the broad scope of the current sanctions authorities.  The Treasury Department may target North Korea’s commercial partners irrespective of their geographic location.

USA PATRIOT Act Section 311

The most significant action is likely the Notice of Proposed Rulemaking (NPRM) by the  Financial Crimes Enforcement Network (FinCEN) to sever China’s Bank of Dandong from the U.S. financial system under its 311 authority.  Although this is not the first listing of a Chinese bank, it will very likely be the most disruptive.  In 2007, the Treasury Department labeled the Macau-based Banco Delta Asia as a financial institution of primary money laundering concern, and in 2012 listed China’s Bank of Kunlun under an Iran-related sanctions authority.  Continue reading

June 16, 2017

Trump’s Cuba Announcement Signals a Change of Tone, but not Substance

by Jeremy Paner

Earlier today, President Trump announced upcoming revisions to the Cuban embargo.  The announcement should be viewed as a preview of coming changes, as the current Treasury and Commerce general licenses will remain in effect until those departments implement amended regulations.  During his speech in Miami, Trump characterized these changes as a “complete” cancellation of the Obama policy and media reports have generally echoed this significant overstatement.  Irrespective of the tonal shift from the current occupant of the White House, current travel and business between Cuba and the United States will generally remain unchanged.

Prior to President Trump’s announcement, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) released a series of 12 frequently asked questions on the upcoming sanctions changes.  These FAQs are interesting for a number of reasons.  First, contrary to the general sanctions practice in the United States, changes in the sanctions regulations will not affect existing contracts.  This means there will be no disruption to current business relationships formed under the existing rules.  Secondly, the revisions to the regulations appear quite minimal.  Trump will only direct OFAC to limit one form of authorized travel and prohibit “direct transactions” with Cuban military, intelligence, or security services entities contained on list to be published by the State Department.      Continue reading

June 1, 2017

D.C. Circuit Affirms OFAC’s Broad Enforcement Authority, but Demands Increased Transparency in its Decision-Making Process

by Jeremy Paner

Last week, the U.S. Court of Appeals for the D.C. Circuit issued a decision in Epsilon Electronics, Inc. v. U.S. Dept. of the Treasury, Office of Foreign Assets Control et al., No. 16-5118, __ F.3d __ (D.C. Cir. 2017), which largely affirms the lower court’s granting of summary judgement in favor of the government defendant.  The D.C. Circuit Court, however, remanded the matter for consideration of five of the 34 alleged sanctions violations and a recalculation of the total $4,073,000 civil monetary penalty arising from alleged Iran sanctions violations.  This decision continues the recent trend of increased judicial scrutiny of national security-related actions by the Executive branch.  Foreign and domestic companies that are the subjects of OFAC enforcement investigations should consider seeking judicial review of administrative records that do not clearly explain the agency’s consideration of potentially exculpatory information.  Continue reading