OFAC’s January 4, 2021 civil settlement with France-based Union de Banques Arabes et Françaises (“UBAF”) provides another case study of the agency’s expansive view of its jurisdiction over transactions occurring outside the United States, when the US financial system is involved even indirectly. This case is particularly noteworthy coming after OFAC’s recent settlement with British Arab Commercial Bank, which we previously analyzed. A key lesson from the UBAF settlement is that OFAC’s jurisdiction may extend to transactions conducted outside the United States – including internal transfers on the books of a non-US bank – that are “closely correlated” with subsequent transactions involving the US financial system. In light of this case, non-US persons operating outside the United States should consider reviewing their OFAC risk if their activity may rely on the US financial system even indirectly.
This case focused on UBAF’s trade finance business, and specifically its business with Syrian financial institutions. Between August 2011 and April 2013, OFAC determined that UBAF operated accounts in USD and other currencies for US-sanctioned Syrian financial institutions, “and indirectly conducted USD business on behalf of these institutions through the US financial system.” The key word is “indirectly.” Below is a brief discussion of each of the types of transactions that OFAC focused on in this settlement and how OFAC asserted jurisdiction over these transactions that relied on the US financial system “indirectly.”
Continue Reading OFAC Asserts Jurisdiction over French Bank’s Internal Transfers and Foreign Exchange Transactions