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Edward J. Krauland focuses on export controls/economic sanctions. Ed’s extensive experience includes representing clients on matters involving US and multilateral economic sanctions, defense and nuclear export controls, dual-use export controls under the EAR, anti-boycott compliance, internal investigations and enforcement work, and review of government procurement regulations in the cross-border context. His practice spans all aspects of these laws, including counseling, compliance work, transactional advice, licensing and opinion work, internal reviews, disclosures, and enforcement actions. He has served as co-chair of the International Trade Committee of the ABA Section of International Law and Practice. He is former Chairman of an ABA-wide Task Force on Gatekeeper Regulation (anti-money laundering compliance), and senior adviser to the ABA Section of International Law and Practice’s anti-money laundering committee.

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The Department of Commerce’s Bureau of Industry and Security (BIS) has announced policy changes designed to strengthen its administrative enforcement of U.S. export controls. In a memorandum released on June 30, Matthew Axelrod, Assistant Secretary for Export Enforcement at BIS, outlined four new policy changes including (1) significantly higher penalties for egregious violations, (2) elimination of no admit/no deny settlements, (3) offering non-monetary settlement agreements in cases where the violations “do not reflect serious national security harm” but are more serious than cases that receive warnings or no-action letters, and (4) implementation of a dual-track processing system for Voluntary Self Disclosures (VSDs) involving minor or technical infractions and those involving potentially more serious violations. These changes have the potential to significantly increase export enforcement risks for U.S. and non-U.S. companies, and suggest it is time for exporters and reexporters to conduct internal audits, assessments, and monitoring for potential compliance gaps. It may be necessary for some exporters to consider tailoring and enhancing internal export compliance programs, processes, and resources to avoid costly penalties, investigations, business disruptions, and brand damage.

Continue Reading Revamping BIS’s Administrative Enforcement Authorities: Time to Consider More Investment in Internal Corporate Compliance

Between April 18 and May 2, 2022, the US government continued to ratchet up economic sanctions, export controls, and other restrictive trade measures targeting Russia.  Most significantly, on April 21, President Biden issued a Proclamation prohibiting “Russian-affiliated vessels” from entering US ports.  Otherwise, the US government has focused on utilizing its existing authorities to impose further costs on Russia.

Over the last two weeks of April, the US Treasury Department’s Office of Foreign Assets Control (OFAC) designated over 40 individuals and entities including Transkapitalbank (TKB), re-issued an expanded set of Ukraine- / Russia- Sanctions Regulations (URSR), and issued several new or revised general licenses, including one relating to the provision of assistance by nongovernmental organizations, and 8 Frequently Asked Questions (FAQs).

Separately, the Commerce Department’s Bureau of Industry and Security (BIS) continues to be focused on restricting the Russian aviation sector, issuing a temporary denial order (TDO) on the Russian cargo aircraft carrier, Aviastar, for operating aircraft on flights into and out of Russia without the BIS authorization required under the Export Administration Regulations (EAR), and providing weekly updates to its list of commercial and private aircraft operated in potential violation of the EAR.

Continue Reading April 18 – May 2, 2022 Russian Sanctions Update

On March 7, 2022, the Financial Crimes Enforcement Network (FinCEN) of the US Department of the Treasury published guidance (Guidance) for US financial institutions warning about: (1) efforts of foreign actors to evade expanding US economic sanctions and trade restrictions related to the Russian Federation and Belarus and (2) increased risk of malicious cyber-attacks and related ransomware campaigns, following the invasion of and continued military action in Ukraine.  The Guidance provides instructive red flags and related advice for all US financial institutions to evaluate, and provides information of particular relevance for Money Services Businesses (MSBs) and other FinCEN-regulated institutions undertaking transactions in what the agency calls “convertible virtual currency” (CVC).

Most notably, FinCEN strongly encourages US financial institutions that have information about CVC flows, including exchangers or administrators of CVC to: (1) be mindful of efforts to evade expanded US sanctions and export controls related to Russia and Belarus, summarized by Steptoe here; (2) submit Suspicious Activity Reports (SARs) as soon as possible regarding such conduct; (3) undertake appropriate risk-based due diligence of customers, and where required, enhanced due diligence; (4) voluntarily share information with other financial institutions consistent with Section 314(b) of the USA PATRIOT Act; and (5) consider using tools to identify assets that must be blocked or frozen under applicable sanctions.

Continue Reading What US Financial Institutions Need to Know about FinCEN’s Russian Sanctions Evasion and Ransomware Guidance

The United States government has continued to impose numerous economic sanctions and export controls measures following Russia’s invasion of Ukraine.  On February 24, 2022, the US Commerce Department’s Bureau of Industry and Security (BIS) significantly expanded export controls applicable to Russia.  On February 25, 2022, the US Treasury Department’s Office of Foreign Assets Control (OFAC) added Russian President Vladimir Putin and others to the Specially Designated Nationals (SDN) List.  It also imposed significant economic sanctions measures targeting Russia’s financial system — including by imposing sanctions on Russia’s largest financial institutions and limiting the ability of certain Russian state-owned and private entities to raise capital.  Together, OFAC’s actions, which were taken pursuant to Executive Order (EO) 14024 following Russia’s invasion of Ukraine, are estimated to affect nearly 80 percent of all banking assets in Russia.

Finally, on February 26, 2022, the United States and European Union countries, together with the United Kingdom and Canada, announced an agreement to block certain Russian banks from access to SWIFT (with Japan also agreeing the following day), to impose sanctions on Russia’s Central Bank, and to limit the ability of certain Russian nationals connected to the Russian government to obtain citizenship in their countries. They further agreed to ensure effective transatlantic coordination in implementing sanctions, including by sanctioning additional Russian entities and persons, and by working together and with other governments around the world to identify and freeze sanctioned Russian assets.

Continue Reading Biden Administration Imposes Sweeping Financial Sanctions, Export Controls after Russian Invasion of Ukraine

On February 23, 2022, the White House announced sanctions on the Nord Stream 2 pipeline following the announcement that Germany would halt certification of the project. Shortly after, the US Treasury Department’s Office of Foreign Assets Control (OFAC) named Nord Stream 2 AG and its managing director as Specially Designated Nationals (SDNs) pursuant to the Protecting Europe’s Energy Security Act (PEESA) and Executive Order (EO) 14039 of August 20, 2021. OFAC also issued General License No. 4 (GL-4) under EO 14039 authorizing US persons to engage in transactions that are ordinarily incident and necessary to the wind down of transactions involving Nord Stream 2 AG and any entity owned 50 percent or more by it, until March 2, 2022.

The day before, on February 22, 2022, OFAC named more than 40 entities, five individuals, and five vessels as SDNs under EO 14024 of April 15, 2021. The targets included two banks: Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (VEB) and Promsvyazbank Public Joint Stock Company (PSB). US persons are prohibited from engaging in any transfer, transaction, export, import, withdrawal, or other dealing involving property or interests in property of SDNs, including the two banks and Nord Stream 2 AG, and if in the possession of a US person or otherwise in the United States, such property or interest in property must be blocked and reported to OFAC in no more than ten days. The prohibitions also apply to any legal entity owned 50 percent or more by one or more SDNs, even if not specifically named or included on the OFAC SDN list.

Continue Reading Update: Biden Administration Announces Sanctions on Nord Stream 2, Russian Banks, Sovereign Debt and Other Targets

On February 21, 2022, the White House issued a new Executive Order (EO) imposing comprehensive sanctions on the disputed Donetsk and Luhansk regions of Ukraine following President Vladimir Putin’s announcement that Russia would recognize the independence of the so-called Donetsk People’s Republic (DNR) and Luhansk People’s Republic (LNR) and place Russian military forces in those territories for purported peacekeeping operations.

The new EO prohibits:

  • new investment in the DNR or LNR by US persons, wherever located;
  • the importation into the United States, directly or indirectly, of any goods, services, or technology from the DNR or LNR;
  • the exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a US person, wherever located, of any goods, services, or technology to the DNR or the LNR; and
  • any approval, financing, facilitation, or guarantee by a US person, wherever located, of a transaction by a foreign person where the transaction by that foreign person would be prohibited if performed by a US person or within the United States.


Continue Reading White House Announces First Sanctions after Russia Enters Ukraine’s Donetsk and Luhansk Regions

Economic sanctions and export controls will form a core part of any multilateral response to an escalation of Russia’s military actions targeting Ukraine. While it is not possible to predict with certainty whether an escalation will occur or what form the responsive measures would take, this blog post outlines some of the current US sanctions proposals and authorizations to assist companies in taking preliminary steps to assess their potential exposure.

As of January 2022, none of the United States, the EU, or the UK have implemented any new, significant Russia-related sanctions or export control measures concerning Russia’s recent military buildup near the Russia-Ukraine border. Based on events in 2014 and the sanctions that ensued, companies could face rapid and potentially disruptive regulatory restrictions with wide-ranging impacts on a variety of industries. Some measures could be imposed within hours of a triggering event, or even prior to a specific triggering event. The US, EU, and UK are likely to coordinate a sanctions response to some extent, but some variations across different jurisdictions’ sanctions measures are also to be expected.  According to reports, policymakers have yet to agree on the triggers for new sanctions, and diplomatic efforts are ongoing.

Continue Reading Preparing for New Russia-Related Sanctions and Export Controls

On 21 December 2021, the Court of Justice of the European Union (“CJEU”) delivered its judgment in Case C-124/20 Bank Melli Iran v Telekom Deutschland GmbH, which is the first case before the EU courts on the interpretation of Council Regulation (EC) No 2271/96 of 22 November 1996 protecting against the effects of the

On December 8, 2021, the US Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $133,860 settlement with an unnamed individual for apparent violations of the Iranian Transactions and Sanctions Regulations (ITSR). According to OFAC’s settlement notice, the individual, who was located in the United States, received four payments in his personal bank account on behalf of an Iranian company for the sale of Iranian-origin cement clinker to a company in a third country.

OFAC also found that the individual coordinated the payment and the shipment of goods with a family member at the Iranian company. The settlement notice remarks that, although the payments involved a family member, they fell outside of the general license for personal remittances, at 31 CFR § 560.550, which only applies to “noncommercial” activity.

Continue Reading OFAC Enters into Rare Settlement with Individual over Iranian Payments and Facilitation

On December 6, 2021, the US Treasury Department’s Office of Foreign Assets Control (OFAC) named one individual and 12 entities in the Democratic Republic of the Congo and Gibraltar as Specially Designated Nationals (SDNs) pursuant to the Global Magnitsky Sanctions program under Executive Order (EO) 13818.

The newly designated SDNs are part of a network of individuals and companies alleged to have provided material “support to sanctioned billionaire Dan Gertler,” who was designated under EO 13818, in December 2017, for allegedly engaging in significant corruption in the DRC mining and oil sectors. There are now 46 persons designated under EO 13813 in connection with Gertler.

Continue Reading OFAC Sanctions DRC Associates of Sanctioned Billionaire in Conjunction with New Strategy on Countering Corruption and Global Magnitsky Designations