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On October 30, 2020, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) issued an advisory on potential sanctions risks arising from dealings in high-value artwork (the “Advisory”). The Advisory follows a July 2020 report from the U.S. Senate Permanent Subcommittee on Investigations detailing how the art industry could be used to evade U.S. sanctions, notably in regard to sanctioned Russian individuals.

The Advisory focuses on the market for high-value artwork and provides guidance on mitigating risks related to transactions involving persons on the OFAC List of Specially Designated Nationals (“SDNs”) and territories subject to comprehensive sanctions (i.e., Crimea, Cuba, Iran, North Korea, Syria).

The Advisory targets art galleries, museums, private art collectors, auction companies, agents, brokers, and other participants in the art market. In describing the vulnerabilities in the market, the Advisory notes that the lack of transparency and high degree of anonymity and confidentiality in the sale and purchase of high-value artworks make the market attractive for illicit actors to obscure their identities and source of funds.…

Continue Reading The Joy of Sanctions: OFAC Paints Picture of High-Risk Artworks

On August 25, 2020, the US Department of Commerce’s Bureau of Industry and Security (BIS) published a final decision by the Undersecretary, affirming an Administrative Law Judge’s (ALJ) imposition of a US $ 31.4 million civil monetary penalty on Nordic Maritime Pte. Ltd., a Singapore-based marine seismic company, and its chairman (together, the “Respondents”), for knowingly exporting highly controlled equipment to Iran. This final decision follows the Undersecretary’s previous decision vacating and remanding the initial penalty as disproportionate to that imposed in similar cases (Remand Order). Our previous blog post discussing this unusual action is available here.

By way of background, the ALJ, in his initial recommended decision and order (RDO) dated February 7, 2020, found the Respondents liable for violating the Export Administration Regulations (EAR), and recommended a civil monetary penalty of US $ 31.4 million. The Respondents then appealed the ALJ’s decision to the Undersecretary, whose first decision, including the Remand Order, was published in March 2020. In that decision, the Undersecretary affirmed the ALJ’s findings on liability, but vacated the penalty and remanded it back to the ALJ for reexamination because the “analysis of damages in the RDO [was] incomplete.” The Undersecretary also listed a number of cases settled with proportionally lower penalties to guide the ALJ on remand. The ALJ then ordered additional briefing focused on the penalty amount, and reinstated the original penalty with a fuller justification in a subsequent RDO dated July 15, 2020. The Undersecretary affirmed the US $ 31.4 million civil monetary penalty in its entirety.…

Continue Reading BIS Undersecretary Affirms USD 31.4 Million Penalty on Singaporean Company for Iran Sanctions Violations

On July 3, the US Department of Justice (DOJ) and Securities and Exchange Commission (SEC) issued the second edition of the Resource Guide to the US Foreign Corrupt Practices Act (the 2020 Guide), the first full-scope overhaul of the Resource Guide since its issuance in 2012.

As with the original edition, the 2020 Guide will…

On July 1, 2020, the US Departments of State, Treasury, Commerce, and Homeland Security jointly issued an advisory, “Risks and Considerations for Businesses with Supply Chain Exposure to Entities Engaged in Forced Labor and other Human Rights Abuses in Xinjiang” (the “Advisory”). Although this Advisory does not set out any new laws, it was published shortly after the Uyghur Human Rights Policy Act of 2020 (the “Act”) was signed into law on June 17, 2020. These developments suggest a shift in enforcement focus on the Xinjiang Uyghur Autonomous Region (“XUAR”), including imports from XUAR, exports and technology transfers to XUAR, and other business activity in China that may implicate XUAR.

The Advisory urges US and non-US businesses, academic institutions, research service providers, and investors with connections to XUAR to implement appropriate human rights due diligence policies, procedures, and internal controls to mitigate reputational, economic, and legal risks. The Advisory suggests that the failure to take appropriate due diligence steps may increase the risk of sanctions or law enforcement activity by the US government.…

Continue Reading US Agencies Issue Xinjiang Business Advisory Targeting Tech and Other Industries Along with Supply Chains

On June 17, 2020, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the US Department of State announced the addition of 17 individuals and 22 entities to the List of Specially Designated Nationals and Blocked Persons (SDN List), pursuant to the Caesar Syria Civilian Protection Act of 2019 (Caesar Act) and Executive Order 13894 (EO 13894), for their support of the Bashar al-Assad government in Syria, and actions to undermine peace efforts in the country.  The State Department described the concurrent designations as part of a “whole-of-government campaign by the United States aimed at deterring the Assad regime from continuing its attacks against the Syrian people.”
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Continue Reading Treasury, State Departments Sanction Syrian Government and Supporters