In a Federal Register notice published on April 10, 2020, the US Department of the Treasury, Office of Foreign Assets Control (OFAC), amended its North Korea Sanctions Regulations (NKSR) to extend their application to non-US entities owned or controlled by US financial institutions. The change was mandated by Congress in Section 7121 of the National Defense Authorization Act for Fiscal Year 2020.

This jurisdictional expansion involving US sanctions on North Korea is noteworthy. With the exception of the Cuba and Iran sanctions programs, US sanctions prohibitions typically do not apply directly to non-US entities owned or controlled by US persons. Historically, the extension of US sanctions prohibitions to foreign subsidiaries of US companies has been one of the most controversial “extraterritorial” aspects of US sanctions programs. (So-called “secondary sanctions” do generally apply to non-US entities, but they do not impose “prohibitions” under US law.)

Continue Reading Under Congressional Mandate, OFAC Asserts Jurisdiction Under North Korea Sanctions Regulations Over Non-US Entities Owned or Controlled by US Financial Institutions

Following Steptoe’s Client Advisory of April 7, 2020, “US and EU Sanctions Policies on Humanitarian Exports and COVID-19 Relief,” the US Office of Foreign Assets Control (OFAC) issued a Fact Sheet on April 16, “Provision of Humanitarian Assistance and Trade to Combat COVID-19,” which provides additional information on OFAC policies covered

Exporters, non-governmental organizations, financial institutions, and individuals that are subject to US jurisdiction may require a license from the US Treasury Department’s Office of Foreign Assets Control (OFAC) to support COVID-19 relief efforts in territories subject to comprehensive US sanctions (e.g., Crimea, Cuba, Iran, North Korea, Syria) and territories whose governments are subject to stringent

It would be an understatement to describe the difference in fines levied by the US Office of Foreign Assets Control (“OFAC”) and the UK Office of Financial Sanctions Implementation (“OFSI”) as a gulf.  Prior to 31 March 2020, OFSI had concluded a total of three enforcement actions, the most significant of which resulted in a fine of just over £146,000.

By comparison, OFAC has levied nearly $9 million in fines in the first few months of 2020 and during the previous year levied nearly $1.3 billion in total.  The largest of these was a fine of $657 million that was handed down to Standard Chartered Bank (“Standard Chartered”) for violations of numerous sanctions regulations.  The majority of the OFAC settlement was part of a global settlement that included numerous US federal and state regulators, as well as the UK’s Financial Conduct Authority (which handed out a £102 million fine for anti-money laundering breaches).

Continue Reading Standard Chartered fined £20.47 million; OFSI finally showing its teeth?

On 12 March 2020, OFAC designated Switzerland-based oil broker and Rosneft subsidiary TNK Trading International SA (“TNK Trading”) as a Specially Designated National (“SDN”) pursuant to Executive Order 13850 for operating in the oil sector of the Venezuelan economy. The action follows OFAC’s February 18, 2020 designation of another Rosneft subsidiary, Rosneft Trading SA (“Rosneft

Click here to read the full Client Advisory by Steptoe.

What can we learn from recent SDN designations by the US Office of Foreign Assets Control (OFAC) on multinationals such as subsidiaries of COSCO and Rosneft Trading S.A.?

OFAC has shown a willingness to impose, then lift, sanctions on major companies that play an

On February 26, 2020, the Office of Foreign Assets Control (OFAC) announced a $7,829,640 settlement with Switzerland-based Société Internationale de Télécommunications Aéronautiques (SITA) for 9,256 violations of the Global Terrorism Sanctions Regulations (GTSR). The settlement, which concerns SITA’s provision of computer services and software subject to U.S. jurisdiction for the benefit of sanctioned airlines, is the latest OFAC enforcement action to highlight the importance of sanctions compliance for software and digital service providers inside and outside the United States.

The takeaway: Non-U.S. providers of software and digital services should avoid the provision of U.S.-origin products or the involvement of U.S.-based infrastructure or subsidiaries in activities with U.S.-sanctioned customers and territories, unless licensed under, or exempted from, OFAC regulations.

Continue Reading Data Breach: OFAC Settles with Swiss Firm over Digital Services for Sanctioned Airlines

Effective February 27, 2020, the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury issued General License (GL) Number 8 to authorize certain humanitarian transactions involving the Central Bank of Iran (CBI).  As discussed further below, GL No. 8 and other measures taken by the US Government should now facilitate transfers, transactions, and certain activities related to the exportation and reexportation of agricultural commodities, medicines, and medical devices to Iran. Before issuance of GL No. 8, humanitarian trade from the United States and involving U.S. persons had been significantly and negatively affected based on the US Government’s “maximum pressure” campaign against the Government of Iran.

Continue Reading New OFAC General License No. 8 Authorizes Agricultural Commodity and Medical Commodity Transactions Involving the CBI

On February 18, 2020, OFAC designated Switzerland-based oil broker Rosneft Trading SA (“Rosneft Trading”), a subsidiary of Rosneft Oil Company, as a Specially Designated National (“SDN”) for “operating in the oil sector of the Venezuelan economy,” under Executive Order 13850.  The US government had been weighing possible sanctions against Rosneft entities due to their activity in Venezuela for months.  A US official stated during a briefing that Rosneft Trading handled more than half of Venezuela’s oil exports and took steps to conceal those shipments, and that this sanctions designation was “a reaction to the growing and increasingly central role of Rosneft in the affairs of Venezuela, particularly in the course of the last year.”  Illustrating the policy deliberations that appear to have preceded this designation, a US Department of Energy official stated that this action was viewed as not likely to destabilize global oil markets, which have seen recent price declines.

OFAC also sanctioned Didier Casimiro, Rosneft Trading’s Chairman and President, who a State Department press release notes “also serves as Rosneft’s Vice President for Refining, Petrochemical, Commerce and Logistics.”  It is noteworthy that the US government intentionally targeted an officer and director of the Rosneft parent entity.  Mr. Casimiro’s profile on Rosneft’s website confirms that he holds that VP position, along with membership on the board of Rosneft and a small number of shares of Rosneft.  The Rosneft web page listing other positions held by board members states that Mr. Casimiro “is Chairman of the Board of Directors at PJSC Saratov Oil Refinery, PJSC NC Rosneft – МP Nefteproduct, CJSC Rosneft-Armenia, LLC RNY, Rosneft Trading S.A., LLC «RNCommerce», LLC «RN-Refining», Chairman of the Supervisory Board at PRJSC LINIK, member of the Board of Directors at SLAVNEFT, Slavneft-YANOS PJSC, Rosneft Global Trade S.A., JSC SPIMEX, Rosneft Techno S.A., PJSOC Bashneft, LLC «RNForeign Projects», Nayara Energy Limited.”  The designation of Mr. Casimiro, if he continues to hold these senior positions within Rosneft and other organizations, could potentially add compliance complications in doing business with Rosneft or those other organizations, along with the direct and more significant impact of these sanctions actions on Rosneft Trading and Mr. Casimiro himself.

Continue Reading US Sanctions Rosneft Subsidiary and a Rosneft Director and Vice President for Venezuela Oil Trade