Tag: Executive Order 13224

Amendment to the Global Terrorism Sanctions Regulations

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The Office of Foreign Assets Control (OFAC) amended the Global Terrorism Sanctions Regulations, 31 C.F.R. part 594 to define the term “financial, material, or technological support,” as used in sanction regulations.

Section 594.201(a)(4)(i) of the regulations implements section 1(d)(i) of Executive Order 13224, as amended, by blocking the U.S. property of persons who assist in, sponsor, or provide financial, material, or technological support for acts of terrorism that threaten the security of U.S. nationals or the national security, foreign policy, or economy of the U.S.

New section 594.317, in subpart C of the GTSR, defines the term “financial, material, or technological support” to mean any property, tangible or intangible, and includes a list of specific examples:

“The term financial, material, or technological support, as used in § 594.201(a)(4)(i) of this part, means any property, tangible or intangible, including but not limited to currency, financial instruments, securities, or any other transmission of value; weapons or related materiel; chemical or biological agents; explosives; false documentation or identification; communications equipment; computers; electronic or other devices or equipment; technologies; lodging; safe houses; facilities; vehicles or other means of transportation; or goods.

‘‘Technologies’’ as used in this definition means specific information necessary for the development, production, or use of a product, including related technical data such as blueprints, plans, diagrams, models, formulae, tables, engineering designs and specifications, manuals, or other recorded instructions.”

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OFAC: Are You In Compliance?

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ATTUS Technologies was kind enough to host a webinar on OFAC compliance. Bradley Allen, CAMS, gave the presentation and these are my notes.

The mission of Office of Foreign Assets Control is to administer and enforce economic and trade sanctions based on U.S. foreign policy and national security goals against selected targets. It really came into the forefront as a result of the Post 9/11 policies. OFAC is not just about terrorists and terrorism countries, but also narcotics traffickers and drug kingpins.

Bradley led us through the history of OFAC

  • Secretary Gallatin – Embargo Act of 1807
  • Civil War “Trading with the Enemy Act” (TWEA)
  • WW I “Trading with the Enemy Act of 1917”
  • WW II Office of Foreign Funds Control (FFC)
    • German Invasion of Norway 1940
    • FFC Regulations – Economic Warfare
  • FFC becomes OFAC – December 1950
    • TWEA applied to North Korea & China
  • TWEA applied to Cuba – 1963
  • IEEPA – Peacetime Sanctions – 1977

The key piece is the Specially Designated Nationals list that is gathered by several government agencies with a thorough review process before getting on the list. (It also makes it hard to get off the list.)

The enforcement options can range from no action, issuing a warning letter, a revocation of an export license, civil penalties and even criminal prosecution. There is currently a $250,000 minimum penalty or 2x the value of transaction, whichever is greater. There have been very few criminal prosecutions. The new enforcement guidelines are under IEEPA Enhancement Act October 16, 2007 (P.L. 110-96, 121 Stat 1011) The penalty depends on whether the conduct was egregious and whether you voluntarily disclosed the violation.

There are various pieces of authority for the OFAC lists and enforcement:

  • Trading With the Enemy Act (TWEA), P.L. 65- 91, 40 Stat. 411 (Oct. 6, 1917)
  • International Emergency Economic Powers Act (IEEPA), P.L. 95-223, 91 Stat. (Dec. 28, 1977)
  • Executive Order 13224
  • Various other statutes

Chiquita was fined $25 million by OFAC for paying a Columbian terrorist group for protection. Farq had threatened to kill the Chiquita workers.

Lloyds TSB was fined $350 million for doing business in Iran. Even though they were based in London, they routed wire transfers through new York. That made them subject to OFAC.

For OFAC compliance, you need to screen all new relationships before engagement in business (clients, vendors, and employees). The OFAC list is updated frequently (there were 54 updates last year.) You need to re-screen periodically and you need a policy to memorialize when you re-screen.

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