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Welcome to Sanctions Sound-Off A forum to share developments and trends in the regulatory areas of OFAC sanctions, export controls, and BSA/AML compliance

The French bank is in discussion with U.S. authorities, particularly OFAC,  in resolving fines for facilitating transactions in violation of U.S. economic sanctions. It is currently unknown which sanctions program was violated and the number of transactions and parties involved.

This news report may have great implications on the future of banks involvement with Iran post-JCPOA and in violation of U.S. secondary sanctions on Iran.

 

The State Department announced on August 8, 2018 that the Trump administration decided it will be imposing further sanctions on Russia. This round of sanctions would be imposed under the Chemical and Biological Warfare Act of 1991 as the U.S. has accused Russia for the March 2018 poison attack on former Russian agent Sergei Skripal and his daughter in the U.K.

The first set of sanction will target specific U.S. exports to Russia that could have military use. Unless Russia takes certain steps in response to the initial round of penalties, Congress would need to impose a second, more stringent round of sanctions on Russia.

Following a 15-day Congressional notification period, this round of sanction will likely take effect on August 22, 2018.

President Erdogan of Turkey said on Tuesday, August 14th, 2018 that Turkey would prohibit the import of U.S. electronics in retaliation against the U.S. sanctions.

The escalating tension between the two NATO allies has contributed to the significant devaluation of Turkey’s currency, the lira, which has lost more than 45% of its value in the past year. On Friday, August 10th President Trump authorized tariffs of 20% on aluminum and 50% on steel.

In response to the U.S. tariff increases, President Erdogan signed a decree on August 15th that raises tax rates on US imports, including passenger cars by 120%; tobacco by 60%; and alcohol by 140%.

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On August 7, 2018, the U.S. reinstated the first wave of sanctions against Iran as the 90-day wind-down period concluded. The Trump administration reimposed sanctions that prohibit Iran purchasing U.S. banknotes, commercial aircraft, trading gold and metals, and business with Iran’s automotive sector.

The snapback provisions were evoked by President Trump’s May 8, 2018 decision to withdraw from the 2015 Joint Comprehensive Plan of Action (“JCPOA”). Under direction from the Administration, federal agencies implemented 90-day and 180-day wind-down periods for activities involving Iran that were consistent with the sanctions relief detailed in the JCPOA.

In addition to the reinstatement of select pre-nuclear deal secondary sanctions, the Administration terminated JCPOA-related authorizations that permitted the importation of Iranian-origin carpets and foodstuffs; the exportation of civilian aircraft to Iran; and activities undertaken pursuant to General License I.

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Demonstrating the importance of knowing who you’re doing business with, Amazon, the largest web-based retailer, submitted a voluntary self-disclosure to OFAC for a potential sanctions violation. According to a recent quarterly report from Amazon, it is under federal investigation after selling products to at least one Iranian on the SDN list.

Read more here.

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The U.S. Treasury Department designated 16 entities and individuals for supporting “illicit Iranian actors or transnational criminal activity.” Read more here.

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Today, President Trump issued an amendment to the E.O. easing sanctions against Sudan. The amendment extends the probationary review period allotted to the U.S. government,  giving the U.S. more time to determine whether the government of Sudan has made demonstrable progress against human rights abuses. The probationary review period was set to end today, Wednesday, July 12, making the lifting of sanctions against Sudan permanent. Many humanitarian organizations have lauded the move, saying that the government of Sudan has not yet made sufficient progress to warrant a permanent easing of U.S. sanctions. The Government of Sudan responded, issuing “a presidential decree ordering the suspension of the committee that was negotiating (the lifting of the sanctions) with the United States until October 12” according to its official news agency.

See further analysis on other implications of the E.O., specifically Sudan’s involvement with North Korea, here.

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Sanctions against Russia have been extended by the Senate – a show of widespread bipartisan support – likely due to the hot button issue of Russian interference in the 2016 presidential election. However, European allies are concerned about the legislation and its impact on European companies in the energy sector.  Read more here.

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Scope of TSRA license regarding the exportation of medical supplies to Iran broadened by the U.S. Department of the Treasury Office of Foreign Assets Control
On December 22, 2016, the U.S. Department of the Treasury Office of Foreign Assets Control (OFAC) amended the rules surrounding the General License for the exportation of medical devices to Iran.  See 31 C.F.R. Section 560.530.  Prior to the recent change, OFAC had published a list of medical supplies and devices that were eligible for exportation to Iran.  The exportation of all medical devices not included on the list would require a Specific License from OFAC.

OFAC’s recent action changed this inclusionary list to an exclusionary one.  Put differently, OFAC has now authorized the exportation of all medical devices to Iran except for products contained on a new shorter List of Medical Devices Requiring Specific Authorization (PDF).

The items on the List of Medical Devices Requiring Specific Authorization include advanced diagnostic imaging equipment, oxygen generators, high-volume pumps, and a long list of laboratory equipment.