Worldwide: Sanctions Roundup: Third Quarter 2016 And Executive Order On Burmese Sanctions

OFAC, acting under the direction of President Obama's Executive Orders, has lifted the economic and financial sanctions against Burma and Côte D'Ivoire. The revisions open these countries, and their financial markets, to significant Western investment. Iran continues to allege that Western financial institutions have refused to enter its markets despite the Joint Comprehensive Plan of Action. Additionally, the European Council and OFAC continue to impose and expand sanctions against Russia for its annexation of Crimea and disruptive activities in eastern Ukraine.

Iran Nuclear Deal

On July 20, United Nations Secretary-General Ban Ki-moon urged Western powers to ensure that the Joint Comprehensive Plan of Action ("JCPOA") delivered "tangible benefits to the Iranian people." These comments came after complaints from Tehran that it has not been fully benefiting from the historic deal.

On July 29, senior Iranian officials stated that the country would explore partnerships with non-Western financial institutions. One official stated "[w]e are in talks with many countries, mainly China, Russia and African countries to widen our banking cooperation aimed at resolving existing banking, financial problems." These comments come after Britain's vote to leave the European Union and the rise of US presidential nominee Donald Trump, who stated that he would "tear up" the JCPOA on his first day as President, have hampered efforts by Western governments to encourage financial institutions to conduct business in the country.

On September 1, British Airways announced that it would resume direct flights from London to Tehran. British Airways has not piloted direct flights to Iran since 2012 when European sanctions against the country were put in place. A British Airways spokesman stated "the Iranians have been extremely helpful in setting up this important new route...Tehran is an important destination for British Airways."  British Airways is the second European air carrier to resume flights to Iran, following Air France's re-establishment in April.

On September 5, Seyed Mohsen Ghamsari, director of the National Iranian Oil Company ("NIOC"), stated that Iran was prepared to raise its oil production to 4 million barrels per day. Ghamsari stated that, depending on market demand, Iran plans to return output to pre-sanction levels. Earlier this year, attempts by OPEC and non-OPEC oil exporters to reach a pact on stabilizing output levels foundered because Iran, which is hoping to increase exports, declined to participate.

On September 26, Ali Akbar Salehi, head of Iran's atomic energy organization, alleged that Tehran remains under certain sanctions which were to be removed under the JCPOA. Salehi stated that Iran had honored all of its commitments under JCPOA but that the "comprehensive and expeditious removal of all sanctions [has] yet to be met." Salehi's comments were made to the general conference of the International Atomic Energy Agency. The JCPOA was signed by the United States, Russia, China, Britain, France and Germany; however, Salehi did not blame any specific country for not honoring their commitments.

Cuba-Related Sanctions for Q3 of 2016

On July 8, OFAC issued two FAQs regarding Cuban sanctions, each addressing US dollar transactions. OFAC clarified that, pursuant to a general license, banking institutions, registered brokers or dealers in securities, and US registered money transmitters are permitted to process authorized remittances to or from Cuba without having to obtain a specific license. Additionally, OFAC made clear that US depository institutions are permitted to open correspondent accounts at Cuban banks located in Cuba and at foreign banks located in Cuba, but Cuban banks are not generally licensed to open such accounts at US banks.

On August 22, Iran's Foreign minister Mohammad Javad Zarif met with Cuban leaders, including Raul Castro, in Havana to discuss possible partnership opportunities between the two countries. Cuban Minister of Foreign Trade and Foreign Investment Malmierca Diaz, stated "[b]oth Cuba and Iran have reached a roadmap after years of sanctions which they should use to explore new economic opportunities and take advantage of each other's capabilities."  Iran maintains extensive investments and economic relationships in Latin America including a USD 500 million credit line for Venezuela.

On September 10, Cuba's Foreign Minister, Bruno Rodriguez Parrilla, announced at a news conference in Havana that "[t]he economic, commercial and financial blockade imposed by the United States of America on Cuba persists. The blockade has hurt the Cuban people." Parrilla claimed that the US embargo on Cuba has cost the island nation USD 125.9 billion since its inception and that, despite the thaw in US-Cuba relations, the financial situation of Cuba has not improved. Despite the re-establishment of diplomatic relations between the two countries, Congress has not fully lifted the US embargo on Cuba.

On September 13, President Obama renewed, for another year, the Trading with the Enemy Act, which extends the economic embargo imposed on Cuba. President Obama stated that "the continuation for one year [of the Cuban embargo] is in the national interest of the United States." These restrictions will remain in place until at least September 14, 2017. Last year, the United Nations General Assembly voted 191-2 to condemn the US blockade, with only the US and Israel opposed, but this year, for the first time, on October 26, the US abstained and the resolution passed 191-0 (with Israel also abstaining).

Russian Related Sanctions for Q3 of 2016

On July 1, the European Union formally extended economic sanctions against Russia in response to its actions in Crimea until January 31, 2017. The extended sanctions limit access to the European Union's capital markets for a number of Russian financial institutions. Restrictions on arms technology and oil production will also be extended. In response, Russian President Vladimir Putin extended the embargo on food imports from countries that joined in the anti-Russian sanctions.

On August 11, the Wall Street Journal reported that US lawmakers were considering levying additional sanctions against Russia in response to the alleged hacking of the Democratic National Committee. House Minority Leader, Nancy Pelosi, stated "I know for sure it is the Russians [and] we are assessing the damage." On October 7, President Obama agreed with the contentions of Pelosi and officially stated that Russia was responsible for hacking Democratic Party organizations. A senior administration official stated that "the President has made it clear that we will take action to protect our interest, including in cyberspace," referring to a 2015 Executive Order signed by President Obama making it easier to impose sanctions against anyone tied to a "cyber-enabled" activity that impacted US national security. To date, however, no new sanctions have been imposed on Russia relating to their alleged hacking of the Democratic National Committee.

On September 1, the US Treasury Department imposed a new set of sanctions on a range of Russian companies and individuals. These companies include certain subsidiaries of the Russian energy company Gazprom and the bridge contractor linking Crimea to mainland Russia. The Chairman of Gazprom, Alexei Miller, stated that the new round of sanctions would not affect Gazprom's operations and that the company only purchased five percent of its equipment abroad.

On September 15, the European Council extended individual asset freezes and travel restrictions against 146 people and 37 entities in Russia. These individuals and entities are allegedly responsible for actions which undermine the territorial integrity, sovereignty and independence of Ukraine. The asset freezes and travel restrictions were levied, along with economic sanctions, in response to Russia's annexation of the Crimea region of Ukraine. These restrictions were extended until March 15, 2017.

On September 21, German Economic Minister, Sigmar Gabriel, stated that he favored lifting EU sanctions against Russia but that it would require some progress on peace in Ukraine. These comments came as the German Minister headed trade talks with Russian President Vladimir Putin. Gabriel stated "I am doing what I can so that the sanctions, imposed after the annexation of Crimea, can be lifted step by step, and in the same measure as there is tangible progress in implementing the Minsk Agreement." Putin added that Germany remained one of Russia's most important trade partners.

South Sudan-Related Sanctions for Q3 of 2016

On July 18, Uganda's President, Yoweri Museveni, said he opposed the United Nations' plan to impose an arms embargo on South Sudan, saying it would weaken the country's army just as it was trying to contain violence. The statement came after Secretary General Ban Ki-moon urged the Security Council to block arms sales in an effort to end more than two years of fighting. President Museveni stated that "[w]hen you impose an [arms] embargo on South Sudan, you destroy the local force on which you need to build a strong integrated army."

On August 30, US Secretary of State John Kerry urged the leaders of South Sudan to implement a peace deal or face possible UN arms embargo and sanctions. These calls come following a meeting in Nairobi with Kenyan President Uhuru Kenyatta and ministers from Sudan and South Sudan. Secretary Kerry stated "[i]t's really up to the people, the leadership of South Sudan to lead and to do the things that they've promised to do...If they don't, then obviously it may be that the UN arms embargo and sanctions are going to be the tools of last resort." Approximately 4,000 extra UN troops were deployed to South Sudan in July following fighting in South Sudan's capital Juba.

On September 16, the Security Council Committee concerning South Sudan was briefed by the Coordinator of the Panel of Experts and a Special Representative on Sexual Violence in Conflict. Ms. Zainab Hawa Bangura, Secretary-General on Sexual Violence in Conflict, noted systemic patterns of sexual violence during the conflict in South Sudan. Ms. Bangura requested that the Committee consider activating targeted sanctions against perpetrators of sexual violence.

Syria-Related Sanctions for Q3 of 2016

On July 21, the US Department of the Treasury imposed new sanctions on Syria, targeting the financial networks of the government of President Bashar al-Assad. Acting Under Secretary for Terrorism and Financial Intelligence, Adam Szubin, stated that "Treasury will continue to act against those responsible for fueling the Assad regime's repressive action and dangerous weapons proliferation." During the course of the conflict in Syria, over 470,000 Syrians have died and half of the country's population of about 23 million has been displaced.

On August 30, calls were made by international organizations to levy sanctions against Syria following a UN commission's finding that government forces twice used chemical weapons, specifically mustard gas, in the ongoing civil war in the country. However, the UN Security Council failed to agree to any action, with Russia questioning the commission's evidence. Russian Ambassador Vitaly Churkin stated "clearly there is a smoking gun. We know that chlorine most likely has been used—that was already the finding of the fact-finding mission before—but there are no fingerprints on the gun...There is nobody to sanction in the report which has been issued."

Burma Related Sanctions for Q3 of 2016 and Executive Order of October 7, 2016

On September 14, President Obama pledged to lift all remaining US sanctions against Burma. This announcement came during a State visit by Myanmar's leader, Daw Aung San Suu Kyi, who became State Counselor (effectively Prime Minister) following the democratic elections last year. President Obama stated removing US sanctions "is the right thing to do in order to ensure that the people of Burma see rewards from a new way of doing business and a new government." Certain human rights organizations criticized the decision to remove sanctions claiming that it came too soon. The organizations claimed that the military still controls large portions of the parliamentary seats and government agencies in Myanmar. John Sifton, Washington director of Human Rights Watch, stated "Obama and Suu Kyi just took important tools out of their collective tool kit for dealing with the Burmese military, and threw them into the garbage."

On October 7, President Obama signed an Executive Order terminating the national emergency with respect to Burma and directing that the financial sanctions issued against the country by OFAC be lifted. Acting Under Secretary Adam Szubin stated that "lifting economic sanctions will further support trade and economic growth, and Treasury will continue to work with Burma to implement a robust anti-money laundering regime that will help to ensure the security of its financial system." As a result of President Obama's Executive Order, the sanctions on Burma administered by OFAC are no longer in effect. As such:

  • All individuals and entities blocked pursuant to the Burmese Sanctions Regulations ("BSR") have been removed from OFAC's SDN List;
  • All property and interest in property blocked pursuant to the BSR are unblocked;
  • All OFAC-administered restrictions under the Burma sanctions program regarding banking or financial transactions with Burma are no longer in effect; and
  • OFAC will remove the BSR from the Code of Federal Regulations.

Additionally, the Financial Crimes Enforcement Network (FinCEN) issued an administrative exception to its 2003 finding that Burma is a "jurisdiction of primary money laundering concern" under Section 311 of the US Patriot Act. Under this administrative exception, US financial institutions are permitted to continue providing correspondent services to Burmese banks, subject to the appropriate due diligence requirements. OFAC stated that it intends to leave the 2003 finding in place, subject to the administrative exception, until "Burma has made sufficient progress in addressing [its anti-money laundering] issues."

US Authorities Continue to Enforce Sanctions Through Settlements

On July 5, Alcon Laboratories Inc. agreed to pay $7,617,150 for apparent violations of the Iranian Transactions and Sanctions Regulations and Sudanese Sanctions Regulations. Specifically, OFAC alleged that Alcon engaged in the sale and exportation of medical end-use surgical and pharmaceutical products from the United States to distributors located in Iran and Sudan from August 2008 to December 2011. In reaching a settlement, OFAC recognized Alcon's enhanced compliance procedures for requesting OFAC licenses and that Alcon had previously and subsequently received an OFAC license to sell and export identical products.

On July 27, OFAC issued a Finding of Violation to Compass Bank, which uses the trade name BBVA Compass, for violations of the Foreign Narcotics Sanctions Regulations. From June 21, 2013 to June 3, 2014, Compass maintained accounts on behalf of two individuals on OFAC's list of Specially Designated Nationals and Blocked Persons. Compass determined that it failed to identify the accounts due to a deficiency in the bank's sanctions screening software that prevented it from reviewing dormant or inactive accounts. In issuing a Finding of Violation against Compass, OFAC considered that Compass did not confer any economic benefit to an SDN and that Compass took remedial action in response to the apparent violations.

On August 8, OFAC issued a Finding of Violation against AXA Equitable Life Insurance Company for violations of the Narcotics Kingpin Sanctions Regulations. Specially, OFAC alleged that AXA maintained and serviced life insurance policies for Leopoldo Lopez Grayeb, Noemi Lopez Fernandez and Juan Manual Lopez Fernandez, all of whom were designated pursuant to the Kingpin Regulations on December 3, 2009. Subsequent to OFAC's designation, AXA failed to screen the names of the policyholders and failed to block policies and premium payments. In issuing a Finding of Violation, OFAC considered that AXA had not previously committed substantially similar violations and that the company cooperated with OFAC's investigation.

On September 7, World Class Technology Corporation ("WCT") agreed to pay $43,200 for alleged violations of the Iranian Transactions and Sanctions Regulations. Specifically, WCT allegedly exported seven shipments of orthodontic devices between April 2008 and July 2010, collectively valued at $59,886, from the United States to Germany, the United Arab Emirates and Lebanon, with the knowledge that the shipments were intended for Iran. In reaching the settlement amount, OFAC considered that WCT lacked commercial sophistication in conducting international sales and cooperated with OFAC in developing a sanctions compliance procedure.

On September 13, PanAmerican Seed Company ("PanAm Seed") agreed to pay $4,320,000 for alleged violations of the Iranian Transactions and Sanctions Regulations. Specifically, PanAm Seed allegedly indirectly exported seeds, primarily of flowers, to two Iranian distributors on 48 occasions from May 2009 to March 2012. OFAC alleged that PanAm personnel engaged in a practice designed to conceal the involvement of Iran. In reaching the settlement amount, OFAC considered that PanAm Seed, over the years, provided over $770,000 in economic benefit to Iran and did not initially cooperate with OFAC's investigation.

Federal Civil Penalties Inflation Adjustment Act ("FCPIA")

On July 1, OFAC issued regulations to implement the Federal Civil Penalties Inflation Adjustment Act of 1990 ("FCPIA"). These regulations, which take effect on August 1, 2016, adjust for inflation the maximum civil monetary penalties that may be assessed against an individual or corporation under the relevant OFAC regulations. The maximum civil monetary penalties which may be imposed by OFAC are as follows:

  • International Emergency Economic Powers Act ("IEEPA"): A maximum penalty amount of the greater of $284,582 or twice the amount of the underlying transaction per violation.
  • Trading with the Enemy Act ("TWEA"): A maximum penalty amount of $83,864 per violation.
  • Antiterrorism and Effective Death Penalty Act ("AEDPA"): A maximum penalty amount of the greater of $75,122 or twice the amount of which a financial institution was required to retain possession or control.
  • Foreign Narcotics Kingpin Designation Act ("FNKDA"): A maximum penalty amount of $1,414,020 per violation.
  • Clean Diamond Trade Act ("CDTA"): A maximum penalty amount of $12,856 per violation.

Other Notable Developments

On September 14, President Obama signed an Executive Order, titled Termination of Emergency with Respect to the Situation in or in Relation to Côte D'Ivoire, which lifted economic sanctions against the African country. The Executive Order stated that the national emergency declared in Executive Order 13396 was no longer present. The national emergency originally stemmed from the massacre of large numbers of civilians, widespread human rights abuses, attacks against international peacekeeping forces, and significant political violence in Côte D'Ivoire. President Obama cited the successful completion of the October 2015 Presidential election and the combatting of illicit trafficking of natural resources as the impetus for removing economic sanctions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.