United States: U.S. Economic Sanctions: A 3/4-Year Review

Last Updated: September 29 2017
Article by Matt Fogarty

Aside from one last mid-January initiative by the Obama Administration to begin rolling back sanctions targeting Sudan, the U.S. Treasury Department's Office of Foreign Assets Control ("OFAC") was quiet at the start of 2017 and during the first 100 days of the transition. However, whether because of long-running investigations coming to a close or as a result world events, there have been a number of intriguing and important sanctions developments over the last several months both in the realm of enforcement and in the imposition of new sanctions.

New Sanctions: North Korea and Venezuela

Aside from a modest rollback regarding the Obama Administration's effort to allow Americans to travel to Cuba, a number of enforcement cases relating to Iran, some additional designations with respect to Syria, and sanctions-enabling legislation relating to Russia, much of the recent news in economic sanctions has been dominated by two countries: North Korea and Venezuela.

Increased tensions between the U.S. and North Korea, prompted by North Korea's recent missile and nuclear tests, as well as a war of words between Pyongyang and the White House, have led to a flurry of additions of North Korean entities and individuals to OFAC's List of Specially Designated Nationals (the "SDN List").  OFAC has added a number of Russian and Chinese entities and individuals to the SDN List under its North Korea sanctions program on the grounds that these entities and individuals are involved in or supportive of North Korea's nuclear and ballistic missile programs.

Finally, on September 20, 2017, President Trump issued a new Executive Order ("EO") imposing additional sanctions on North Korea. Among other steps, this new EO expanded the grounds on which OFAC is authorized to designate SDNs to include entities that engage in significant transactions with North Korea, initiated restrictions on immigrant and non-immigrant entry into the United States from North Korea, and banned aircraft from landing in the United States and vessels from entering U.S. ports if they have, within the last 180 days, landed or entered ports in North Korea. While the real force of this new EO may not be felt unless and until OFAC identifies new entities and invidivuals to designate, the inclusion of the travel ban and port restrictions strongly resemble prohibitions copied from the more restrictive days of the Cuba embargo.

In this respect, the situation with North Korea seems likely to continue to deteriorate as the Trump Administration uses additional designations and, where possible, additional sanctions measures to increase pressure on Moscow, like these to increase pressure on Moscow, Beijing, and other governments to more effectively counter the North Korea threat. For this reason, we anticipate that more Chinese companies, in particular, may be added to the SDN List over the coming months, potentially including companies with significant partnerships in the United States and elsewhere. In this regard, it is critical that companies screen their Chinese and Russian business partners on a regular basis in order to ensure they are not doing business with any newly designated SDNs.

As to Venezuela, early in 2017, the Trump Administration identified the Venezuelan Executive Vice President, Tareck El Aissami, as a narcotics trafficker under the Foreign Narcotics Kingpin Designation Act. Subsequently, following months of civil unrest in the country, the Trump Administration added a number of other Venezuelan government officials to the SDN List, most notably including President Nicolas Maduro, several members of his cabinet, and much of the Venezuelan Supreme Court.

And then on August 24, President Trump issued an EO imposing sectoral sanctions similar to those used to target Russia. These sectoral sanctions prohibit certain extensions of credit and other investments involving the government of Venezuela and the state-owned oil company, Petroleos de Venezuela, S.A. ("PdVSA"). Along with the EO, OFAC issued a number of general licenses, the most intriguing of which authorized transactions involving Citgo, the retail presence of PdVSA.

Old Sanctions: Sudan

As noted, in January 2017, the Obama Administration, acknowledging the progress that had been made in resolving the conflict in Sudan, began the process of rolling back the Sudan sanctions. Specifically, President Obama issued an EO establishing a general license to authorize all activities that would otherwise be prohibited under the Sudanese Sanctions Regulations. The January 2017 EO further initiated a six-month review after which, provided the peace process continues, the original EO would be formally revoked.

In July, however, President Trump issued a new EO extending the review period for another three months and, essentially, delaying the formal lifting of sanctions. Further, while the general license remains in place and U.S. companies could technically do business with Sudan, the country remains designated a State Sponsor of Terrorism and is still the subject of divestment legislation in a number of U.S. states. For this reason, business involving Sudan continues to carry a heightened level of risk.

Enforcement, Enforcement, and More Enforcement

In addition to developments in these sanctions programs, both old and new, OFAC was busy during the summer months wrapping up a number of enforcement cases. The most prominent case, which has been discussed widely, is the $1.19 billion penalty issued to Chinese telecom company, ZTE. However, other highlights include:

  • A $2 million penalty issued to ExxonMobil for transactions with a Russian SDN. In particular, in 2014, Exxon signed a number of deals with the Russian oil company, Rosneft. While Rosneft itself was not an SDN at the time, the company's CEO and the signatory for Rosneft, Igor Sechin, had been designated under one of the Ukraine-related sanctions programs. This case highlights the need to screen both business partners and, to the extent feasible, any executives or counterparties involved in a transaction.
  • American Export Lines paid a more than $500k penalty for transshipping goods through Iran. Specifically, the company had shipped a number of used and junked cars and parts from the United States to Afghanistan. During transit, the cars and parts transited through Iran in violation of the Iranian Transactions and Sanctions Regulations. As this case illustrates, as a general matter, OFAC's sanctions programs prohibit any business involving sanctioned countries. This includes not only sourcing goods from or supplying goods to sanctioned territories, but simply transiting goods through sanctioned territories, as well.

These are just a few of the many enforcement notices issued during the summer. Additional cases can be found on OFAC's Recent Actions page, which is available here: https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/OFAC-Recent-Actions.aspx.

Conclusion

While it is impossible to predict how tensions with North Korea or the domestic situation in Venezuela will play out, the Trump Administration has made clear that sanctions—specifically, denying certain parties access to the U.S. financial system—are a preferred method both for countering instability and deterring aggression. As a tool of foreign policy, sanctions developments can happen quickly and often take effect immediately. In this respect, it is critical for all U.S. and non-U.S. companies with significant business in the United States to maintain an effective risk-based compliance program. Torres Law will continue monitoring any new OFAC developments and will keep you appraised of any important changes.

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
Events from this Firm
22 Oct 2017, Conference, Texas, United States

What to Expect

  • Three Tracks –Import, Export, General
  • International Trade Compliance Hot Topics
  • Valuation Seminar 10/25/17 9:00am-3:00pm
 
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.