OFAC took an additional step toward further implementation of President Obama’s new policy direction toward Cuba on October 17, with the publication of a final rule amending the Cuban Assets Control Regulations, 31 CFR Part 515 (CACR). Of those most relevant to financial institutions, OFAC updated the CACR by, among other things, amending paragraphs (c) and (f) of section 515.584, which relates to certain financial transactions involving Cuba. Section 515.584(c), as outlined in OFAC’s set of updated FAQs, “authorizes all transactions incident to the processing and payment of credit and debit card transactions for third-country nationals traveling to, from, or within Cuba.” FAQ number 49 further explains that “[a]ny person subject to U.S. jurisdiction, including U.S. financial institutions and their foreign branches, may conduct transactions authorized by [section 515.584(c)].” Section 515.584(f), as explained by FAQ 73, permits: Any banking institution …that is a person subject to U.S. jurisdiction is authorized to provide financing for exports or reexports of items, other than agricultural commodities, authorized pursuant to § 515.533, including issuing, advising, negotiating, paying, or confirming letters of credit (including letters of credit issued by a financial institution that is a national of Cuba), accepting collateral for issuing or confirming letters of credit, and processing documentary collections. OFAC’s amendments to the CACR are effective immediately.
Treasury Sanctions North Korean Officials and Companies from Transportation, Mining, Energy, and Financial Services Industries
On December 2, OFAC announced its decision to designate 16 entities and seven individuals in response to North Korea’s ongoing nuclear weapons development and violations of U.N. security council resolutions. The designations include a number of North Korean banks and other entities in the financial services sector of the North Korean economy. As a result of today’s action, any property or interests in property of the designated persons in the possession or control of U.S. persons or within the United States must be blocked. Additionally, U.S. persons are generally prohibited from engaging in transactions involving the designated persons and listed aircraft. The additions to the Specially Designated Nationals List were made pursuant to Executive Orders 13382, 13687, and 13722, which target proliferators of weapons of mass destruction, the Government of North Korea, and a number of North Korean trade and industry sectors, including transportation, coal and energy, and financial services.
On October 18, OFAC granted General License No. 2B renewing the authorization regarding nine Belarusian entities to enter into transactions otherwise prohibited by Executive Order 13405. General License No. 2B replaces and supersedes in its entirety General License No. 2A, which was set to expire later this month, and authorizes transactions with any entities that are owned 50 percent or more by the nine named entities. All property and interests in property of these entities, if blocked, remain blocked. U.S. persons must report authorized transactions or any series of transactions exceeding $50,000 to the U.S. Department of State no later than 30 days after execution. The authorization expires on April 30, 2017, unless otherwise extended or revoked.
OFAC Publishes Fact Sheet and FAQ Related to Termination of Burma Sanctions Program; Updates SDN List
On October 7, OFAC published a Fact Sheet and Frequently Asked Question (FAQ) number 481 regarding the implementation of the President’s Executive Order entitled “Termination of Emergency with Respect to the Actions and Policies of the Government of Burma.” OFAC’s fact sheet explains that all OFAC-administered restrictions and authorizations under the Burma sanctions program pertaining to banking with Burma, including 2012 and 2013 OFAC general licenses that authorized certain correspondent account activity with Burmese banks, are terminated pursuant to the Executive Order. FAQ 481 clarifies that “[p]ending OFAC enforcement matters will proceed irrespective of the termination of OFAC-administered sanctions on Burma, and OFAC will continue to review apparent violations of the [Burmese Sanctions Regulations], whether [such violations] came to the agency’s attention before or after the Burma sanctions program was terminated.” In connection with terminating the Burma-related sanctions program, OFAC made several deletions to its SDN List.
On October 7, OFAC updated its Frequently Asked Questions (FAQs) relating to the Listing of Certain U.S. Sanctions under the Joint Comprehensive Plan of Action (JCPOA). In addition to adding three FAQs related to due diligence (see M.10 through M.12), OFAC amended two FAQs (C.7 and C.15) regarding Financial and Banking Measures and one FAQ (K.19) related to Foreign Entities Owned or Controlled by U.S. Persons. FAQ M.10 clarifies that while “[i]t is not necessarily sanctionable for a non-U.S. person to engage in transactions with an entity that is not on the SDN List but that is minority owned, or that is controlled in whole or in part, by an Iranian or Iran-related person on the SDN List,” it is recommended that persons engaging in such transactions exercise caution to ensure that they do not involve Iranian or Iran-related persons on the SDN List. FAQs M.11 and M.12, respectively, address (i) due diligence expectations related to the screening of potential Iranian counterparties; and (ii) the circumstances under which OFAC expects a non-U.S. financial institution to repeat the due diligence their customers have already performed on an Iranian customer.