On June 23, OFAC announced a $107,691.30 settlement with a North Carolina-based medical device company for apparent violations of the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (the Regulations). Specifically, the company violated § 560.204 of the Regulations by exporting a number of its medical products to its United Arab Emirates distributor throughout April and May 2011 with the knowledge or reason to know that the products were ultimately destined for Iran. The settlement amount reflects OFAC’s consideration of the following aggravating factors: (i) the company acted willfully by exporting products it knew or had reason to know were ultimately destined for Iran, editing its destination control statement at the request of its distributor and continuing to conduct business with its distributor after receiving confirmation that the distributor had reexported the company’s products to Iran; (ii) the company’s former CEO and International Sales Manager knew the products were ultimately destined for Iran; and (iii) the company did not have a sanctions compliance program at the time of the apparent violations. OFAC considered the following as mitigating factors when determining the settlement amount: (i) limited harm was inflicted on U.S. sanctions program objectives because OFAC likely would have granted the company a license to export the medical products to Iran, had the company sought permission to do so; (ii) the company had no prior OFAC sanctions history; (iii) the company took remedial steps, such as establishing an OFAC compliance program; and (iv) the company “cooperated with OFAC’s investigation and agreed to toll the statute of limitations for a total of 513 days.”
On July 8, OFAC updated its list of frequently asked questions related to Cuba to add two new FAQs regarding the use of U.S. dollars in certain transactions. New FAQ number 43 clarifies that persons subject to U.S. jurisdiction may use the U.S. dollar to conduct transactions in Cuba or with Cuban nationals if the activity is authorized by or exempt from the Cuban Assets Control Regulations (CACR). FAQ 43 further clarifies that under 31 CFR § 515.584(d), commonly known as the “U-turn” general license, U.S. banking institutions are authorized to process transactions originating and terminating outside the United States provided that neither the originator nor the beneficiary is a person subject to U.S. jurisdiction. This means that transactions related to third-country commerce involving Cuba or Cuban nationals may be processed in U.S. dollars through the U.S. financial system via financial institutions located in the United States that serve as intermediary banks. New FAQ 50 relates to correspondent accounts. Pursuant to a general license in the CACR, U.S. depository institutions are permitted to maintain correspondent accounts at financial institutions that are nationals of Cuba, provided such accounts are used only for transactions that are authorized or exempt under the CACR. FAQ 50 explains that such accounts may be maintained in U.S. dollars, and that transactions necessary to establish and maintain such accounts – including processing funds transfers in U.S. dollars – are authorized. Finally, FAQ 50 notes that financial institutions that are nationals of Cuba remain prohibited from opening correspondent accounts at a U.S. financial institution.
On June 8, OFAC updated its Frequently Asked Questions (FAQs) Relating to the Lifting of Certain U.S. Sanctions Under the Joint Comprehensive Plan of Action (JCPOA). In addition to adding nine FAQs related to Foreign Entities Owned or Controlled by U.S. Persons (see, K.14 through K.22), OFAC added two FAQs, C.15 and C.16, regarding Financial and Banking Measures. Specifically, C.15 clarifies that U.S. financial institutions “can transact with, including by opening or maintaining correspondent accounts for, non-U.S., non-Iranian financial institutions that maintain correspondent banking relationships or otherwise transact with Iranian financial institutions that are not on the SDN List.” Non-U.S. financial institutions remain prohibited from routing Iran-related transactions through U.S. financial institutions or involve U.S. persons in such transactions, unless the transactions are exempt from regulation or licensed by OFAC. FAQ C.16 addresses whether or not a non-U.S., non-Iranian entity may engage in transactions with Iranian persons not on the SDN List if one or more U.S. persons serve on the non-Iranian entity’s Board of Directors or senior managers. While the presence of one or more U.S. persons on the Board of Directors or serving as a senior manager does not, according to C.16, necessarily preclude the entity from transacting with Iranian persons not on the SDN List, OFAC stresses that “U.S. persons must be walled off or “ring-fenced” from Iran-related business.” OFAC recommended that non-U.S., non-Iranian entities consider implementing broad recusal policies to wall off U.S. persons for the institution’s Iran-related business.
Last month, OFAC designated as Specially Designated Narcotics Traffickers (SDNTs) an alleged Panamanian money laundering organization and its leaders, as well as six associates who, according to OFAC, provided material support and/or acted on behalf of the organization. OFAC also designated 68 companies connected to the organization, including Felix B. Maduro, S.A., Importadora Maduro, S.A., and Maduro Internacional, S.A. (the “Felix Maduro Group”), for being owned or controlled by the designated individuals. According to a June 1 statement, the Government of Panama is working to sever the SDNTs’ ownership and control of the Felix Maduro Group so as “to protect the Panamanian and U.S. financial systems from abuse.” As such, OFAC advised that it would not impose sanctions on non-U.S. persons for engaging in transactions related to the removal of the SDNTs’ ownership, provided certain conditions are met. Additionally, OFAC advised that to the extent such transactions may involve U.S. persons or implicate U.S. jurisdiction, involved parties should apply for a specific license from OFAC.
On May 17, OFAC amended the Burmese Sanctions Regulations, 31 C.F.R. part 537 by adding a general license to authorize most transactions related to U.S. persons residing in Burma that are otherwise prohibited by the Regulations, including paying rent and purchasing goods and services for personal use. In addition, the amendments add general licenses to (i) extend indefinitely General License 20, which authorizes transactions “ordinarily incident to exports to or from Burma that are otherwise prohibited involving an individual or company that is designated or otherwise blocked by OFAC’s sanctions”; and (ii) support trade-related transactions by permitting certain transactions incident to the movement of goods within Burma. OFAC also updated an existing general license to authorize most banking services involving Innwa Bank and Myawaddy Bank (two currently designated financial institutions in Burma) and terminated sanctions on Myanma Economic Bank, Myanmar Foreign Trade Bank, and Myanma Investment and Commercial Bank, which, taken together, authorizes “most transactions involving all Burmese financial institutions.”