u.s. department of the treasury office of foreign assets control
TRANSCRIPT
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U.S. Department of the TreasuryU.S. Department of the Treasury
Office of Foreign Assets ControlOffice of Foreign Assets Control
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AgendaAgenda What is OFAC? Relevance for Corporate Registration Legal Authority for U.S. Sanctions Jurisdiction Sanctions Programs
– Current List of Sanctions– Comprehensive Sanctions– Limited Sanctions– Recent OFAC Actions– Specially Designated Nationals (SDNs) and Blocked Persons
Penalties and Consequences Effective Compliance Strategies
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What is OFAC?What is OFAC?Office of Foreign Assets Control (OFAC) of the
U.S. Department of the Treasury
OFAC administers and enforces economic sanctions against targeted:- Foreign governments (e.g. Iran, Sudan, Cuba)
- Individuals (e.g. terrorists, int’l narcotics traffickers)
- Entities (e.g. drug front companies, charities that send money to terrorist groups)
- Practices (e.g. trade in non-certified rough diamonds, proliferation of weapons of mass destruction)
Importance of the “SDN List”
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Relevance for Corporate RegistrationRelevance for Corporate Registration
OFAC regulations prohibit doing business with sanctions targets – you need to know who those targets are!
9/11 emphasized the need to “know your customer” by screening applicants
Cooperation of corporate filing offices and businesses who facilitate this process contributes to the effectiveness and success of OFAC sanctions programs.
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For example…For example…
U.S. business filing company contracted with Yugoslavian entity to file incorporation papers*
Prohibited under the embargo of Yugoslavia (can’t do business with company in an embargoed country)
Adequate screening was not done by the filing company or the state registration office
Newly incorporated U.S. corporation used to avoid economic sanctions
* This violation occurred prior to the lifting of the Yugoslavian sanctions on May 28, 2003.
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Legal Authority for U.S. SanctionsLegal Authority for U.S. Sanctions
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Legal Authority: TWEALegal Authority: TWEA Trading with the Enemy Act (“TWEA”)
(50 U.S.C. app. § § 1-44)
– Primary legal authority for Cuba and North Korea programs
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Legal Authority: IEEPALegal Authority: IEEPA International Emergency Economic Powers Act
(“IEEPA”)(50 U.S.C. § § 1701-06)
– Primary legal authority for most non-TWEA programs
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Legal Authority: OtherLegal Authority: OtherOTHER STATUTES: Antiterrorism and Effective Death Penalty Act
8 U.S.C. 219, 18 U.S.C. 2332d and 18 U.S.C. 2339b
Foreign Narcotics Kingpin Designation Act
Pub. L No. 106-120, tit. VIII Stat 1606, 1626-1636
IMPLEMENTATION AUTHORITIES: Title 31 U.S. Code of Federal Regulations, Chapter V Various Executive Orders
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Jurisdiction: IndividualsJurisdiction: Individuals American citizens and permanent resident
aliens anywhere they are located
Any individual, regardless of citizenship, who is physically located in the United States
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Jurisdiction: BusinessesJurisdiction: Businesses
Under the International Emergency Economic Powers Act (IEEPA) programs:
– Corporations organized under U.S. law, including foreign branches of U.S. companies
– Any corporation or company physically located in the United States, including U.S. branches, agencies and representative offices of foreign corporations
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Jurisdiction: BusinessesJurisdiction: Businesses Under Trading With the Enemy Act
(TWEA) programs (Cuba, North Korea):
– Corporations organized under U.S. law, including foreign branches and foreign-organized subsidiaries of U.S. companies
– Any corporation or company physically located in the United States, including U.S. branches, agencies and representative offices of foreign corporations
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Current List of Sanctions ProgramsCurrent List of Sanctions Programs
Cuba Iran Sudan Burma Nonproliferation Diamond Trading Liberia
Zimbabwe Syria Terrorism Narcotics Trafficking The Balkans Iraq North Korea
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Comprehensive Sanctions ProgramsComprehensive Sanctions Programs
In general the following are prohibited under comprehensive sanctions programs:– Exports of goods and services– Imports of goods and services– Trade brokering, financing, or facilitation
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Sudan
Cuba
Iran See OFAC’s website for details on each of these programs: www.treas.gov/ofac
Comprehensive Sanctions ProgramsComprehensive Sanctions Programs
Current comprehensive sanctions programs:
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Under comprehensive OFAC sanctions, persons subject to OFAC jurisdiction must “block” (“freeze”) assets/property of a sanctions target under their control.
For corporate registration industry, must refuse to do business with all sanctions targets.
Comprehensive Sanctions ProgramsComprehensive Sanctions Programs
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Zimbabwe- Block property of persons undermining democratic processes/
institutions in Zimbabwe.
(Robert Mugabe, etc.)
Limited Sanctions ProgramsLimited Sanctions Programs Balkans
– Block property of Milosevic supporters and persons who threaten international stabilization efforts in the Western Balkans
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Burma/Myanmar– No import of goods or
services from Burma.– All major banks blocked.– No new investment.
Limited Sanctions ProgramsLimited Sanctions Programs
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Iraq– General License– Most new transactions
allowed– Cannot do business with
designated members of the insurgency.
Limited Sanctions ProgramsLimited Sanctions Programs
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Recent OFAC ActionsRecent OFAC Actions Liberia
– Block property of Charles Taylor and his supporters and persons who have undermined Liberia’s transition to democracy.
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Recent OFAC ActionsRecent OFAC Actions Libya
– Sanctions lifted– All blocked funds
released– Doing business with
Libya is now permitted
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Specially Designated NationalsSpecially Designated Nationals Specially Designated Nationals (SDNs)
– Individuals and entities all over the globe– Owned, controlled by or acting on behalf of targeted
governments or groups– May be front companies, parastatals, high-ranking
officials or specifically identified persons– Designated terrorists or narcotics traffickers
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Specially Designated NationalsSpecially Designated Nationals
Over 3,000 unique SDNs and blocked persons identified by OFAC
Published and accessible on:– Federal Register– http://www.treas.gov/offices/eotffc/ofac/sdn/index.html
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Specially Designated NationalsSpecially Designated Nationals
Holy Land Foundation for Relief and Development (SDGT)
Atlas Air Conditioning, U.K. (IRAQ)
Treviso Trading Corporation, Panama (CUBA)
Al-Hamati Sweets Bakeries (SDGT)
Usama Bin Ladin (SDT/SDGT)
Mamoun Darkazanli Import-Export, Germany (SDGT)
Myanma Foreign Trade Bank (BURMA)
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Penalties and ConsequencesPenalties and Consequences Criminal Penalties
– Up to $10 million and 30 years in jail
Civil Penalties– Trading With the Enemy Act: $65,000– International Emergency Economic Powers Act: $11,000– Iraqi Sanctions Act: $325,000– Foreign Narcotics Kingpin Designation Act: $1,075,000– Anti-Terrorism and Effective Death Penalty Act: $55,000
Violations may result in:– Blocked funds and seized goods– Negative publicity and loss of business good will
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Effective Compliance StrategiesEffective Compliance Strategies Screen corporate
registrations for sanctions references– Screen against sanctioned
countries, including cities and territories within such countries.
– Screen all parties connected with registration
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““Due Diligence”Due Diligence”
Is the “hit” against the OFAC SDN list? Organization vs. individual vs. vessel? Is it a full name match? Have you gathered enough information to
compare?
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Example 1Example 1 Your potential customer:
– Arnulfo Marquez; ABC Import-Export Limited; POB Chiapas, Mexico; US Citizenship; SSN: 222-22-222
Similar to the OFAC SDN listing: – TREJOS MARQUEZ, Arnulfo, Carrera 4 No. 9-
17 of. 308, AA 38028, Cali, Colombia; c/o CONSTRUCTORA TREMI LTDA., Cali, Colombia; Cedula No. 6090595 (Colombia) (individual) [SDNT]
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Example 2Example 2
Your potential customer: – CIMEX N.V., Antwerp, Belgium
Similar to the OFAC SDN listing: – CIMEX (a.k.a. CIMEX CUBA; a.k.a.
COMERCIO INTERIOR, MERCADO EXTERIOR; a.k.a. CORPORACION CIMEX S.A.), Edificio Sierra Maestra, Avenida Primera entre 0 y 2, Miramar Playa, Ciudad de la Habana, Cuba; and all other locations worldwide [CUBA]
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Example 3Example 3 Your potential customer:
– Abubaker Ahmed; DOB: August 1, 1970; Address: Dar es Salaam
Similar to the OFAC SDN listing: – AHMED, Abubakar K. (a.k.a. GHAILANI,
Ahmed Khalfan; … a.k.a. KHALFAN, Ahmed; a.k.a. MOHAMMED, Shariff Omar); DOB 14 Mar 1974; alt. DOB 13 Apr 1974; alt. DOB 14 Apr 1974; alt. DOB 1 Aug 1970; POB Zanzibar, Tanzania; citizen Tanzania (individual) [SDGT]
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Effective Compliance StrategiesEffective Compliance Strategies Make sure your sanctions information is up-
to-date!– Sanctions and SDN list can be updated or revised
at any time– Updates not on a regular basis– Set your browser to automatically check the
OFAC web site for updates– Subscribe to email notification service on OFAC
home page
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Effective Compliance StrategiesEffective Compliance Strategies Make sanctions compliance an integral part
of your business– Don’t treat OFAC compliance as an
afterthought– Ensure that all employees are familiar with U.S.
sanctions– Make compliance a part of training program for
new hires
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Effective Compliance StrategiesEffective Compliance Strategies
Take advantage of OFAC compliance resources– OFAC publishes an extensive library of on-line
reference manuals, brochures etc.– These and other useful materials are available
free of charge through: OFAC’s web site: http://www.treas.gov/ofac OFAC’s automated fax on demand service:
202- 622-0077
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For compliance counseling…For compliance counseling…
202-622-2490 or 1-800-540-6322 Monday through Friday 8 a.m. to 7:00 p.m EST www.treas.gov/ofac
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Erin Ghelber
Compliance Programs Division
Tel: 202-622-2490 or
1-800-540-6322
Fax: 202-622-2426
Web: www.treas.gov/ofac