Archive for the ‘Cuba Sanctions’ Category


Jan

31

OFAC Fines Canadian Bank for Complying with Canadian Law


Posted by at 6:29 pm on January 31, 2017
Category: Cuba SanctionsEconomic SanctionsForeign CountermeasuresOFAC

Caught in the Act by Exile on Ontario Street [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/JG66R4 [cropped and processed]The Office of Foreign Assets Control (“OFAC”) recently whacked “Toronto-Dominion Bank … a financial institution headquartered in Toronto, Canada,” with a $516,105 fine for various sanctions violations including — get this — maintaining bank accounts for 62 Cubans in Canada.  Yes, OFAC is now going after Canadian banks for holding accounts for Cubans in Canada, apparently under the common delusion that Canada is the 51st state.

Of course, part of the problem here may be the endemic sloppiness in OFAC reports of its penalty actions. It’s not at all clear exactly what corporate entity is involved, as Toronto-Dominion Bank is not the name of any corporate entity that I could locate. It appears to be a reference to TD Bank Group, a Canadian corporation headquartered in Toronto, and not a reference to its U.S. banking subsidiary TD Bank, N.A., if for no other reason than that the U.S. banking operation does not have branches in Canada.

The jurisdictional hook alleged by OFAC to cause Cuban accounts in a Canadian bank to be illegal under U.S. law is, apparently, this:

Between August 7, 2007 and January 24, 2011, TD Bank processed 99 transactions totaling $459,341.62 to or through the United States on behalf of these customers in apparent violation of the CACR

OFAC can’t be bothered to explain what provision or how this violates the CACR, probably because it is just an “apparent” violation.  However, in all instances, violations must either be “by a person subject to the jurisdiction of the United States,” which TD Bank Group in Canada is not, or must involve “property subject to the jurisdiction of the United States.” The definition of “property subject to the United States” is set forth in 515.313 which only talks about securities and doesn’t mention currency. Apparently then OFAC’s theory here is part of its overreaching belief that dollars anywhere located and by whomever owned are, nonetheless, property subject to the jurisdiction of the United States. If you touch a U.S. Dollar, you can be sent to a U.S. jail.

Leaving aside the agency’s unconscionably expansive view of its own extraterritorial jurisdiction, OFAC, yet again, pretends that this tenuous extraterritorial connection over Canada trumps (so to speak) Canada’s own laws. The Canadian Foreign Extraterritorial Measures Act forbids TD Group from complying with the U.S. boycott of Cuba. It is one thing (though not much better) to tell a U.S. company, such as Carlson Wagonlit, choosing to do business in a country with an embargo blocking statute that it must violate that foreign statute; it is quite another thing to say that to a foreign company that is incorporated in that jurisdiction.

Moreover, sections 3 and 5 of the Canadian Human Rights Act also likely would make it illegal for TD Group to deny services based on national origin to the Cuban account holders. During the time period involved in the violations at hand, section 515.505 provided that Cuban nationals who had taken up permanent residence in Canada were still blocked unless they obtained a specific license from OFAC. So, in effect, OFAC is fining TD Bank for refusing to violate the human rights of Cubans, including Cubans who were permanent residents of Canada.

An odd footnote to the OFAC announcement of the TD Bank Group fine notes the change in 515.505 which would unblock Cuban’s who became permanent residents of Canada without need for a specific license. Presumably this offers the cold comfort that, in the future, Canadian companies will only have to violate the human rights of a smaller group of people to avoid an OFAC fine.

Photo Credit: Caught in the Act by Exile on Ontario Street [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/JG66R4 [cropped and processed]. Copyright 2009 Exile on Ontario Street

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Jan

10

Homeless Travel Blogger Advises Readers To Violate OFAC Rules


Posted by at 6:03 pm on January 10, 2017
Category: Cuba SanctionsOFAC

Ben Schlappig via http://onemileatatime.img.boardingarea.com/wp-content/uploads/2008/01/Ben-Schlappig-10bw-cropped-e1427813265841.jpg [Fair Use]
ABOVE: Ben “Lucky” Schlappig

A homeless blogger named Ben “Lucky” Schlappig, who makes his living flying on airplanes and staying in hotels, has decided to take up the practice of law along with advising fellow travelers on the intricacies of the airline and hotel reward programs. The result is pretty much what you would expect when Lucky opines on the legality of traveling to Cuba as a tourist.

Technically Americans can only travel to Cuba for one of about a dozen approved reasons. … In practice, most people traveling to Cuba as tourists choose either “Support For The Cuban People” or “People-To-People Exchanges” as the reason for visiting.

So technically you can’t go if tourism is your stated reasons [sic], though in practice there are tens of thousands of American tourists going. That’s because they keep the categories intentionally broad, and you won’t generally be asked about the details of why you’re going to Cuba. Arguably when you’re a tourist somewhere you have “people-to-people exchanges” and also “provide support” to the people.

Without hesitation I’d feel comfortable recommending people visit Cuba as tourists and just state one of those as the reasons.

Arguably, when you’re relying on a pretend lawyer, your mileage may vary.  Also, never trust anyone who goes by the name of “Lucky.”

Of course, OFAC anticipated that amateur lawyers like Lucky would say that all tourism in Cuba was inherently a people-to-people exchange, so it gave an example here, in the actual rules (which Lucky clearly did not bother to read), to put the kibosh on such silliness:

An individual plans to travel to Cuba to rent a bicycle to explore the streets of Havana, engage in brief exchanges with shopkeepers while making purchases, and have casual conversations with waiters at restaurants and hotel staff. None of these activities are educational exchange activities that will result in meaningful interaction between the traveler and individuals in Cuba, and the traveler’s trip does not qualify for the general license.

So, just as you should not trust my opinions on how to get the most frequent flyer miles from your airline, you probably shouldn’t trust Lucky when he tells you to travel to Cuba as a tourist.

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Dec

22

How the OFAC Gave Back Christmas


Posted by at 8:19 am on December 22, 2016
Category: Cuba SanctionsOFAC

Santa Flanked by F-16

Before leaving for the holidays, I thought it would be appropriate to repost the good news that we received earlier this year regarding Santa’s annual toy delivery being finally released from OFAC restrictions on his route.

FOR IMMEDIATE RELEASE
MEDIA CONTACT: Elf E. McElfface, eemcelfface@gmail.com or (951) 262-3062

Santa’s Village, North Pole – Santa Claus today, on behalf of himself, Mrs. Claus and the 40,000 elfployees of the Santa Foundation, expressed his gratitude to the Office of Foreign Assets Control for its timely revision of its rules to grant Santa clear authority this year to visit children both in the United States and Cuba. For years, Santa’s efforts to bring holiday cheer to children of both countries has been thwarted by section 515.207 of the Cuba regulations which would prohibit Santa’s sleigh from landing in the United States while toys for Cuban children remained in the sleigh or in landing in the United States if those toys had been delivered to Cuban children first.

Today’s action waives these restrictions if Santa’s sleigh only carries items that would, if they were subject to the EAR, be EAR99 or controlled only for AT reasons. This ends the long struggle over whether teddy bears and other toys — which are not food, medicine, or personal communications devices — could only be delivered to Cuban children in wrapped parcels with the child’s name and address written on the outside and with the statement “GIFT—Export License Not Required” also marked on the parcel package. Notwithstanding the diligence and timely efforts of Santa’s elfployees, compliance with these requirements for each non-naughty child in Cuba has heretofore been impossible.

News of the OFAC announcement led to loud cheers and applause throughout Santa’s Village. Elf E. McElfface, Santa’s spokeself, wiped a tear of joy from his eye as he said to the elves in one of Santa’s workshops that he never believed that this would occur in his lifetime, which was saying a lot given that the average life expectancy of an elf on the North Pole is currently just over 500 years.

As Christmas approaches, Santa said that he was looking forward to this year’s delivery of toys and goodies to the nice children throughout the world more than ever before and reminded children everywhere, both in Cuba and the United States, that they could call his hotline at +1 (951) 262-3062 to leave their Christmas wishes and toy requests.

This press release may include predictions, estimates or other information that might be considered forward-looking. While these forward-looking statements represent the Santa Foundation’s current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this press release. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events.

I hope all Export Law Blog readers are able to take some time off and enjoy the holidays with their family and friends. See you in 2017!

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Copyright © 2016 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

Oct

24

Just What Part of “Executory” Don’t You Understand?


Posted by at 3:22 pm on October 24, 2016
Category: Cuba SanctionsOFAC

Image via https://pixabay.com/p-1202440/?no_redirect [Public Domain]A lawyer at another DC firm is having a conniption fit over the part of the new Cuba regulations that authorizes U.S. persons to enter into executory contracts in Cuba that are contingent upon OFAC approval. He apparently thinks that this goes to the “core” of the embargo and that OFAC is overstepping its authority as circumscribed by section 102 of the Helms-Burton Act and, although he does not cite it, section 204 of that same act.

We’ve all been through this before: section 204 applies only if the President seeks to “end” the embargo. As long as imports of chia pets and thermal underwear from Cuba are prohibited, the embargo has not been ended, which leaves OFAC and the White House pretty much free to do what they want in this regard.

Section 102, which is the provision relied on here by the lawyer in question, codifies the Cuban Assets Control Regulations in effect as of the date of the law’s enactment. But those regulations, in section 515.201, specifically provide that everything prohibited by the regulations may be “authorized by the Secretary of the Treasury (or any person, agency, or instrumentality designated by him) by means of regulations, rulings, instructions, licenses, or otherwise.” So, once again, OFAC can pretty much promulgate general licenses and regulations to its heart’s content. Whether it was Mr. Helms or Mr. Burton who left open this truck-height loophole doesn’t really matter.

Leaving aside the broader issue of authority, the blog post criticizing OFAC’s new rules on executory contracts somehow thinks that this rule goes to the “core” of the embargo — but why that is the case is far from clear. The author thinks that the problem arises because the executory contract is somehow or other a “dealing” in the property of a Cuban national. Now granted, OFAC has previously interpreted dealing in such a broad fashion that someone who just thinks about buying a vacation casa in Cuba has probably violated the rules. But, in an actual universe where people speak a language where words have a circumscribed meaning, it seems clear that a contract that says it isn’t dealing in property until OFAC says its okay to deal in that property, isn’t “dealing” in that property. Thus, OFAC can issue this regulation on executory contracts without violating statutory prohibitions  because an executory contract can legitimately be seen as not dealing in the property in question, because this regulation has not ended the embargo and because it remains consistent with the authority that Congress gave OFAC in section 102 of the Helms-Burton Act to authorize whatever it wants by regulations and licenses.

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Copyright © 2016 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

Oct

14

North Pole Praises Today’s OFAC Actions


Posted by at 4:27 pm on October 14, 2016
Category: BISCuba SanctionsOFAC

Santa Flanked by F-16

The following just arrived in my email:

FOR IMMEDIATE RELEASE
MEDIA CONTACT: Elf E. McElfface, eemcelfface@gmail.com or (951) 262-3062

Santa’s Village, North Pole – Santa Claus today, on behalf of himself, Mrs. Claus and the 40,000 elfployees of the Santa Foundation, expressed his gratitude to the Office of Foreign Assets Control for its timely revision of its rules to grant Santa clear authority this year to visit children both in the United States and Cuba. For years, Santa’s efforts to bring holiday cheer to children of both countries has been thwarted by section 515.207 of the Cuba regulations which would prohibit Santa’s sleigh from landing in the United States while toys for Cuban children remained in the sleigh or in landing in the United States if those toys had been delivered to Cuban children first.

Today’s action waives these restrictions if Santa’s sleigh only carries items that would, if they were subject to the EAR, be EAR99 or controlled only for AT reasons. This ends the long struggle over whether teddy bears and other toys — which are not food, medicine, or personal communications devices — could only be delivered to Cuban children in wrapped parcels with the child’s name and address written on the outside and with the statement “GIFT—Export License Not Required” also marked on the parcel package. Notwithstanding the diligence and timely efforts of Santa’s elfployees, compliance with these requirements for each non-naughty child in Cuba has heretofore been impossible.

News of the OFAC announcement led to loud cheers and applause throughout Santa’s Village. Elf E. McElfface, Santa’s spokeself, wiped a tear of joy from his eye as he said to the elves in one of Santa’s workshops that he never believed that this would occur in his lifetime, which was saying a lot given that the average life expectancy of an elf on the North Pole is currently just over 500 years.

As Christmas approaches, Santa said that he was looking forward to this year’s delivery of toys and goodies to the nice children throughout the world more than ever before and reminded children everywhere, both in Cuba and the United States, that they could call his hotline at +1 (951) 262-3062 to leave their Christmas wishes and toy requests.

This press release may include predictions, estimates or other information that might be considered forward-looking. While these forward-looking statements represent the Santa Foundation’s current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this press release. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events.

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Copyright © 2016 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)