Archive for the ‘General’ Category



The Best Question on Burma Sanctions Is Still Unanswered

Posted by George Murphy at 6:28 pm on April 8, 2014
Category: Burma SanctionsCompliance Programs and ProceduresEconomic SanctionsGeneralOFACSDN ListZimbabwe Sanctions

By Bild von Stefan Grünig, CH-3752 Wimmis (de:Benutzer:Sgruenig)Sgruenig at de.wikipedia [GFDL ( or CC-BY-SA-3.0 (], from Wikimedia Commons

OFAC announced last week that it issued additional Frequently Asked Questions and respective answers relating to what remain of U.S. sanctions against Burma.  None of the additional questions or answers is surprising or resolves an issue that is not otherwise answered by other OFAC guidance or applicable general licenses.

The questions and answers are, for the most part, a helpful recitation of the current landscape of sanctions involving Burma that summarize in one place the state of sanctions based on an assortment of scattered statutes, executive orders, regulations and licenses.  But one question stands out along with its non-responsive answer, in part, as follows:

What are the plans to update the SDN List for Burma?

Listings and any potential delistings under our Burma authorities will be pursued as appropriate to meet changing conditions in Burma.

The question itself has a colloquial quality to it as if the frequently asked question really put to OFAC has been along the lines of “What’s going on here?”

As other questions and answers describe, a number of banks remain on the SDN List but General License 19 authorizes U.S. persons to conduct most transactions with the banks.  In a similar situation about a year ago dealing with Zimbabwean banks, we posted about OFAC’s decision to keep those banks on the SDN List but, through a general license, to authorize almost all transactions with them.  At that time, I termed both the Burmese and Zimbabwean banks as SDN-lite designations and warned of the potential compliance difficulties such situations presented.

Keeping an entity on the SDN List would have the effect of blacklisting it from possible business with U.S. persons who rely solely on software to screen names on the SDN List to decide with whom to do business.  The results, of course, would create false positives because most transactions with these Burmese and Zimbabwean entities are permissible under U.S. law.  In fact, running these banks through OFAC’s SDN Search tool produces hits with no mention of any general license permitting dealings with them.

Delisting would, of course, be one option to correct the problem, but that would unblock any currently blocked assets, something OFAC might not wish to do.  Failing that, OFAC should at least put some annotation on the SDN List to denote that these very few entities are to be treated very differently than the thousands of others on the SDN List with whom U.S. persons may have no dealings.  At the moment, the question is back to OFAC, “What are the plans to update the SDN List?”

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O, Canada! The Harper Government Solidifies Position as a Sanctions Hawk

Posted by George Murphy at 6:17 pm on February 26, 2014
Category: General

By Jamie McCaffrey from Ottawa, Canada (RCMP Sunset Ceremony 2012) [CC-BY-2.0 (], via Wikimedia Commons

Canadian Citizenship and Immigration Minister Chris Alexander suggested this week on Canadian television that Canadian sanctions against Russia were a possibility if Russia was to support violent strife in Ukraine.  Although Alexander has since declined to comment on specific sanctions against Russia and other “hypothetical scenarios,” the idea that Canada would sanction Russia in some form should not come as a surprise.

Canada has quietly developed an economic sanctions regime that may be the world’s most aggressive outside the United States.  Case in point is Iran.  While the United States and the EU are at the negotiation table with Iran, Canada has stood steadfastly by its sanctions, which now include a comprehensive trade embargo as of last May.

Some in the Canadian press have pointed out that Canadian Prime Minister Stephen Harper’s alliance with Israel and its Prime Minister Benjamin Netanyahu, who called Harper a “great friend,” is the reason for increasing sanctions against Iran.  But Canadian sanctions remain aggressive in other parts of the world as well.  Canada, unlike the EU, has a comprehensive trade embargo against North Korea.  Canada also has strong sanctions remaining against Burma as well as some of the strongest global sanctions against Syria.

The glaring omission is, of course, sanctions against Cuba, which Canada does not have.  In fact, Canada is Cuba’s largest export destination. Canada’s Foreign Extraterritorial Measures Act, moreover, has long created a transnational dilemma because it prohibits any business in Canada from complying with U.S. sanctions against Cuba.  Businesses subject to both U.S. and Canadian laws will violate someone’s law in deciding whether or not to do business with Cuba.  As aggressive as Canada is in imposing sanctions against some countries, it is also aggressive in countering sanctions which it does not support.

But why shouldn’t Canada have a leading role in developing global sanctions policy?  Canada is the second-largest country in the world and one of the few countries with over a trillion dollars in GDP.  Eastern Canada’s traditional ties to Europe and western Canada’s increasing ties to China, Japan and the rest of the Pacific Rim make Canada one of the most globally connected countries.

For exporters with business in the United States, EU and Canada that presume that U.S. sanctions set the bar for your global compliance efforts, you may increasingly need to think again with respect to Canada.  Remember the Canadians can beat us at our own game: the Blue Jays won the World Series (twice)!

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Abra-OFAC-A-Dabra: Now You See Them, Now You Don’t

Posted by Clif Burns at 8:35 am on February 22, 2014
Category: General

Associated Shipbroking HQ via Google Maps [Fair Use]
ABOVE: Associated Shipbroking HQ

Monaco-based Associated Shipbroking was, earlier this week, quietly removed from the Office of Foreign Assets Control’s List of Specially Designated Nationals and Blocked Persons, fondly known simply as the SDN List. As is normally the case with these removals, OFAC declined to give a reason for the company’s removal from the list, either because of its aversion for admitting mistakes or because it is disinclined to offer any guideposts to others on the list about avenues for removal.

This is exceedingly odd given everything that was said by the U.S. Government when it whacked Associated Shipbroking with these ultimate sanctions in the first place. It all started on May 24, 2011, when the Department of State sanctioned seven companies, including Associated Shipbroking, under the Iran Sanctions Act. Three of these companies –Tanker Pacific (Singapore), Ofer Brothers Group (Israel), and Associated Shipbroking — were added to the State Department’s Sanctioned Entity List because they were said to have dealt with a front company used by the Islamic Republic of Iran Shipping Lines (“IRISL”) to buy an $8.65 million dollar tanker.

Tanker and Ofer were sanctioned for failure to exercise due diligence to discover that they were dealing with an IRISL front company. Accordingly, they were prohibited from receiving Ex-Im Bank loans, obtaining loans over $10 million from U.S. financial institutions or receiving U.S. export licenses. Associated Shipbroking was sanctioned more severely because it was deemed to have acted knowingly and was aware that the company was an IRISL front. As a result, it was prohibited from “U.S. foreign exchange transactions, U.S. banking transactions and all U.S. property transactions.” On the same day, OFAC added Associated Shipbroking — but not Ofer or Tanker — to the SDN List which, in addition, would block all property of Associated that comes into the control of U.S. persons.

Several months later Ofer was removed from the State Department list, apparently because the Ofer family convinced the State Department that they were not responsible for the decisions made by their affiliate Tanker Pacific. Somewhat later, Tanker Pacific got itself removed from the State Department list after promising the State Department that it would behave in the future. Then about a week before the OFAC action, the State Department removed Associated Shipbroking from its sanctions list stating, somewhat oddly, that Associated “is no longer engaging in sanctionable activity.” That is odd because since Associated was sanctioned for a single transaction, it was no longer engaging in sanctionable activity the day after that transaction closed.

So, although OFAC does not state a reason for removing Associated Shipbroking from the SDN list, it presumably was simply following the State Department’s lead in removing the company a week earlier. It still leaves open the question as to why a company caught “knowingly” dealing with IRISL through a front company got a get-out-of-jail-free card from OFAC.  Of course, it can’t be ruled out that this delisting is based on larger diplomatic considerations in the context of ongoing discussions with Iran about dismantling its nuclear program.


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Zealous Screening Software Nabs Random Characters

Posted by Clif Burns at 6:19 pm on February 20, 2014
Category: General

Monkey Typing via Wikimedia Commons [Public Domain]A reader and colleague sent me an email with a great story (and the wire documents to back it up) about OFAC screening software gone bad. At issue was a relatively small wire transfer that was blocked because the SWIFT message referenced Sudan. What was the reference? Well in SWIFT message field 59, which contains the beneficiary account number, the account number was shown as XDQSUDAN13DE4. (For obvious reasons, I have munged all the alphanumeric characters of the actual account number except for S, U, D, A and N).

Now, I realize that being given an account number with the words Sudan, Iran, Cuba or some SDN name is about the same as the chance of a chimp randomly typing out in its entirety Hegel’s Phenomenology of Spirit (although there are some who might suggest that is precisely what happened), this amusing incident indicates that screening software is stupid and relentless and that you need to check everything about a transaction to avoid unexpected glitches. It makes me wonder how Mark Cuban can conduct any business at all these days.

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Law Suit Prompts Removal of Ante Gotovina from SDN List

Posted by Clif Burns at 12:21 am on February 7, 2014
Category: General

Ante Gotovina [Fair Use]
ABOVE: Ante Gotovina

At the beginning of January, we reported on a lawsuit filed by Ante Gotovina, an alleged war criminal, who sued the Treasury Department’s Office of Foreign Assets Control (“OFAC”) seeking removal from OFAC’s Specially Designated Nationals and Blocked Persons List (the “SDN List”). Gotovina claimed that he should be removed based on the 3-2 reversal by an Appeals Panel of the International Criminal Tribunal for the Former Yugoslavia (“ICTY”) of his conviction for war crimes. Earlier this week OFAC quietly removed Gotovina from the SDN list, announcing the removal in this Federal Register notice and stating that “circumstances no longer warrant inclusion” of Gotovina on the SDN List.

Getting removed from the SDN List is normally no easy task. Requests for removal normally languish for months or years at Treasury without response even though during that period the designated individual is unable to conduct financial transactions with U.S persons or firms. Indeed, a listed individually technically can’t even buy a hot dog on a street corner in New York while designated, although I personally have never seen any NYC hot-dog vendors card their customers and run their names against the SDN List. The Gotovina case suggests that the best way to get OFAC’s attention is to force the issue in court where, like it or not, OFAC will have to respond one way or the other on the court’s schedule, not its own.

Gotevina’s lawyer said the OFAC did not even bother to call him with the news of Gotovina’s removal.

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