Archive for the ‘SDN List’ Category


Apr

15

Justin Timberlake Shows the U.S. Is Not NSYNC With Its Sanctions Songbook


Posted by George Murphy at 6:30 pm on April 15, 2014
Category: Economic SanctionsOFACRussia DesignationsRussia SanctionsSDN List

By Mandy Coombes [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons http://commons.wikimedia.org/wiki/File%3AJustin_Timberlake_-_Justified_World_Tour_-_Earls_Court_-_2.jpg

Armed with over 30 million Twitter followers and a shelf-full of Grammy and Emmy awards, Justin Timberlake may be staring down U.S. sanctions better than Putin himself.  Reuters reported last week that JT’s sold-out show next month at Helsinki’s Hartwall Arena will go on despite the fact that the largest indoor venue in the country is owned by Gennady Timchenko, Arkady Rotenberg and Boris Rotenberg.  All three Russians are on the SDN List because they are, in OFAC’s words, members of the Putin “Inner Circle.”  Perhaps equally as important to Finnish music fans, Miley Cyrus, Aerosmith and Nine Inch Nails are also scheduled to perform at the Hartwall Arena between now and June 1st.

Because U.S. company Live Nation is the concert promoter for these U.S. musicians, there is an understandable concern that dealings with Hartwall Arena may be impermissible under U.S. sanctions law because the 15,000-seat venue is entirely owned by a troika of billionaires on the SDN List.  But no one will have to stop the music as Live Nation announced that “U.S. officials had indicated at the weekend that the sanctions would not prevent the concerts going ahead.”

Some have speculated the shows would go on because Live Nation may have already paid in full Arena Events Oy, the entity owned by Timchenko and the Rotenbergs which owns the Hartwall Arena, prior to the three Russians being added to the SDN List.  But that logic doesn’t hold up because, if paying Arena Events Oy would be a violation, so would, according to the relevant executive order, providing services “for the benefit of” Arena Events Oy.  If Live Nation could not pay for the concert, Justin and Miley could not perform their services.

The most likely response that OFAC may have given Live Nation has been a recent focus of ours: the so-called 50 percent rule.  We reported a few weeks ago that Visa and Mastercard resumed transactions with banks owned by the Rotenbergs because, as we understand it, no one Rotenberg owns 50 percent or more of the banks.  Presumably, then, Timchenko and the Rotenberg Brothers do not individually hold more than 50 percent.  Of course, an entity owned entirely by three Russian SDNs is a good candidate for designation at any time.  You have to imagine that OFAC may have made some assurances to Live Nation else Live Nation would be ill-advised to fly its pricey talent in private jets to Finland only to have the Arena designated moments before the stars arrive.

These concerts are, however, a hallmark of how out of tune sanctions enforcement appears to be in relation to the zeal of the President’s executive orders authorizing the sanctions in the first place.  What better opportunity for OFAC to elucidate the 50 percent rule in order to explain how U.S. sanctions will permit four American musical acts, who are each listened to by millions around the world, to perform before tens of thousands of people about a two-hour drive from the Russian border in an arena owned solely by three Russian individuals on the SDN List.

Enforcing sanctions against entities owned or controlled by someone already targeted by sanctions is an important arrow in any country’s sanctions quiver.  How such an enforcement policy is defined and articulated publicly is critically important to its effectiveness.

As it stands now, U.S. sanctions would permit Miley Cyrus to sing her hit song “Party in the U.S.A.” to a concert with Putin in attendance.  For a whole host of reasons, we don’t want to see that.

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Apr

8

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 (http://www.gnu.org/copyleft/fdl.html) or CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0/)], from Wikimedia Commons http://commons.wikimedia.org/wiki/File%3ABurma06.jpg

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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Feb

12

OFAC Filches Professor’s Good Name


Posted by Clif Burns at 8:17 pm on February 12, 2014
Category: OFACSanctionsSDN List

Sources:http://stephenlaw.blogspot.com/ and http://magwayfootballclub.com/images/stories/group/u_tun_myint_naing.jpg [Fair Use]Stephen Law is a distinguished scholar, a philosopher and a senior lecturer at Heythrop College, University of London. Steven Law, on the other hand, is a Burmese man, also known as Tun Myint Naing, who helps to run his father’s drug trafficking empire as Managing Director of Asia World Co., Ltd. Guess which one of these men is on the Office of Foreign Assets Control’s List of Specially Designated Nationals and Blocked Persons? Guess which one on these men pays the price for this and is unable to conduct basic business transactions? If you guessed Steven and Stephen, respectively, then you were right.

Professor Stephen Law recounted his travails at the hands of OFAC in this recent blog post.

I have discovered that, as a result of this listing, US Customs block shipments of goods to me here in the UK. Also when people try to wire me money from abroad (not just from the US, but from anywhere), for e.g. occasional travel expenses for academic conference attendance, the payment is interrupted and various checks are made before the funds are released. This became so bad during one period (a series of payments every single one of which triggered a block) that I had to switch to a different bank account. At no point was I told why this was happening (i.e. that you, OFAC, are responsible). The banks concerned believe they must keep this information from me (I was told this by my bank branch). Hence it took me many months to figure out what the source of the problem was: OFAC/US Treasury.

Long-time readers will know that we’ve been highlighting for quite some time the injustice caused to innocent people by OFAC designations of similarly named individuals. Back in 2007, we described in one post cases of people who had mortgages and car loans denied, PayPal accounts closed, and basic consumer transactions refused because they had a name similar, in whole or in part, to someone else on the SDN list.

The irony, then and now, is that kingpin Steven Law, the narcotics trafficker, has a right to seek removal from the SDN List but that, according to OFAC, a non-designated individual, such as Professor Stephen Law, has no right to request any relief from OFAC, whether it be a clearance letter or the inclusion on some kind of white list. OFAC officials have said that the reason for not providing such documentation is that the person involved might later need to be designated, a foolish and unconvincing rationale at best.

Of course, there is a recent development that suggests that OFAC’s rule might not be so hard and fast with respect to collateral victims of OFAC designations. In June 2011, OFAC designated Tidewater Middle East Co., which is the company in charge of managing seven of Iran’s ports and which was accused by OFAC of facilitating Iran’s export and imports of arms and materiel. Oddly, however, the announcement designating Tidewater went out of its way to say this:

There is no relationship between today’s target, Tidewater Middle East Co., and Tidewater (US), an international shipping company headquartered in the United States, listed on the New York Stock Exchange as TDW.

It seems to me that OFAC’s special concession to a similarly named U.S. company erodes its already risible reason for not providing some assistance to collateral victims of the designation process and that if the innocent Stephen Law demanded that OFAC distinguish him from the other Steven Law, OFAC would find it harder to tell him to change his name if he didn’t like being treated like an SDN. This is not to say it wouldn’t do so, just that it would be even more shameless than it used to be and that such a position would possibly be more vulnerable now to challenge by litigation.

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Jan

8

The Never-Ending Balkan Wars Continue in Court


Posted by Clif Burns at 6:51 pm on January 8, 2014
Category: Balkan SanctionsOFACSDN List

Ante Gotovina http://rudebutgood.blogspot.com/2012/11/ante-gotovina.html [Fair Use]
ABOVE: Ante Gotovina from Croatian
Propaganda Poster


Ante Gotovina, who is currently designated on the Office of Foreign Assets Control’s List of Specially Designated Nationals and Blocked Persons, filed suit on Monday in federal court in the District of Columbia seeking his removal from that list. Gotovina is a Croatian military officer widely believed to have been implicated in war crimes committed during Operation Storm which involved the “ethnic cleansing” of Serbs from certain territories by the Croatian Army.

Gotovina was added to the SDN list by Executive Order 13304 in 2003. That order designated a number of individuals involved in the Balkan conflicts that arose upon the dissolution of Yugolavia, including all parties who were “under open indictment by the International Criminal Tribunal for the former Yugoslavia,” which Gotovina was at the time.

Gotovina’s complaint is premised upon the 3-2 decision of the Appeals Panel of the ICTY in November 2012 overturning Gotovina’s earlier conviction for war crimes by the ICTY in April 2011. Since he is no longer under indictment by the ICTY, Gotovina claims that he should be removed from the list and alleges that OFAC has refused to respond to his request for removal.

Not surprisingly, Gotovina glosses over the reason for the Appeals Panel decision and argues that it is a complete exoneration of claims that he was a war criminal. In fact, the Appeals Panel decision was more procedural than substantive, setting aside the ICTY decision based on its finding that the “200 meter rule” used by the ICTY was arbitrary. The 200-meter rule excluded arguments that shelling targeted military rather than civilian targets when the shells fell more than 200 meters from legitimate military targets. According to the Appeals Panel, there was no evidence to support 200 meters as a measure rather than, say, 220 meters or 180 meters. As such, the Appeals Panel overturned the decision entirely.

Of course, OFAC is not bound by the Appeals Panel decision and is free to determine on its own whether Gotovina is a war criminal or not. Executive Order 13304 not only permits sanctioning ICTY indictees but also covers persons determined by Treasury “to have committed … acts of violence that have the purpose or effect of … diminishing the stability or security of any area or state in the Western Balkans region.” Treasury could still believe it has evidence that Gotovina committed war crimes and that these crimes threatened stability in the Western Balkans even if the Appeals Panel even if the Appeals Panel had affirmatively decided that Gotovina hadn’t committed war crimes (rather than more narrowly deciding that the 200 meter rule was flawed.) In that regard, there is no reason OFAC cannot, in its discretion, believe that the 2 dissenters on the Appeals Panel are more credible as to Gotovina’s participation in war crimes than were their majority colleagues.

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May

16

Palestine: A Reminder of the OFAC Regulatory Labyrinth


Posted by George Murphy at 1:36 pm on May 16, 2013
Category: Economic SanctionsOFACSanctionsSDN List

SUPARCO HQ http://www.suparco.gov.pk/assets/images/hq.jpg [Fair Use]

OFAC this week issued a general license redefining the term “Palestinian Authority” as that term is used in three sets of U.S. sanctions regulations relating to terrorism. The change was only to add a phrase to account for Prime Minister Salam Fayyad’s resignation. You may be asking yourself how we got to the point where OFAC issues licenses to redefine a regulatory term because of the resignation of a foreign political leader. The answer is, not surprisingly, not so simple.

The Palestinian Authority (PA) is not, and never has been, on the SDN List. But back in 2006, OFAC announced, by virtue of the Hamas victory in the PA legislative elections, it determined that Hamas “has a property interest in the transactions of” the PA and, therefore, “U.S. persons are prohibited from engaging in transactions with” the PA. The strained logic that an entity has a property interest in the transactions of a government because individuals affiliated with the entity won a plurality of a legislative election vote was implemented into the terrorism regulations as interpretive provisions, which still exist. This was a harbinger for things to come.

In 2007, as a result of Prime Minister Fayyad’s appointment, OFAC issued a general license authorizing U.S. persons to engage in all transactions with the PA that were otherwise prohibited by defining the PA to be the government of President Abbas and Prime Minister Fayyad. OFAC could have, instead, at that point explained the situation and removed the interpretive provisions from the terrorism regulations. It did not, and we commented here on the oddity of this situation over five years ago. The new general license this week perpetuates the situation further. Now the regulations include the interpretive provisions, the 2007 general license and the new general license clarifying the other general license.

It should not be this complicated. If OFAC’s goal is to hedge its bets that the PA may at any time fall back under control of Hamas, which the Gaza Strip effectively has been since 2007, there are more direct ways to make the PA subject to sanctions that are easier for U.S. persons to follow and understand. The most obvious candidate, if the United States believed there was a Hamas-related terrorism threat with the PA, would be adding the PA to the SDN List or some form of direct sanctions. If not direct, then an interpretive provision is second-best, but one that provides a more realistic justification than the current “property interest” logic. Of course, a new interpretive provision would put the onus on OFAC to explain further notions of ownership and control that have thus far not received enough attention.

Until then, we will wait for the next general license when the new prime minister is determined.

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