Archive for the ‘SDN List’ Category


Apr

20

OFAC Releases Frequently Misleading Answers to FAQs on SDN Delisting


Posted by at 9:14 pm on April 20, 2017
Category: OFACSDN List

U.S. Treasury Department by Oran Viriyincy [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/ecNvDu [cropped]The Office of Foreign Assets Control today issued FAQs on the process whereby OFAC removes people from its List of Specially Designated Nationals and Blocked Persons. Sadly, the answers to those FAQs don’t really tell the whole story.  You might refer instead to Frequently Mis-Answered Questions

For example, OFAC says that it delists “hundreds” of entities each year. Although that has been the case lately, that has not always been the case, as OFAC’s archive of changes demonstrates. In 2001 and 2002, no entities were delisted and many less than 100 were delisted in 2005. Just over 100 were delisted in 2009

And although OFAC says the purpose of designation is not punitive but is to change behavior, this is hard to credit fully given the barriers OFAC erects to make delisting difficult. The principal ground for delisting is, as OFAC says in the FAQs, that the SDN has stopped the behavior that led to designation. The problem is OFAC will not ever reveal the specific basis for any designation. OFAC also makes it difficult to obtain paid legal representation because a license from OFAC is usually required to authorize payments to the lawyer, a lengthy and uncertain process that will lead most lawyers to decline representation. The only reliable way to get off the list is, as OFAC says, to die, but that, as they say, is cold comfort.

The 900 pound gorilla in the SDN listing room, of course, is still not addressed by these FAQs. If you are a terrorist or drug dealer that is designated by OFAC there is at least a process for removal. If you, however, aren’t a terrorist or drug dealer, but have a name similar to one, you are out of luck. Even though banks will routinely refuse to deal with people with similar names, there is no avenue for these innocent victims of the designation process to obtain relief from the agency.

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Copyright © 2017 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

Apr

18

Indictment of SDN Ignores OFAC’s 50 Percent Rule


Posted by at 2:56 pm on April 18, 2017
Category: Criminal PenaltiesOFACSDN List

Kassim Tajideen Mugshot [Fair Use]
ABOVE: Kassim Tajideen

Prosecutors love to add cute little nicknames to indictments.   In their view, United States v. John Jones aka Vicious Johnny the Kneecapper sounds much, much better than plain old vanilla United States v. John Jones.  So, in the indictment against recently arrested Kassim Tajideen the government makes sure to lead off with a few akas:  “Big Haj” and “Big Boss.”  In this case, however, maybe the United States needs its own aka as well: “United States aka United States of Imaginary Laws”

Tajideen is on the Office of Foreign Assets Control’s List of Specially Designated Nationals and Blocked Persons.   He is being prosecuted for “causing” U.S. persons to violate the rules against transactions with blocked parties.   Charging an SDN for doing business with U.S. persons, rather than charging U.S. persons that do business with the SDN, is unusual but not unprecedented.

The problem here, however, is not that the prosecution is unusual.   The problem is that the prosecution is based on a rookie mistake and an careless misinterpretation of governing law.  The theory of the indictment is that Tajideen, by not disclosing that he controlled various companies, caused U.S. persons to transact business with those companies in violation of U.S. sanctions.   Here’s what the indictment says:

The business empire utilized different corporate entities over the years, all controlled by KASSIM TAJIDEEN, including Epsilon, ICTC, and Sicam Ltd., to procure and distribute goods throughout the world, including the United States. KASSIM TAJIDEEN was the ultimate owner and chief decision-maker of the business empire, with IMAD HASSOUN acting as confidante and lieutenant. KASSIM TAJIDEEN benefited directly and indirectly from the operation of the business empire.

22. At all relevant times during the conspiracy, the defendant KASSIM TAJIDEEN was designated a Specially Designated Global Terrorist by the United States Department of the Treasury, Office of Foreign Assets Control, pursuant to the International Emergency Economic Powers Act, Executive Order 13224, and the Global Terrorism Sanctions Regulations. As discussed above, the SDGT designation resulted in any property in the United States, or in the possession or control of U.S. persons, in which KASSIM TAJIDEEN had an interest, being blocked, and all U.S. persons were generally prohibited from transacting business with, or for the benefit of, KASSIM TAJIDEEN.

Most readers here will immediately see the problem with the prosecutor’s case. In effect, the prosecution is asserting, wrongly, that it is illegal for a U.S. person to deal with an entity in which an SDN has any interest. Alternatively, the prosecutors might be asserting above that it must be at least a controlling interest. But whichever the case, that is just not true.

OFAC has issued clear guidance, easily found by anyone with access to the Internet (which presumably includes the prosecutors here) that describes the circumstances in which any entity in which an SDN has interest is itself also blocked by operation of law.  This guidance makes clear that it takes more than “any interest” or even a “controlling interest” for ownership by an SDN result in the owned entity being itself blocked.

Here is what that guidance says:

Persons whose property and interests in property are blocked pursuant to an Executive order or regulations administered by OFAC (blocked persons) are considered to have an interest in all property and interests in property of an entity in which such blocked persons own, whether individually or in the aggregate, directly or indirectly, a 50 percent or greater interest. Consequently, any entity owned in the aggregate, directly or indirectly, 50 percent or more by one or more blocked persons is itself considered to be a blocked person.

The guidance makes it perfectly clear that control alone does not result in the SDN’s company being blocked:

U.S. persons are advised to act with caution when considering a transaction with a non-blocked entity in which one or more blocked persons has a significant ownership interest that is less than 50 percent or which one or more blocked persons may control by means other than a majority ownership interest. Such entities may be the subject of future designation or enforcement action
by OFAC.

There’s good reason for this rule. Although majority ownership of an entity is something on which information can be easily gathered, it is difficult, if not impossible, for a party to a transaction to determine every owner of that entity or even the person who might ultimately exercise de facto control over that entity. So, under the OFAC guidance, it was not illegal for U.S. persons to transact business with these entities in which Tajideen had some interest, maybe even a controlling one. If those transactions were not illegal, then Tajideen did not cause any illegal transactions and the bottom drops out of the government’s case.

What the government had to allege here, and what it somehow was unable to do, is that Tajideen had a “50 percent or greater” interest in Epsilon, ICTC, and Sicam Ltd.  Even saying, as the indictment does, in one place that Tajideen was the “ultimate owner and chief decision-maker of the business empire” is not the same as saying that he had an interest of 50 percent or more in the three companies at issue.

Indeed the government’s silence here, like the dog’s silence in The Adventure of Silver Blaze, says all you need to know.

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Copyright © 2017 Clif Burns. All Rights Reserved.
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Apr

5

American University in Beirut Dinged by DOJ for SDN Listing in Directory Database


Posted by at 8:59 pm on April 5, 2017
Category: Civil PenaltiesOFACSDN List

AUB - College Hall by marviikad [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/fLntMv [cropped]The American University in Beirut (the “AUB”) recently agreed to pay $700,000 to settle claims in a civil suit under the False Claims Act brought by the United States. One of the violations alleged was that the AUB, while receiving funds under government contracts with USAID, provided material support to Jihad al-Binaa, an SDN designated under the SDGT program, by “including Jihad al-Binaa in a database that AUB maintained on its public website (the “NGO database”) for the stated purpose of connecting Non-Governmental Organizations (“NGOs”) with students and others interested in assisting them.”

This seems to run contrary to guidance from OFAC that says that the so-called informational materials exception (otherwise known as the Berman Amendment) allows listings in membership directories. In this guidance, issued in 2003, OFAC says this

The listing of basic information on a website in a uniform format for companies around the world, including Iran, by a U.S. person, is not prohibited by the ITR. … You note in your letter that the information being added to the enhanced listings displayed on your website is based on pre-existing information supplied by customers wishing to purchase enhanced advertising from the U.S. Company. The posting of this alternative layout of information on your website regarding companies in Iran, including additional data elements of identifying information, would not be prohibited, as long as the U.S. Company does not provide any marketing services to customers in Iran or substantively enhance information provided by Iranian customers.

The same logic would seem to apply whether the sanctioned party is a resident of Iran or an SDN designated under another program.

There may be, however, some reasons why it might not. Section 594.201(a)(4)(i) prohibits the provision of “financial, material, or technological support” to an entity designated under those regulations. And although section 594.305 of the SDGT regulations contains the standard definition of “informational materials,” that term, oddly, is not used elsewhere in the SDGT regulations and there is not an explicit informational materials exemption as there is, for example, in 560.210(c) of the Iranian Transactions and Sanctions Regulations. This means that there is at least an argument that the provision of informational materials to an SDN designated under the SDGT program might constitute prohibited “financial, material or technological” support to that SDN.

The language of the Berman Amendment, set forth in 50 U.S.C. § 1702(b)(3) prohibits regulation of “importation from any country, or the exportation to any country” of informational materials. Arguably, the prohibition of provision of informational materials to an SDN does not involve the prohibition of the importation or exportation of informational materials.

The better criticism of the government’s case here is whether simply listing an SDN in a database for students is a financial, material or technological support of the SDN. If it is, then one might wonder whether OFAC violates its own regulations by providing a listing, complete with an address and alternate names, in the SDN directory, er, list. Also, one has to wonder about how Facebook gets away with giving Jihad al-Binaa its own page without violating the rule if this kind of activity if “financial, material or technological” support. The answer is simple: providing this sort of information on the Internet is not such support.

Photo Credit: AUB – College Hall by marviikad [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/fLntMv [cropped]. Copyright 2014 marviikad

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Copyright © 2017 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

Feb

14

SDN List Hit Holds Up Food Bank Funds in Britain


Posted by at 11:12 pm on February 14, 2017
Category: Economic SanctionsOFACSDN List

Eventbrite Instagram Post via https://www.instagram.com/p/032C0eyzj7/?taken-by=eventbrite [Fair Use]So, UK accountant Mamunal Islam was minding his own business trying to raise money for a Bedford food bank. He thought maybe he’d sell tickets to a film through Eventbrite and use the proceeds to help people in his home town who needed food. He had never even heard of this obscure agency in the United States call the Office of Foreign Assets Control until San Francisco based Eventbrite told him that they were keeping his money and the hungry people in Bedford, well, they could eat cake. (Eventbrite didn’t really say the last part.)

It seems that Eventbrite thought that Mamunal Islam was a match on the SDN List, and although it never said that the food bank customers could eat cake, it did, according to an article on BBC News, say this:

Eventbrite said it was “truly sorry” but “a person with a very common name is more likely to make the list.” … Eventbrite said the Office of Foreign Assets Control (OFAC) had only recently added “M Islam” to its list. … A spokesman for the company said: “As a US company, Eventbrite must comply with US law. “In this instance, a payment to the organiser was temporarily held because of a potential OFAC name match. “Whether that is J Smith or M Islam does not make the slightest difference.”

To begin with, I don’t know what SDN List Eventbrite was using but it’s certainly not the one that OFAC publishes. Here’s every individual on the SDN List with Islam in his/her name:

ATABIEV, Islam SDN
ATABIYEV, Islam SDGT
ATABIYEV, Islam Seit-Umarovich SDGT
ABU ISLAM, Karim SDGT
ABU ISLAM SDGT
AL-SURIR, Abu Islam SDGT
AL-GADDAFI, Saif al-Islam LIBYA2
AL-QADHAFI, Saif al-Islam LIBYA2
EL-QADDAFI, Seif al-Islam LIBYA2
ELKADDAFI, Saif al-Islam LIBYA2
GADDAFI, Saif al-Islam LIBYA2
GADHAFI, Saif al-Islam LIBYA2
GHADAFFI, Saif al-Islam LIBYA2
GHATHAFI, Saif al-Islam LIBYA2
QADDAFI, Saif al-Islam LIBYA2
QADHAFI, Saif al-Islam LIBYA2
DEL ROSARIO SANTOS, Ahmad Islam SDGT

I don’t see any “M Islam” there, do you?  I don’t see anything even close other than “Islam” — which should not be cause to say that “Mamunal Islam” is a hit.  If sharing one part of a name is enough, than Eventbrite would need to block every Sally, Carol, José, Mohammed, Ahmed, Tom, Robert, Paul and James, because all those names also show up on the list.

Beyond this, Eventbrite had already burned the barn after the horses had escaped, so to speak.   If Mamunal Islam was really on the list — and he is not — then it would have been illegal to have sold any tickets on his behalf.  By the time there were actual funds to block, the rules had already been broken. So it’s not clear why Eventbrite didn’t tell Mr. Islam that there was an issue when he signed up or registered a new event rather than after he’d already sold a bunch of tickets for the food bank event.

Ultimately Eventbrite reversed its action after Mr. Islam provided “information confirming his country of birth” thereby proving, I suppose, that he is not the second son of Muammar Gaddafi.  So there was, ultimately, a happy ending, more or less, for Mr. Islam, Eventbrite, and the food bank in Bedford.

I understand that OFAC is in the business of scaring people to death and that Eventbrite’s reaction was not entirely irrational.  I’m also guessing that Eventbrite was the victim of one of the numerous paranoid screening services that market their value by claiming to screen against a semi-dubious list of sixty-two billion names of dodgy people.   Last, and perhaps least,  I’m sure “Islam” is scarier to an Internet company in San Francisco than, say, “Sally” or “Carol.”  Still, it seems that common sense should have prevailed here sooner than it did.

 

 

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Copyright © 2017 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

Jan

9

Our Long National Nightmare Is Over


Posted by at 5:06 pm on January 9, 2017
Category: OFACSDN List

Washington DC Fireworks by Curtis Palmer [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/5294FA [cropped] Regular readers of this blog are probably quite aware of my long-running crusade, dating back almost a decade, to free Daniel Garcia or, more accurately, to free people named Daniel Garcia from the stigma of sharing a name with someone on OFAC’s Specially Designated Nationals and Blocked Persons List. Other posts on Daniel Garcia are here and here.

The impetus behind this crusade was that people named Daniel Garcia are routinely denied financial services because someone else named Daniel Garcia is on the SDN List. Worse, officials at OFAC admitted to me, anonymously of course, that no one at OFAC even knew who Daniel Garcia was or why he was on the list.

Well, Daniel Garcias of the world, rejoice! Last Friday, OFAC announced that it was removing the mysterious Daniel Garcia from the list, sans, of course, any explanation for the removal. Because no one at the agency was sure why he was designated, it couldn’t have found that Daniel Garcia had stopped doing whatever it was that got him on the list in the first place. OFAC couldn’t even say that Daniel Garcia was dead or alive or whether, like Schrödinger’s cat, he was both dead and alive at the same time.

No matter. All that counts here is the result. I hope that maybe I played a small part in this removal and in helping  the next guy named Daniel Garcia who tries to get a car loan  drive off the lot in a shiny new BMW.

Now we can focus our attention on Sally Jones.

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Copyright © 2017 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)