OFAC Debuts New Game Show: Guess That Violation, or Wheel of Misfortune

Posted by at 7:27 pm on November 17, 2015
Category: Cuba SanctionsOFAC

Havana by Bryan Ledgard [CC-BY-SA-2.0 (], via Flickr [cropped]The Office of Foreign Assets Control (“OFAC”) has made sort of a name for itself by issuing cryptic penalty announcements where it is a considerable challenge to figure out what went on and why the unfortunate company that has been whacked with an “agreed” fine got itself tangled up with OFAC in the first place. But the recent penalty slapped on Gil Tours Travel for some vague violation of the Cuba sanctions takes the cake or, I suppose, el pastel.

According to the penalty announcement, Gil was being fined because “dealt in property in which Cuba or Cuban nationals had an interest, by providing Cuba travel-related services involving 191 individuals, without authorization from OFAC,” which is pretty much like saying Gil broke the rules when it broke the rules. But here’s the kicker. In discussing aggravating factors, OFAC says this:

Gil Travel had some awareness that it was providing Cuba-related travel services, and that its conduct could be in violation of the CACR [Cuban Assets Control Regulations]

Say what? It had “some awareness” that it was providing Cuba-related travel service and that this “could” be in violation of the rules? What on earth does that mean? How can you not know whether you are providing Cuba-related services? Close only counts in horseshoes and hand grenades, not rule violations. It’s a binary thing: you either are or are not providing those services and, if you are, you know it. Don’t count on any clarification from OFAC to help anyone figure out what happened here.

Apparently the owner of Gil Tours told (subscription required) Law360 sort of what was going on, although his explanation is not a model of clarity either.

Gil’s president and CEO Igal Hami told Law360 on Wednesday by email that … its only involvement with the trips under investigation was in referring nonprofit agencies that had OFAC licenses to arrange Cuban travel to another tour operator that also had a license.

So, apparently (if this is true), OFAC thinks you violate the CACR if you refer someone to a licensed tour operator unless you have a license to make that referral. In other words, if I included a link here to a licensed provider of people-to-people tours to Cuba, I would be breaking OFAC rules because I don’t have a license to make that referral. No wonder OFAC didn’t want to let on what happened here.

(I’m really, really, really hoping someone at OFAC clicked the link above to see if I had committed this violation. Explanation here.)


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Banks’ Fear of OFAC Blocks Travel to Cuba

Posted by at 9:15 pm on November 11, 2015
Category: Cuba SanctionsOFAC

Cuba Capitole by y.becart(Own work) [CC-BY-SA-2.0 (], via Flickr

With the corpses of banks skewered by OFAC strewn around everywhere you look, it is not altogether surprising that banks are terrified of the agency and are scared to death that the slightest misstep might bring the wrath of the agency down upon them. The latest instance of acute ofacaphobia, reported here in an excellent Miami Herald article, involves banks in a panic that travelers to Cuba on one of the general licenses might be fibbing and might really be going to Cuba to drink mojitos in Old Havana and hang out on the beach.

Before travelers can arrive in Cuba, the airline or charter company needs to pay $194 per passenger for landing fees and mandatory health insurance. According to the article, now that passengers self-certify their eligibility under the twelve categories covered by the general license for travel, banks are trying to verify that these self-certifications are accurate, asking for itineraries and other information to assure themselves that they won’t be the next cow in the OFAC abbatoir.

Meanwhile, analysts said perhaps the biggest reason banks are wary of Cuba business are the huge — and recent — fines aimed at banks that have done business with sanctioned countries. Just last month, France’s Crédit Agricole bank paid nearly $800,000 [sic – $800,000,000] to U.S. state and federal agencies to settle allegations it tried to hide or obscure references to transactions involving U.S.-sanctioned nations, including Cuba.

The result has been that travelers arrive at the airport only to learn that they aren’t going to Cuba, that the flight has been cancelled, and that they have to go home because necessary fees had not been transferred by the U.S. banks. Apparently they are so irritated that charter companies have gone to the airport with “police escorts” to deliver the bad news.

This should come as no surprise to OFAC. And there is a simple solution: issue guidance to the banks that they can rely on the traveler’s self-certification of their eligibility under the general license. If Justin Whiteshoes says he’s going to Cuba on a people-to-people tour and is, in fact, going on a bar-to-bar tour, it is going to be Justin Whiteshoes who gets whacked and not the bank that wired his $194 fee to Cuba.

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I’m from the Government and I’m Here to Fine You (Twice)

Posted by at 12:25 am on November 6, 2015
Category: BISSDN List

PPI via [Fair Use]

Back in August, we detailed the sad story of Production Products,  a small family-run business in Maryland that sent OFAC into a tizzy and received a $78,5000 fine because, heaven forfend, the company had never heard of the SDN list and sent HVAC duct manufacturing worth $500,000 to an SDN in China, which equipment is now probably being used to make bombs and missiles and stuff. We took the occasion to suggest that, rather than pitch a fit, OFAC should engage in a bit of reflection and wonder why a small mom-and-pop company in Maryland might never have heard of its SDN list.

Well, Production Products’s woes were scarcely over because BIS, equally annoyed that Production Products doesn’t have someone read the Federal Register cover-to-cover every day, has decided it ought to pile on with its own $50,000 fine for the same violation, as well punishing the company with a year in detention or the equivalent, namely requiring three officials to attend export school and report back to BIS Special Agents with “attendance certificates.”

BIS gets to attend this punching party as a result of section 744.8 of the Export Administration Regulations which makes it a violation of the EAR to deal with any SDN that is listed “with the bracketed suffix [NPWMD].” And that was the case here. The Chinese company on the list has the “bracketed suffix [NPWMD]” which means (for those of you who don’t speak the Low Middle Inflected Dialect of the Exportish language) that they were put on the list for reasons having to do with their involvement in nuclear proliferation and/or weapons of mass destruction.

Like OFAC, BIS was miffed that Precision Products had never heard of the SDN and, as a result, imposed a fine and the requirement that the miscreants take course at Export School and bring back proof of attendance. But, also as was the case with OFAC, this was less an opportunity for BIS to get lathered up than it was an opportunity for self-reflection. What has BIS done to make sure that small businesses know about its arcane and complex regulations?


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OFAC Expands List of Medical Devices Eligible for Unlicensed Exports to Iran

Posted by at 10:28 pm on November 4, 2015
Category: Iran SanctionsOFAC

GE Giraffe Baby Warmer via [Fair Use]

Back in September, we reported on industry criticism of the list published by the Office of Foreign Assets Control (“OFAC”) of medical devices eligible for export to Iran without a license for certain glaring omissions, namely, infant warmers used in maternity units and neo-natal intensive care devices. This seemed ironic given that certain contraceptive devices were on the list, but critical infant care items were not.

Well, OFAC just updated the list to add a number of devices eligible for unlicensed exports to Iran, including “infant radiant warmer and parts and accessories … [and] [n]eonatal equipment (phototherapy, nasal CPAP, etc. and all components).” Whether or not OFAC listened to what we had to say or not, it clearly listened to industry and did the right thing.

There are a substantial number of additions to the new list, too many to detail here, but I noticed certain changes of particular interest. The category of radiology equipment was expanded from a single item (medical ultrasound equipment) to pretty much the full array of radiology equipment: MRIs, X-ray machines, x-ray film, contrasting agents, mammography machines, and tomography scanners.

Also on the list, and it’s hard to understand why this took so long, are hearing aids. It seems to me that we were in no position to say that Iran was not listening to our arguments on nuclear proliferation at the same time we were restricting the export of hearing aids to the Iranians.

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A Scary Halloween Post on Another Obscure List for Exporters to Check

Posted by at 3:41 pm on October 30, 2015
Category: Criminal PenaltiesOffice of Diversion Control

Taminco HQ via Google Maps [Fair Use]
ABOVE: Taminco HQ


I still have some invitations for free food and drink at the Bryan Cave reception at 6:00 pm on November 3 for people in town attending the BIS Update Conference (or anyone else for that matter). Email me at if you want one. It won’t be as much fun as that cruise that somebody else is doing for people attending the BIS Update 2015, but at least you can leave our event when you want to.


As if there weren’t enough lists to check and agencies to fuss with and other requirements before exporting stuff, did you know about this list? Otherwise known as the Schedule of List I Chemicals, all the chemicals on that list are chemical precursors for the manufacture of methamphetamine. (Yes, apparently iodine and red phosphorus are used for that. Who other than Walter White a/k/a Heisenberg had any idea?)

If you are going to export anything on that list, the rules of the DOJ Office of Diversion Control require that you verify the identity and end user of the chemical pursuant to the procedures set forth in 21 C.F.R. § 1310.07. If part of a shipment goes missing, or if the exporter learns that an end-user might be cooking meth, section 1310.05 requires the exporter to report this “at the earliest practicable opportunity.”

Taminco, a Pennsylvania-based producer of chemical amines used as components in manufacturing everything from agrochemicals to fuel additives and animal feed did not verify the identity of its customers or report missing shipments in connection with exports of 100 tons of monomethylamine to Mexico. As a result, according to this report (subscription required), it has now been forced by DOJ to agree to pay $1.3 million in criminal and civil penalties. According to the DOJ Sentencing Memorandum the chemicals were worth only $210,234.07

The only consolation here is that nobody went to jail. I think that used to be called cold comfort.  Once again, the moral of the story is this: export stuff at your own peril, something that has been known since the early days of the Roman Empire and nicely expressed in that well-known maxim: Caveat Exportor.

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