OFAC

On Sunday, January 27, 2019, the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”) announced the lifting of sanctions imposed on En+ Group plc (“En+”), UC Rusal plc (“Rusal”) and JSC EuroSibEnergo (“ESE”).  As previously reported here, this announcement follows the Administration’s notification submitted to Congress on December 19, 2018.

Today, January 8, 2019, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) added approximately 30 individuals and entities to its Specially Designated Nationals and Blocked Persons List (the “SDN List”) due to their engagement in corrupt currency exchange transactions which enriched themselves by at least $2.4 billion at the expense of Venezuela’s citizens.  These sanctioned persons include two former Venezuelan National Treasurers – Claudia Patricia Diaz Guillen (“Diaz”) and Alejandro Jose Andrade Cedeno (“Andrade”) – who authorized a Venezuelan businessman named Raul Antonio Gorrin Belisario (“Gorrin”) to convert Venezuelan bolivars into U.S. dollars at highly favorable exchange rates at currency exchange houses under his control.  Gorrin then shared the resulting excess currency conversion profits with Diaz and Andrade by engaging in deceptive practices to purchase a wide variety of properties, aircraft and other luxury assets on behalf of Diaz, Andrade, their family members and their other business associates.  The Treasury Department published a diagram which explains the scheme in further detail.

On December 19, 2018, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) and the U.S. State Department took multiple sanctions actions related to Russia:

Proposed Delisting of En+ Group, UC Rusal and ESE

OFAC notified Congress of its intent to remove En+ Group plc (“En+ Group”), UC Rusal plc (“UC Rusal”) and JSC EuroSibEnergo (“ESE”) from its Specially Designated Nationals and Blocked Persons List (the “SDN List”) within thirty (30) days from December 19, 2018.  OFAC first added these companies to the SDN List in April 2018 when it imposed sanctions on Oleg Deripaska due to his status as a senior Russian government official.  OFAC added these three companies to the SDN List because Deripaska was the majority owner of En+ Group (which, in turn, was the majority owner of both UC Rusal and ESE).  Under OFAC’s 50% ownership rule, these sanctions also extended to any subsidiaries in which En+ Group, UC Rusal or ESE held an ownership interest of 50% or greater. 

On December 7, 2018, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) further extended the expiration date of certain Ukraine-related general licenses related to EN+ Group plc (EN+), United Company RUSAL PLC (RUSAL), and GAZ Group (GAZ) as the entities continue discussions with OFAC to potentially effect “significant changes in control of these sanctioned entities.”   The new  General Licenses 13H (Authorizing Certain Transactions Necessary to Divest or Transfer Debt, Equity, or Other Holdings in Certain Blocked Persons), 14D (Authorizing Certain Activities Necessary to Maintenance or Wind Down of Operations or Existing Contracts with United Company RUSAL PLC), 15C (Authorizing Certain Activities Necessary to Maintenance or Wind Down of Operations or Existing Contracts with GAZ Group), and 16D (Authorizing Certain Activities Necessary to Maintenance or Wind Down of Operations or Existing Contracts with EN+ Group PLC or JSC EuroSibEnergo) supersede their previous versions by extending the expiration date from from January 7, 2019, to January 21, 2019.

On November 9, 2018, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) extended the expiration date for certain Ukraine-related general licenses related to EN+ Group plc (EN+), United Company RUSAL PLC (RUSAL), and GAZ Group (GAZ).  The expiration date of General Licenses 13G (Authorizing Certain Transactions Necessary to Divest or Transfer Debt, Equity, or Other Holdings in Certain Blocked Persons), 14C (Authorizing Certain Activities Necessary to Maintenance or Wind Down of Operations or Existing Contracts with United Company RUSAL PLC), 15B (Authorizing Certain Activities Necessary to Maintenance or Wind Down of Operations or Existing Contracts with GAZ Group), and 16C (Authorizing Certain Activities Necessary to Maintenance or Wind Down of Operations or Existing Contracts with EN+ Group PLC or JSC EuroSibEnergo) was extended from December 12, 2018 to January 7, 2019.  U.S. persons participating in transactions or activities authorized by these general licenses should provide a detailed report to OFAC within 10 business days of January 7, 2019 (by January 21, 2019).

As previously covered here, on April 6, 2018, the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”) invoked authority provided under the Countering America’s Adversaries Through Sanctions Act (“CAATSA”) in order to place several Russian oligarchs, political officials and businesses under their control on its Specially Designated Nationals and Blocked Persons List (“SDN List”).  These designations generally prohibited U.S. persons from engaging in transactions  with the sanctioned individuals  and entities, however OFAC also issued several General Licenses simultaneously which were intended to provide limited windows for maintaining or winding down preexisting transactions with those sanctioned individuals or entities.  OFAC has now partially extended those authorized wind down periods by issuing the following General Licenses last week on September 21, 2018:

On September 20, 2018, President Trump released a 16-page Executive Order which delegated various Presidential powers established under the Countering America’s Adversaries Through Sanctions Act (“CAATSA”) to both the U.S. Secretary of Treasury and the U.S. Secretary of State.  As a result of this delegation, the U.S. Treasury Department‘s Office of Foreign Assets Control (“OFAC”) and the U.S. State Department are now empowered to take actions which include (but are not limited to) designating parties to be sanctioned under various CAATSA provisions, selecting the specific menu-based sanctions to be imposed upon those parties and implementing those menu-based sanctions (we previously covered the CAATSA statute here, here and here).  OFAC also updated its website to provide an additional FAQ response explaining the new Executive Order and indicating that it anticipates promulgating regulations to implement these sanctions.

President Trump signed a new Executive Order on August 6, 2018, titled “Reimposing Certain Sanctions with Respect to Iran”. The Executive Order was timed to coincide with the last day of the 90-day wind-down period established for activities associated with certain sanctions relief authorized by the Joint Comprehensive Plan of Action (“JCPOA”).  As a result, the first round of sanctions against Iran will become effective at 12:01 a.m. on August 7, 2018.

President Trump announced today, May 8, 2018, that the United States will withdraw from the Iran Nuclear Deal and will begin reimposing previously waived sanctions on Iran.  The deal, formally known as the Joint Comprehensive Plan of Action, or JCPOA, was signed by the U.S. in July 2015 along with China, France, Germany, Russia, the United Kingdom, the European Union and Iran. The White House issued a statement which explained that “President Trump is terminating United States participation in the JCPOA, as it failed to protect America’s national security interests.”

On April 15, 2018, the Department of Commerce’s Bureau of Industry and Security (“BIS”) issued a denial order against ZTE Corporation and ZTE Kangxun Telecommunications Ltd. (collectively “ZTE”), effectively banning U.S. companies from providing components to ZTE  because the company had failed to comply with the terms of a disciplinary agreement reached in March 2017 arising from violations of U.S. export control restrictions against Iran and North Korea. It is estimated that U.S. companies provide nearly 25-30 percent of the components used in ZTE products. ZTE’s U.S. subsidiary advertises that it has been ranked by independent industry analysts as the fourth-largest supplier of mobile devices in the U.S. overall and second-largest supplier of prepaid devices.