fincen Archives - Meshkat Law, P.C.

What Are OFAC’s “Secondary Sanctions” on Russia, Truly?

October 2, 2024

One concern I hear a lot from businesses outside the United States is regarding so-called “secondary sanctions” of the United States (“U.S.”), especially since the rapid expansion of the U.S. Department of the Treasury’s Office of Foreign Assets Control’s (“OFAC”) Russia-related sanctions regime beginning in February 2022. For example, a typical inquiry will be something like : “Our dealings with a Russian entity do not involve the U.S. or any U.S. persons, but what about U.S. secondary sanctions?” Unfortunately for them (and myself as a sanctions attorney), OFAC has never officially defined the term “secondary sanctions” for any of its programs, and it became an

OFAC and the End of Chevron Deference: Does It Even Matter?

July 8, 2024

For better or worse, the U.S. Supreme Court has overruled Chevron v. Natural Resources Defense Council (“Chevron”), which for the last 40 years has provided many U.S. government agencies with significant leeway in interpreting the statutes they administer. One agency that perhaps didn’t bat an eye when the Court’s decision in Loper Bright Enterprises v. Raimondo (“Loper”) laid Chevron to rest, was the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), which administers U.S. economic sanctions laws and regulations. Historically, the agency has for the most part come out unscathed from a plethora of judicial disputes challenging OFAC’s agency actions on a range of issues under the

US to Harmonize Russia-Related Sanctions Lists with the EU and UK

June 20, 2024

When President Biden signed into law the April 24, 2024 National Security Package (H.R. 815), media outlets predominately focused their coverage on the long awaited United States (“US”) aid for Ukraine, Israel, and Taiwan that had been held up in Congress for months. However, this comprehensive piece of legislation also had numerous trade and sanctions-related provisions, including a significant amendment of the existing statute of limitations for the statutory bases of most US sanctions programs from 5 to 10 years. In this article, we examine another important sanctions-related provision hidden under “Other Matters” of Division G of H.R. 815, which requests the President to impose

Removal from the UFLPA Entity List

June 11, 2024

Upon its December 23, 2021 enactment, the Uyghur Forced Labor Prevention Act (“UFLPA”), Public Law No. 117-78, directed the United States government’s interagency Forced Labor Enforcement Task Force (“FLETF”) to develop a strategy to enforce a prohibition on the importation of goods into the U.S. that are manufactured wholly or in part with forced labor in the People’s Republic of China, especially from the Xinjiang Uyghur Autonomous Region (“Xinjiang”). The law went into effect on June 21, 2022, with a rebuttable presumption administered by the U.S. Customs and Border Protection (“CBP”) that goods mined, produced, or manufactured wholly or in part in Xinjiang or by

BIS Implements SDN Crossover Rule

March 27, 2024

This article was last updated on October 8, 2024, but originally published on March 27, 2024, and updated on June 6, 2024. On March 21, 2024, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) significantly expanded its end-user restrictions under the Export Administration Regulations (“EAR”), 15 C.F.R. Part 744, in coordination with the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) in relation to 14 OFAC-administered sanctions programs and its Specially Designated Nationals and Blocked Persons (“SDN”) List. These specific end-user restrictions—many of them new in relation to OFAC’s Russia- and Belarus-related sanctions programs—have all been consolidated into a

OFAC’s Enforcement of the 50 Percent Rule

February 28, 2024

The U.S. Department of the Treasury’s Office of Foreign Assets Control’s (“OFAC”) last civil enforcement action for 2023 involved insurance company Privilege Underwriters Reciprocal Exchange (“PURE”), and was a stark reminder of the potential risks in dealing with sanctioned entities that aren’t identified on any OFAC sanctions lists but otherwise subject to the agency’s “50 Percent Rule.” This Rule extends relevant blocking sanctions and prohibitions to any entity that is owned 50 percent or more, in the aggregate, by persons identified on the Specially Designated Nationals and Blocked Persons (“SDN”) List, certain other OFAC sanctions lists, and/or other blocked persons. PURE’s alleged violations stemmed from insurance-related transactions

U.S. Expands Russia Sanctions in February 2024

2 Years After: U.S. Expands Sanctions & Export Controls on Russia

February 26, 2024

On the eve of the second anniversary of Russia’s full-scale war against Ukraine, February 23, 2024, and also in response to the on February 16, 2024 death of opposition figure Aleksey Navalny, the United States government imposed economic sanctions on hundreds of individuals and entities located around the world, as well as additional export controls measures in relation to the Russian Federation. These actions were undertaken by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), the U.S. Department of State (“State”), and the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”). In this article we provide an overview of

Removal from the BIS Unverified List: Verifying “Bona Fides”

January 16, 2024

One of several lists administered by the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) is the lesser-known Unverified List (“UVL”). While persons may be added to BIS’s better known Entity List for involvement in activities that are contrary to U.S. national security or foreign policy interests, the regulatory reasons UVL additions are more innocuous in nature. Nevertheless, being added to the UVL can have significant repercussions for the targeted person’s ability to acquire any commodities, software, technology (“items”) that are subject to BIS’s Export Administration Regulations (“EAR”)—i.e., U.S.-origin items, including many controlled foreign-made items involving U.S.-origin goods or technology—and listed persons will presumably want

Navigating U.S. Economic Sanctions

January 8, 2024

Economic sanctions, especially those related to Russia and Iran, routinely make news headlines. However, the underlying legal changes that occur can significantly impact the operations of organizations engaging in cross-border commerce, risking exposure to relevant legal repercussions. It is therefore imperative for the legal counsel of organizations facing such sanctions risks to appreciate the legal landscape of U.S. economic sanctions, which is constantly changing based on U.S. foreign policy and national security interests, to ensure compliance with applicable legal authorities. This primer on U.S. sanctions is intended as a preview to the January 11 U.S. Economic Sanctions 101 Webinar: a comprehensive introduction for practicing attorneys on

Ready to Disclose Your Entity’s Beneficial Ownership Details?

December 26, 2023

Coming in hot on January 1, 2024 is the Financial Crimes Enforcement Network’s (“FinCEN”) new beneficial ownership information reporting rule (the “BOI Reporting Rule”), which will require many companies to report certain identifying information about the individuals who ultimately own and control them. FinCEN is a bureau of the U.S. Department of the Treasury that has historically collected and analyzed financial transaction information from financial institutions (e.g., banks and money exchangers) to enable the U.S. government to combat financial crimes. Most companies have never had to interact with the bureau or comply with any of its rules, and this new BOI Reporting Rule will likely

U.S. Economic Sanctions Implications for Sovereign Disputes

November 20, 2023

The expansive scope of United States economic sanctions programs—comprised of the laws and regulations administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”)—can have a considerable impact on legal disputes involving a sovereign state or instrumentality targeted by U.S. sanctions, irrespective of the dispute’s location or forum. When a U.S. sanctioned target is involved in a dispute, failure to adequately assess relevant sanctions risks, prohibitions, and available OFAC license authorizations related to your involvement can result in potential violations of applicable laws or invoke certain sanctions-related retaliatory measures. For example, legal counsel intending to represent the sanctioned target, or the

Banks Are Busy Verifying Client BIS Export Licenses

November 7, 2023

Banks are increasingly verifying with their exporting clients whether their transactions related to the export of goods—even ordinary consumer goods—had appropriate license authorization from the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”), especially where Russia or Belarus are involved. As discussed in a prior article of ours, this is ostensibly because BIS has actively coordinated with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) in issuing joint alerts to inform financial institutions (“FI”) on the scope of U.S. export controls targeting Russia and Belarus under BIS’s Export Administration Regulations (“EAR”), unauthorized diversion tactics and relevant monitoring measures, and reminding them of

Selling Iranian Real Estate? U.S. Sanctions and Tax Implications

October 24, 2023

You have real estate in Iran that you wish to sell and then transfer the proceeds to the United States. Several questions will come to mind: Answers to these questions stem from the laws and regulations administered and enforced by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) and the Internal Revenue Service (“IRS”). OFAC administers U.S. economic sanctions programs, including on Iran, and it goes without saying that the IRS administers U.S. federal taxes. There may also be state and local tax considerations depending on where you reside, but we won’t delve into those here. U.S. Economic Sanctions Considerations OFAC’s

Suspension of U.S. Sanctions on Key Venezuelan Economic Sectors

October 20, 2023

With everything going on in the world these days, one could excuse the media’s apparent disinterest in an otherwise significant change in U.S. economic sanctions policy towards Venezuela, which occurred on October 18, 2023. The odd timing of the U.S. Department of the Treasury’s Office of Foreign Assets Control’s (“OFAC”) announcement of relevant changes was also perhaps to blame (and arguably suspect), because it occurred after hours Eastern Time. So what were these changes? In response to the signing of an electoral roadmap agreement between Venezuela’s Maduro regime and the opposition political alliance, Unitary Platform, OFAC eased sanctions on key sectors of the Venezuelan economy, including the oil, gas,

Preventing Unauthorized Diversion to Russia and Belarus

October 17, 2023

Notwithstanding the robust economic sanctions imposed on Russia and Belarus since February 2022 by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), and export controls by the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”)—in coordination with international allies and partners—unlawful diversion to Russia and Belarus remains a critical issue as illustrated by numerous enforcement and targeting actions. Generally speaking, unlawful diversion occurs when a third-party intermediary to an export transaction—e.g., distributor, reseller, sales agent, procurement agent—transfers the underlying items (i.e., goods, software, technology) to an unauthorized end-user, either by actively obfuscating transactional details from the exporter or purposely

FYI: OFAC’s Sudan-Related Sanctions Still Exist

May 11, 2023

In many instances where I’ve been called upon to evaluate a business’s trade compliance program, I notice that company policy is to prohibit any and all dealings with Sudan. It always makes me wonder if their respective compliance unit missed the memo back in October 2017 when President Obama gutted the comprehensive U.S. embargo on Sudan that had been administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) for over a decade, along with the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) removing its stringent export controls treatment for Sudan. Nevertheless, I still wouldn’t advise my clients

OFAC Enforcement Indicates Sanctions List Screening Isn’t Enough

April 11, 2023

Many businesses are of the impression that as long as their internal trade compliance controls include screening against the U.S. Department of the Treasury’s Office of Foreign Assets Control’s (“OFAC”) various sanctions lists—e.g., the Specially Designated Nationals and Blocked Persons (“SDN”) List—and prohibiting and interdicting any potential dealings with comprehensively embargoed jurisdictions (e.g., Iran, North Korea, Cuba, Syria, and certain regions of Ukraine), then their U.S. economic sanctions risks are adequately addressed. Unfortunately, as illustrated by two recent OFAC enforcement actions— published within a week of one another in March/April 2023—this is not necessarily the case because many OFAC administered sanctions programs also block and

Divesting from Russia? You May Need an OFAC License

March 31, 2023

As of March 27, 2023, the Russian Federation requires all western businesses seeking to divest from the country to make a direct donation to the Russian state. This leaves western companies between a rock and a hard place. On the one hand, companies seeking to exit Russia are generally doing so because they don’t want their operations to fund Russia’s war effort, and/or because continuing to do business would otherwise face very heightened economic sanctions risks imposed by the west. However, paying any such divestment donation has its own sanctions risks, including potentially violating relevant U.S. economic sanctions laws in the process. Therefore, for businesses

No Jet Fuel for Burma’s Military: OFAC Sanctions Risks

March 27, 2023

The U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) is specifically targeting businesses and individuals involved in the provision of jet fuel to Burma’s (a.k.a. Myanmar) military regime. In particular, on March 24, 2023 OFAC: OFAC’s efforts are intended to counter the military regime’s continued atrocities and violence against the people of Burma, especially through an increased reliance on air strikes and unguided munitions and rockets in civilian populated areas. Whether such efforts will actually be able to deprive the Burmese military of its ill-used jet fuel ultimately depends on relevant business’s compliance with the legal implications of these sanctions actions, many

Benchmarking OFAC Enforcement Actions for Sanctions Compliance

March 23, 2023

When creating or enhancing a U.S. economic sanctions compliance program, businesses will typically refer to certain published guidance from the U.S. Government that may include the U.S. Department of the Treasury’s Office of Foreign Assets Control’s (“OFAC”) A Framework for OFAC Compliance (“Compliance Framework”), the U.S. Department of Justice’s Evaluation of Corporate Compliance Programs (Updated March 2023), and/or the U.S. Federal Sentencing Guidelines for Organizations’ section 8B2.1’s Effective Compliance and Ethics Programs. However, while these publications may serve as helpful high-level outlines to follow, they don’t provide specific guidance for businesses based on their respective size, industry, customer-base, supply chain, products/services, relevant geographical locations, and other operational idiosyncrasies. With the

How to Go About Removal from the BIS Entity List

March 20, 2023

This article was updated on October 10, 2024, but originally published on March 20, 2023. With so many entities being added to the Entity List lately, whether in China, Russia, or elsewhere, is it possible for them to ever be removed? After all, being identified on the U.S. Department of Commerce’s Bureau of Industry and Security’s (“BIS”) Export Administration Regulations’ (“EAR”) Entity List—Supplement No. 4 to 15 C.F.R. Part 744—imposes highly restrictive licensing requirements on the export, reexport, or transfer (in-country) of items subject to the EAR and involving the listed entity or individual (yes, individuals can also be identified on the Entity List). For example, the

U.S. Expands Russia-related Sanctions 1 Year After

1 Year After: U.S. Expands Export Controls on Russia and Belarus

February 24, 2023

With one full year gone by since Russia invaded Ukraine, a lot has been written in the history books of U.S. economic sanctions and export controls. Marking this first anniversary, the Department of Commerce’s Bureau of Industry and Security (“BIS”), the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), and the U.S. Department of State have all imposed additional and substantial sanctions and export controls. Whether such measures will dampen Russia’s war efforts and hopefully put a stop to it before the two-year mark is a topic of much deliberation by think tanks and politicians. However, as a sanctions and export controls

New BIS-DOJ “Strike Force” and Relevant Export Controls

February 21, 2023

A new strike force is out, and it’s not a movie or video game (sorry Marvel fans). On February 16, 2023, the United States Department of Justice (“DOJ”) and Department Commerce launched the Disruptive Technology Strike Force (a.k.a. “DIS-TECH Strike Force”). DOJ’s National Security Division and Commerce’s Bureau of Industry and Security (“BIS”) are leading the effort—in coordination with several other agencies—to target actors involved in the illegal acquisition and export of advanced U.S. technologies for use by nation-state adversaries. Who are such adversaries? And what are the relevant export controls? Read on. The related press release underscores that “[w]hen acquired by nation-state adversaries such as the

Export & Sanctions Compliance Insights

Export & Sanctions
Compliance Insights