Sanctions Top-5 for the week ending 11 September 2020

Here are five things that happened this week in the world of economic sanctions that I think you should know about.

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1. The US Office of Foreign Assets Control (OFAC) announced a pair of settlements with Deutsche Bank Trust Company Americas (DBTCA) for violations of the Ukraine-Related Sanctions Regulations (URSR). According to the OFAC settlement notice, one related to a payment processed through the US financial system involving an unspecified property interest of a blocked company in Cyprus. The other related to failures to detect a sanctioned bank in payment messages due to incorrectly calibrated screening software.
2. OFAC named four individuals as Specially Designated Nationals (SDNs) pursuant to Executive Order 13848 (election interference) and Executive Order 13694 (malicious cyber-enabled activities) for “attempting to influence the US electoral process.” The targets include a Ukrainian lawmaker who is accused of spearheading a “covert influence campaign centered on cultivating false and unsubstantiated narratives concerning US officials in the upcoming 2020 Presidential Election.”
3. In related news, the US Department of Justice (DOJ) charged one of the newly sanctioned individuals with conspiracy to commit wire fraud. According to the criminal complaint, the individual attempted to open bank and Bitcoin accounts using stolen identity information while managing operations for “Project Lakhta,” a Russian campaign to influence US voters.
4. OFAC named Lebanon’s former Minister of Finance and Minister of Transportation and Public Works as SDNs pursuant to Executive Order 13224 for providing “material support to Hizballah” and engaging in corrupt dealings with the group in their prior roles. According to a Treasury Department news release, the individuals’ conduct is part of a pattern of “backdoor deals and reliance on Hizballah for personal gain and gains for their political allies ahead of the needs of the Lebanese people.”
5. The DOJ announced criminal charges against two North Korean nationals and one Malaysian national for using front companies to process transactions through the US financial system in violation of OFAC’s North Korean Sanctions Regulations. (A footnote in an affidavit filed with the criminal complaint notes one of the individuals was investigated for his role in the assassination of Kim Jong-un’s half-brother in February 2017.)

Comments

The facts behind the DBTCA settlement are intriguing and a little confounding. According to the OFAC settlement notice, in August 2015, DBTCA was pushed by the US lawyer of a “non-accountholder party” to process a very large payment related to a sale of fuel oil involving an SDN company in Cyprus. The lawyer insisted that the company had no interest in the payment. According to OFAC, an email sent to DBTCA by that lawyer contained information “that called into question whether [the company’s] interest in the oil or funds had been extinguished.” However, DBTCA did not “take steps to corroborate independently the representations it received in order to assure itself that [the company] did not have a present, future, or contingent interest in the payment” and processed it anyway.

Apparently, the SDN company did have a “present, future, or contingent interest” in the payment, but OFAC does not tell us what that was. OFAC also does not tell us whether the US lawyer knew or should have known of that interest when he or she pressed DBTCA to process the payment. And what about the non-accountholder party? So many questions. In any event, OFAC uses the case to drive home the lesson that “US persons should take due caution in accepting the oral or written representations of non-accountholder parties to a transaction.” In other words, do your own homework.

I’m looking forward to joining Michael Burnett of the US Embassy in Singapore, Srinivas Vaman Gollapudi of Kotak Mahindra Bank, and Andrew Glover of the International Compliance Association for a panel on trade compliance as part of Accuity’s Global Trade and Cargo Compliance Forum on Tuesday, 22 September 2020, hosted at three times in Asia, Europe, and US time zones. Registration and more information is available here.

It’s not too late to sign up for Windward’s virtual training series on maritime sanctions risk and compliance on 15, 22, and 29 September. Join me later today for the kick-off presentation on the latest shipping advisories and new compliance standards. Get more information here.

Did I miss something? Send me a message or comment on LinkedIn.

(The views expressed are my own and do not constitute legal advice. Photo from Vladislav Reshetnyak.)