Each quarter, I send my clients a trade compliance update, highlighting important developments over the last few months and summarizing key points for important sanctions programs.
In addition to a variety of ad hoc designations, below is a summary of key events this past quarter:
- OFAC has officially revoked the Syrian sanctions program. That said, several designations were just migrated to the new Promoting Accountability for Assad and Regional Stabilization Sanctions program. Sanctions risks still exist in the country, though it now presents new opportunities as well.
- Significant and continued activity surrounding the ongoing conflicts in the Middle East. Additional designations targeting Iran, the Houthis, and Hamas, along with the various networks supporting each. Secondary sanctions risks remain high.
- Now seeing notable activity focusing on international drug cartels. Recent designations target the Sinaloa Cartel, Cartel de Jalisco Nueva Generacion, Tren de Agua, and Cartel de Los Soles. Additional designations on a cocaine transshipment network in Guyana.
- OFAC has transitioned its Licensing Hotline to a new online platform. This should simplify the licensing process somewhat, and make it easier to get information about pending license requests.
Click here to download the quarterly update for July.
Additionally, below is a new feature, a summary of the most recent OFAC enforcement actions, with links to my relevant blog posts and the official enforcement release.
Interactive Brokers LLC
Blog Post | Enforcement Release
Quick Facts
$11,832,136 settlement ($5,234,583,687 potential liability)
12,376 violations of:
- Iranian Transactions and Sanctions Regulations
- Syrian Sanctions Regulations
- Ukraine-/Russia-Related Sanctions Regulations
- Cuban Assets Control Regulations
- Russian Harmful Foreign Activities Sanctions Regulations
- Chinese Military Industrial Complex Sanctions Regulations
- Global Magnitsky Sanctions Regulations
Key Compliance Lessons
- IP geo-blocking is a critical control.
- Periodically test, audit, and calibrate existing controls.
- Maintain strong transaction monitoring tools.
- Obtain proper legal guidance from a sanctions expert.
- Compliance controls must evolve with sanctions regulations.
Harman International Industries, Inc.
Quick Facts
$1,454,145 settlement ($4,154,700 potential liability)
11 violations of:
- Iranian Transactions and Sanctions Regulations
Key Compliance Lessons
- U.S. sanctions apply to foreign subsidiaries of U.S. companies.
- Beware of business units “self-policing.”
- Apply heightened sanctions risk to known transshipment hubs.
- Proper recordkeeping is critical.
- Remediation and self-disclosure can help to mitigate penalties.
Key Holding, LLC.
Quick Facts
$608,825 settlement ($4,007,088 potential liability)
36 violations of:
- Cuban Assets Control Regulations
Key Compliance Lessons
- U.S. sanctions apply to foreign subsidiaries of U.S. companies.
- Prioritize post-acquisition compliance integration.
- Foster awareness of sanctions laws, not necessarily mastery.
- Remediation and self-disclosure help mitigate penalties.
- Implement robust screening and monitoring.
Unicat Technologies, LLC.
Quick Facts
$3,882,797 settlement ($8,035,626 potential liability)
14 violations of:
- Iranian Transactions and Sanctions Regulations
- Venezuela Sanctions Regulations
Key Compliance Lessons
- Conduct thorough pre- and post-acquisition due diligence.
- U.S. sanctions apply to foreign subsidiaries of U.S. companies.
- Foster a culture of compliance throughout the organization, especially tone at the top.
- Remediation and self-disclosure help mitigate penalties.
- Implement robust screening and monitoring.
GVA Capital Ltd.
Quick Facts
$215,988,868 settlement (maximum)
4 violations of:
- Ukraine-/Russia-Related Sanctions Regulations
28 violations of:
- Reporting, Procedures and Penalties Regulations
Key Compliance Lessons
- Robust due diligence on beneficial ownership is critical.
- Ignore legal advice at your own peril.
- Timely and complete subpoena responses are non-negotiable.
- “Gatekeepers” face heightened sanctions scrutiny.
- Voluntary self-disclosures can mitigate severe penalties.
Click here to download the enforcement action summary table for July.
About the documents:
The first is a handy one-pager that is designed to be used by our clients to provide a quick reference guide for the complex topics of trade sanctions and export control regulations. The goal is to briefly summarize key points for each program.
This document can be especially useful for non-lawyers and non-compliance officers. Some of our clients distribute the document to the sales and operations teams, or hang it with other legal and compliance material somewhere in the office. Many front-line employees need to know enough about sanctions to identify red flags and then engage legal and compliance as needed, and this documents helps with that.
Please feel free to let me know if you see any ways to improve it, whether that be content or formatting, so I can make sure it’s as useful as it can be. I hope you find it helpful!
If you would like to be on the distribution lists going forward, please email Matt Stankiewicz at [email protected]. And if you have any further questions, please reach out!