Introduction: On October 24, 2011, a three-judge panel of the U.S. Court of Appeals for the Second Circuit released an opinion in United States v. Banki, No. 10-3381 (2d Cir. Oct. 24, 2011) that reversed convictions of Defendant Mahmoud Reza Banki on charges of conspiring to violate the Iranian Transaction Regulations (“ITR”) and aiding and abetting violations of the ITR. In doing so, the Court contradicted the position of the U.S. Government in a manner that may have important consequences for how the Government pursues sanctions enforcement matters going forward.
In late September, Flowserve Corporation (“Flowserve”) and a number of its subsidiaries agreed to settle alleged export violations with the Department of Commerce, Bureau of Industry of Security (“BIS”) for $2.5 million, and to remit $502,408 to the U.S. Department of the Treasury, Office of Foreign Assets Control (“OFAC”) to settle alleged U.S. sanctions violations. Flowserve, including its subsidiaries, is an oil, gas, and chemical services company with operations around the world. The settlement underscores the value of compliance measures specifically tailored to a company’s operations, and provides yet another example of the U.S. government vigorously enforcing U.S. law overseas.
On August 25, 2011, a major U.S. financial institution agreed to pay the U.S. Department of Treasury, Office of Foreign Assets Control (“OFAC”) $88.3 million to settle claims of violations of several U.S. economic sanctions programs. While OFAC settlements with financial institutions in recent years have involved larger penalty amounts, this August 2011 settlement is notable because of OFAC’s harsh—and subjective—view of the bank’s compliance program.
On August 18, 2011, based on the “continuing escalation of violence against the people of Syria,” President Barack Obama issued Executive Order 13582 (“EO 13582”) to expand significantly U.S. sanctions on Syria. This briefing summarizes those sanctions as well as the General Licenses issued—first on August 18 and again on September 9—by the U.S. government to authorize limited transactions with Syria.
In recent weeks, the U.S. Department of Treasury, Office of Foreign Assets Control (“OFAC”) has updated the sanctions regulations it administers against Libya and North Korea. These recently implemented sanctions continue OFAC’s trend towards precise, targeted sanctions; moreover, the way in which OFAC amended its sanctions on North Korea could have implications for U.S. sanctions on Cuba.
On February 25, 2011, the President issued an Executive Order blocking not only the assets of Muammar Qadhafi, Ayesha Qadhafi, Khamis Qadhafi, Mutassim Qadhafi, and Saif Al Islam Al Qadhafi, but also blocking all assets of the Government of Libya, as follows:
“All property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person, including any overseas branch, of the Government of Libya, its agencies, instrumentalities, and controlled entities, and the Central Bank of Libya, are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in.”