Articles Posted in OFAC Sanctions

For other sanctions regimes not as active as Burma, Iran, Cuba and Russia.

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Earlier this week, the U.S. Office of Foreign Assets Control (OFAC) and the UK Office of Financial Sanctions Implementation (OFSI) published a Memorandum of Understanding (MoU), which was previously signed on October 9, 2024, formalizing a framework to govern cooperation including in relation to exchanging information, coordinating investigations, training personnel, discussing regulatory expectations and economic analyses.

Part of a Broader Trend of U.S.-UK Collaboration

The MoU represents a significant step within a broader shift toward increased collaboration between the U.S. and UK on sanctions adoption and enforcement. Several key developments exemplify this trend:

  1. OFAC-OFSI Partnership: The MoU formalizes the growing partnership between OFAC and OFSI, which has been developing through initiatives such as the deployment of OFAC secondees to OFSI and the establishment of regular communication channels.
  2. Joint Guidance: U.S. and UK authorities have increasingly worked together to issue joint guidance (such as this Humanitarian Assistance and Food Security guidance note), streamlining compliance expectations and providing unified directions to stakeholders.
  3. Coordinated Sanctions Adoption: Both countries have increasingly aligned their sanctions measures, particularly in response to geopolitical crises such as Russia’s invasion of Ukraine. Sanctions have been adopted not only bilaterally but also in coordination with allies through forums such as the G7, the Five Eyes community and in collaboration with the EU, signaling a commitment to unified enforcement. By way of recent example, last week, OFAC and OFSI jointly designated two Russian energy companies, Gazprom Neft and Surgutneftegas.

The UK Sanctions Regime’s Shift Toward a U.S.-Style Framework

The MoU has emerged in the context of a broader transformation of the UK sanctions regime, which has gradually been evolving to align with the U.S. regime. Key examples of this shift include:

  1. Civil Strict Liability Powers: As reported previously, the UK has introduced civil strict liability enforcement powers for OFSI and the newly established Office of Trade Sanctions Implementation (OTSI). Absent from the UK sanctions regime prior to Brexit, these powers bring the UK’s sanctions regime closer in line with the U.S. strict liability approach to sanctions enforcement, without a requirement to prove intent or negligence.
  2. Increased Use of General Licenses: The UK has significantly expanded its use of General Licenses, a tool that mirrors OFAC’s approach and provides flexibility in sanctions implementation by permitting UK sanctions authorities to adopt general exemptions for specific activities otherwise prohibited under sanctions laws.
  3. Post-Brexit Autonomy: Following the UK’s exit from the EU, the UK has sought to collaborate with other allies and partners with the intention of pooling expertise, sharing and developing ideas, and extending collective reach to maximize the impact of sanctions and to address loopholes. The UK’s collaboration in this regard with the U.S. (and its approach in general, as referenced in the UK government’s policy paper on the UK sanctions strategy published in February 2024) has spanned sanctions strategy, design, implementation and enforcement, and has also sought to prevent circumvention.

Implications

The MoU between OFAC and OFSI marks a significant turning point in the enforcement of sanctions, underscoring growing alignment between U.S. and UK authorities. At its core, the MoU enhances the ability of the U.S. and the UK to collaborate on key areas such as information sharing, joint investigations, and regulatory alignment. This increased coordination means that businesses must prepare for greater scrutiny and the possibility of facing enforcement actions simultaneously in both jurisdictions.

For companies, the impact of this cooperation extends beyond compliance obligations. Internal controls and monitoring systems must be robust enough to withstand the enhanced scrutiny that comes with shared intelligence and enforcement efforts between regulators. Compliance programs should be harmonized to address both U.S. and UK requirements so as to reduce the risk of oversight in a rapidly converging regulatory environment.

 

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On December 16, 2024, the EU issued its 15th package of sanctions against Russia, new designations under the Belarus sanctions regime, and the first designations under the hybrid threats sanctions regime adopted in October 2024. These updates are summarized below.

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On January 17, 2024, the U.S. Department of State announced the redesignation of the Yemen-based Ansarallah (commonly referred to as the “Houthis”) as a Specially Designated Global Terrorist organization (SDGT). The decision to redesignate Ansarallah comes after several months of attacks by Houthi forces against international maritime vessels in both the Red Sea and Gulf of Aden.

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In 2023, the United States sharpened its focus on deterring China’s ability to develop advanced technology with the potential to threaten U.S. national security. To do so, the U.S. government has implemented several new restrictions and requirements related to critical technologies. Some of these measures, such as the announcement of an outbound investment regime, are entirely new tools. Others, like updates to semiconductor related export controls and newly sanctioned entities, build on existing regimes.

Below, we outline several of the key developments aimed at restricting China’s technology sector which U.S. and multinational businesses should remain aware of. Continue reading →

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2023 witnessed significant developments from the United States government aimed at countering China’s influence and curbing potential threats to U.S. national security. These developments have spanned legislative and administrative action, shifting long-standing paradigms within export controls, import controls, and sanctions. The Biden Administration is increasingly utilizing these tools as strategic elements of foreign policy, often in conjunction with allied nations.

The restrictions on trade with China are rapidly evolving and increasingly nuanced, influenced by growing Congressional attention on the U.S.-China relationship, increased pressure on the Department of Commerce, and international interest in upholding strong supply chains. For companies to navigate these tensions, they must remain well-informed regarding the myriad of regulations which have been imposed in the past year.

This post is the first in a series dedicated to highlighting notable developments in the sanctions and export controls realm targeting China. This series will span across three sectors in which our team has been notably engaged: technology, energy, and supply chain resiliency. The final blog in the series will forecast expected developments through 2024.

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On November 6, 2023, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) announced a $206,213 settlement with Swift Prepaid Solutions, Inc. d/b/a daVinci Payments (daVinci) for apparent violations of sanctions regarding Crimea, Iran, Syria and Cuba. The financial services and payments firm was penalized by OFAC for enabling prepaid reward cards to be redeemed by persons who purchased the cards from sanctioned jurisdictions.

The November 6 settlement reflects a growing trend in OFAC enforcement actions to emphasize the importance of geolocation and blocking for financial and web services companies.

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In their recent client alert, “OFAC Issues New Sanctions Targeting Hamas’s Financing Networks,” colleagues Nancy A. Fischer, Aaron R. Hutman, Matthew R. Rabinowitz, Samantha Franks, Arielle R. Heffez and Erin Kwiatkowski discuss two rounds of sanctions imposed by the U.S. government on Hamas, other terrorist groups and Iranian networks in the wake of the October 7 attacks on Israel.

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On May 8, 2022, the White House announced a number of new measures in response to Russia’s ongoing war in Ukraine. The new measures include prohibitions on new categories of services to Russia by U.S. persons; export controls on certain industrial goods; and the addition of several shipping companies, bank executives, and television companies to the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) Specially Designated Nationals and Blocked Persons (SDN) List.

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UK DEVELOPMENTS

Further designations
On 10 March 2022, the UK Government added a further seven oligarchs to its list of sanctions targets, including the owner of Chelsea football club, Roman Abramovich. This was closely followed on 11 March 2022 by the sanctioning of 386 members of the Russian Duma (comparable sanctions had already been imposed by the EU).

Further aircraft-related sanctions
Airport operators, air traffic controllers and the Secretary of State have been granted new powers to issue directions to Russian aircraft (e.g., to take off, not to take off, and to land) and to suspend and revoke permissions needed to operate. The new provisions also allow the detention and movement of Russian aircraft and prohibit a person from providing aircraft insurance or reinsurance services to a person connected with Russia or where the aircraft is for use in Russia.

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The EU and UK have imposed additional export controls and sanctions with respect to Russia and Belarus connected to the Russian invasion of Ukraine. Below is a summary of key developments over recent days since our last blog post on EU and UK developments [here]. This is a rapidly developing area and future blog posts will summarize further developments.

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