Multinational banks are more often choosing not to authorize payments involving sanctioned jurisdictions or people, even if those payments are authorized by a general license or not subject to restrictions, said Richard Newcomb, a DLA Piper lawyer and former director for the Office of Foreign Assets Control. “Even if authorized, banks increasingly will not process a transaction involving or touching a sanctioned country or do business with anyone that has unlawfully done business with a sanctioned person or country,” Newcomb said.
Ian Cohen
Ian Cohen, Deputy Managing Editor, is a reporter with Export Compliance Daily and its sister publications International Trade Today and Trade Law Daily, where he covers export controls, sanctions and international trade issues. He previously worked as a local government reporter in South Florida. Ian graduated with a journalism degree from the University of Florida in 2017 and lives in Washington, D.C. He joined the staff of Warren Communications News in 2019.
Petitioning to be delisted from a sanctions regime has become increasingly difficult and often lacks transparency, both in the U.S. and Canada, trade lawyers from both countries said this week. Several lawyers, including a former high-ranking senior U.S. sanctions official, said designated people often aren’t given an adequate explanation for why they were sanctioned and therefore aren’t able to fairly challenge the basis for their designation.
The Bureau of Industry and Security issued a temporary denial order on Nov. 7 against seven people and three companies for orchestrating a scheme to illegally export millions of dollars worth of export-controlled dual-use electronics to Russia. BIS said the U.S.-origin items were bought by Russian procurement agents and transshipped through other countries before being delivered to Russian companies with ties to the country’s military.
The Bureau of Industry and Security fined Forta, a U.S. synthetic fiber manufacturer, $44,750 after the company violated BIS’ antiboycott regulations. Forta voluntarily disclosed the violations, which included providing its freight forwarder ahead of a trade show in Abu Dhabi with certifications that its products weren’t made with Israeli labor or raw materials.
The Bureau of Industry and Security and the Financial Crimes Enforcement Network this week issued another set of export control evasion red flags for financial service firms along with a new key term that banks and others can include in their suspicious activity reports to FinCEN. The new term will “enable even more BIS investigative and Entity List actions against” people and companies looking to evade U.S. export controls, said Matthew Axelrod, BIS’ top export enforcement official.
The Bureau of Industry and Security is planning to soon issue a rule that will offer clarifications and corrections to its recently updated export controls on advanced semiconductors and chipmaking equipment, said Thea Kendler, the agency’s assistant secretary for export administration (see 2310170055).
An Illinois-based financial services firm reached a $206,213 settlement with the Office of Foreign Assets Control this week after the company allowed its prepaid reward card programs to be used by people in sanctioned regions, including Iran, Syria, Cuba and the Crimea region of Ukraine. OFAC said Swift Prepaid Solutions’ lack of “comprehensive geolocation controls” led to 12,391 violations of U.S. sanctions programs.
As the EU implements its new import restrictions on Russian iron and steel, European companies are starting to ask U.S. exporters whether their products contain those Russian metals, said Scott Gearity, a consultant with the Export Compliance Training Institute. Gearity said most U.S. companies shouldn’t face any legal issues in making that certification, and Bailey Reichelt, a lawyer with Aegis Trade Law, stressed that companies don’t need to include an end-use statement as part of every benign contract, a practice that could scare potential customers that don’t deal in items subject to trade controls.
The Commerce Department recently introduced a new policy as part of its export promotion work that will formally require the International Trade Administration to determine whether any potential export assistance would contribute to human rights concerns, including assistance for shipments that could cause surveillance technology to be exported to human rights abusers. The agency outlined the new policy in an October letter to Sen. Ron Wyden, D-Ore., who asked Commerce in May to review its export assistance to companies that may sell “dangerous surveillance technology” in certain foreign markets (see 2305300025).
The U.S. this week announced a spate of new Russia-related sanctions and export controls, targeting people and companies supplying Russia’s military, aiding its defense industrial complex or operating in various Russian financial, metals, government and procurement sectors. The measures include additions to the Commerce Department’s Entity List and more than 200 combined sanctions by the Treasury and State departments targeting businesses in China, the United Arab Emirates and elsewhere for sending export-controlled components to Russia.