US Department of Treasury Office by pengxiang


									   U.S. Department of the Treasury
   Office of Foreign Assets Control

“Working Together as Partners
 Protecting U.S. National Security
 and Foreign Policy Objectives”
What is OFAC?
 Office of Foreign Assets Control (OFAC) of the
         U.S. Department of the Treasury
 OFAC administers and enforces economic sanctions
  against targeted:
  - Foreign governments (e.g. Iran, Sudan, Cuba)
  - Individuals (e.g. terrorists, int’l narcotics traffickers)
  - Entities (e.g. drug front companies, charities that send money to
  terrorist groups)
  - Practices (e.g. trade in non-certified rough diamonds,
  proliferation of weapons of mass destruction)
 Importance of the “SDN List”
Relevance for Corporate Registration
  OFAC regulations prohibit doing business
   with sanctions targets – you need to know
   who those targets are!
  9/11 emphasized the need to “know your
   customer” by screening applicants
  Cooperation of corporate filing offices and
   businesses who facilitate this process
   contributes to the effectiveness and success
   of OFAC sanctions programs.
For example…
   U.S. business filing company contracted with
    Yugoslavian entity to file incorporation papers*
   Prohibited under the embargo of Yugoslavia
    (can’t do business with company in an
    embargoed country)
   Adequate screening was not done by the filing
    company or the state registration office
   Newly incorporated U.S. corporation used to
    avoid economic sanctions

    * This violation occurred prior to the lifting of the Yugoslavian sanctions on May 28, 2003.
Legal Authority for U.S. Sanctions
Legal Authority: TWEA
 Trading with the Enemy Act (“TWEA”)
     (50 U.S.C. app. § § 1-44)
  – Primary legal authority for Cuba and North Korea
Legal Authority: IEEPA
 International Emergency Economic Powers Act
     (50 U.S.C. § § 1701-06)
  – Primary legal authority for most non-TWEA
Legal Authority: Other
 Antiterrorism and Effective Death Penalty Act
       8 U.S.C. 219, 18 U.S.C. 2332d and 18 U.S.C. 2339b
 Foreign Narcotics Kingpin Designation Act
       Pub. L No. 106-120, tit. VIII Stat 1606, 1626-1636

 Title 31 U.S. Code of Federal Regulations, Chapter V
 Various Executive Orders
Jurisdiction: Individuals
 American citizens and permanent resident
  aliens anywhere they are located

 Any individual, regardless of citizenship, who is
physically located in the United States
Jurisdiction: Businesses
  Under the International Emergency
   Economic Powers Act (IEEPA) programs:
   – Corporations organized under U.S. law,
     including foreign branches of U.S. companies

   – Any corporation or company physically located
     in the United States, including U.S. branches,
     agencies and representative offices of foreign
Jurisdiction: Businesses
  Under Trading With the Enemy Act
   (TWEA) programs (Cuba, North Korea):
   – Corporations organized under U.S. law,
     including foreign branches and foreign-
     organized subsidiaries of U.S. companies
   – Any corporation or company physically located
     in the United States, including U.S. branches,
     agencies and representative offices of foreign
Current List of Sanctions Programs
 Cuba                Zimbabwe
 Iran                Syria
 Sudan               Terrorism
 Burma               Narcotics Trafficking
 Nonproliferation    The Balkans
 Diamond Trading     Iraq
 Liberia             North Korea
Comprehensive Sanctions Programs
 In general the following are prohibited under
  comprehensive sanctions programs:
  – Exports of goods and services
  – Imports of goods and services
  – Trade brokering, financing, or facilitation
Comprehensive Sanctions Programs
 Current comprehensive sanctions programs:
 See OFAC’s website for details on each of
these programs:
Comprehensive Sanctions Programs
 Under comprehensive OFAC sanctions, persons
  subject to OFAC jurisdiction must “block”
  (“freeze”) assets/property of a sanctions target
  under their control.

 For corporate registration industry, must refuse to
  do business with all sanctions targets.
Limited Sanctions Programs
                               Balkans
                                – Block property of
                                  Milosevic supporters and
                                  persons who threaten
                                  international stabilization
  Zimbabwe                       efforts in the Western
  - Block property of
  persons undermining
  democratic processes/
  institutions in Zimbabwe.
  (Robert Mugabe, etc.)
Limited Sanctions Programs
 Burma/Myanmar
  – No import of goods or
    services from Burma.
  – All major banks blocked.
  – No new investment.
Limited Sanctions Programs
 Iraq
  – General License
  – Most new transactions
  – Cannot do business with
    designated members of
    the insurgency.
Recent OFAC Actions
 Liberia
   – Block property of
     Charles Taylor and his
     supporters and persons
     who have undermined
     Liberia’s transition to
Recent OFAC Actions
 Libya
  – Sanctions lifted
  – All blocked funds
  – Doing business with
    Libya is now permitted
Specially Designated Nationals
 Specially Designated Nationals (SDNs)
   – Individuals and entities all over the globe
   – Owned, controlled by or acting on behalf of targeted
     governments or groups
   – May be front companies, parastatals, high-ranking
     officials or specifically identified persons
   – Designated terrorists or narcotics traffickers
Specially Designated Nationals
 Over 3,000 unique SDNs and blocked persons
  identified by OFAC

 Published and accessible on:
  – Federal Register
Specially Designated Nationals
  Holy Land Foundation    Al-Hamati Sweets
   for Relief and           Bakeries (SDGT)
   Development (SDGT)      Usama Bin Ladin
  Atlas Air                (SDT/SDGT)
   Conditioning, U.K.      Mamoun Darkazanli
   (IRAQ)                   Import-Export,
  Treviso Trading          Germany (SDGT)
   Corporation, Panama     Myanmar Foreign
   (CUBA)                   Trade Bank
Penalties and Consequences
 Criminal Penalties
  – Up to $10 million and 30 years in jail
 Civil Penalties
  –   Trading With the Enemy Act: $65,000
  –   International Emergency Economic Powers Act: $11,000
  –   Iraqi Sanctions Act: $325,000
  –   Foreign Narcotics Kingpin Designation Act: $1,075,000
  –   Anti-Terrorism and Effective Death Penalty Act: $55,000
 Violations may result in:
  – Blocked funds and seized goods
  – Negative publicity and loss of business good will
Effective Compliance Strategies
 Screen corporate
  registrations for sanctions
   – Screen against sanctioned
     countries, including cities
     and territories within such
   – Screen all parties connected
     with registration
“Due Diligence”
  Is the “hit” against the OFAC SDN list?
  Organization vs. individual vs. vessel?
  Is it a full name match?
  Have you gathered enough information to
Example 1
 Your potential customer:
  – Arnulfo Marquez; ABC Import-Export Limited;
    POB Chiapas, Mexico; US Citizenship; SSN:
 Similar to the OFAC SDN listing:
  – TREJOS MARQUEZ, Arnulfo, Carrera 4 No. 9-
    17 of. 308, AA 38028, Cali, Colombia; c/o
    Colombia; Cedula No. 6090595 (Colombia)
    (individual) [SDNT]
Example 2
  Your potential customer:
   – CIMEX N.V., Antwerp, Belgium
  Similar to the OFAC SDN listing:
   – CIMEX (a.k.a. CIMEX CUBA; a.k.a.
     S.A.), Edificio Sierra Maestra, Avenida Primera
     entre 0 y 2, Miramar Playa, Ciudad de la Habana,
     Cuba; and all other locations worldwide [CUBA]
Effective Compliance Strategies
 Make sure your sanctions information is up-to-date!
  – Sanctions and SDN list can be updated or revised at any
  – Updates not on a regular basis
  – Set your browser to automatically check the OFAC web
    site for updates
  – Subscribe to email notification service on OFAC home
  – Get the OFAC Financial Operations Bulletin via E-mail
  – Get the What’s New File (Recent OFAC Actions of
    Interest) via E-mail
Effective Compliance Strategies
  Make sanctions compliance an integral part of
   your business
    – Don’t treat OFAC compliance as an afterthought
    – Some one or some group must be responsible for
      OFAC compliance in your organization
    – Ensure that all employees are familiar with U.S.
    – Make compliance a part of training program for new
Effective Compliance Strategies
 Take advantage of OFAC compliance
  – OFAC publishes an extensive library of on-line
    reference manuals, brochures etc.
  – These and other useful materials are available
    free of charge through:
      OFAC’s web site:
      OFAC’s automated fax on demand service:
       202- 622-0077
For compliance counseling…

 202-622-2490 or 1-800-540-6322
 Monday through Friday 7:00 a.m. to 7:00 p.m
Gerard (Jerry) LiVigni
Compliance Programs Division

Tel:    202-622-2490 or
Fax:    202-622-2426

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