International Trade Law News

The Treasury Department's Office of Foreign Assets Control (OFAC) today issued its monthly report of civil penalties imposed on companies and individuals for allegedly violating the sanctions regimes administered by OFAC.

OFAC's monthly penalty report indicates that the agency settled three cases involving corporations and three cases against individuals. The following is a summary of the settlements:

Entities:

• Fleet National Bank, which was acquired by Bank of America in 2005, remitted $1,337.50 to settle allegations of a violation of the former Libyan Sanctions Regulations by the Montevideo, Uruguay branch office of Fleet. The alleged violation by the Fleet branch occurred in April 2003 and prior to the June 2005 merger of Fleet into Bank of America. This matter was voluntarily disclosed to OFAC.
  

• Citigroup, N.A. remitted $16,250 to settle allegations of violations of the Cuban Assets Control Regulations. OFAC alleged that in October 2004 Citigroup acted without an OFAC license or outside the scope of its license by creating a banker’s acceptance for goods shipped by a Cuban carrier. Citigroup voluntarily disclosed this matter to OFAC.

• America Servi Express, Inc. (“ASE”), a Fort Lauderdale, Florida provider of financial and other services, was assessed a $2,465.00 civil monetary for allegedly violating the Narcotics Trafficking Sanctions Regulations by initiating a wire transfer to a U.S. life insurance company in payment of a premium on a policy issued on the life of a Specially Designated Narcotics Trafficker. ASE did not voluntarily disclose this matter to OFAC.
  

• OFAC imposed a $6,000 penalty on an individual for allegedly dealing in property in which Cuba has an interest. Specifically, the person allegedly engaged in financial transaction with Cuba, including the receipt of an payment for goods and services. This penalty amount is one of the largest recent penalties imposed by OFAC on an individual associated with the Cuban Assets Control Regulations.

• OFAC settled one case involving the purchase of Cuban-cigars offered for sale on the internet for $282.50.

• OFAC also settled a case for $1,063 against an individual that dealt in services with Cubans that were incident to the making of a commercial.
  

Labels: Cuba, OFAC, Sanctions

The National Council on International Trade Development's (NCITD) February 14, 2008 meeting in Washington, DC will feature the following speakers:

Labels: ITAR, OFAC, Sanctions

The Council on Foreign Relations recently hosted an online debate on sanctions policy between Simon Cox, an economics correspondent for The Economist, and Jake Colvin of USA*Engage. To read the debate, start at the bottom of the site and work your way up.

Labels: Cuba, Sanctions, Sanctions; Iran, Sanctions; Sudan

On July 11, 2007, the Treasury Department's Office of Foreign Assets Control (OFAC) issued its monthly report of civil penalties imposed on companies and individuals for allegedly violating the sanctions regimes administered by OFAC.

OFAC's monthly report indicates that the agency settled three cases involving corporations and three cases against persons. The following is a summary of the settlements:

Entities:

• LogicaCMG Inc. paid $220,000.00 to settle allegations of violations of the Cuban Assets Control Regulations by a predecessor corporation, CMG Telecommunications, Inc. (CMG), occurring during 2001. OFAC alleged that CMG procured, assembled, and exported a computer system, as well as provided technical support for the system after export, with knowledge that the goods and services were ultimately destined for Cuba and that such exports to Cuba were prohibited. CMG did not have an OFAC license to engage in these transactions and CMG did not voluntarily disclose this matter to OFAC.

This is the third penalty imposed on CMG as a result of prohibited transactions with Cuba. As we previously reported, in May 2007 LogicaCMG, Inc. paid $99,000 to the Bureau of Industry and Security to settle allegations that CMG violated the Export Administration Regulations by making an unlicensed export of telecommunications equipment to Cuba via Panama.

In addition, in April 2007, LogicaCMG pled guilty in federal court for violating the International Emergency Economic Powers Act for the unlicensed reexport from Panama to Cuba and was ordered to pay a $50,000 criminal fine.

• Gibson Overseas, Inc. paid $1,357 to settle allegations of violations of the Iranian Transactions Regulations occurring during January 2006. OFAC alleged that Gibson used an Iranian vessel to ship goods from China to Dubai in violation of 31 C.F.R. § 560.206, which prohibits transactions or dealings in goods or services of Iranian origin. Gibson did not voluntarily disclose this matter to OFAC.

• American Bankers Life Assurance Company of Florida remitted $1,271.50 to settle allegations of violations of the Narcotics Trafficking Sanctions Regulations occurring between October – December 2003. OFAC alleged that the insurance company processed premium payments on insurance policies on the lives of two persons who are named as Specially Designated Narcotics Traffickers. ABLAC did not voluntarily disclose this matter to OFAC.
  

• One individual agreed to a settlement totaling $10,000 for alleged travel-related transactions incident to travel to Cuba. Specifically, OFAC alleged that from May through December 2002 the individual engaged in prohibited travel-related transactions, including the purchase of food and lodging in Cuba. The individual traveled to and from Cuba through a third country. (This is one the largest penalties imposed by OFAC on an individual for travel-related violations of the Cuban Assets Control Regulations.)
  

• Another individual agreed to pay $2,892.75 to settle charges of allegedly dealing in property in which Cuba or a Cuban national had an interest. OFAC alleged that in 2004, 2005 and 2006 the individual purchased Cuban-origin cigars on six separate occasions that were offered for sale on the Internet. The individual did not voluntarily disclose this matter to OFAC.

• An individual was assessed a penalty totaling $200.00 for making four payments in 2003 to purchase of Cuban-origin cigars offered for sale on the Internet. The individual did not voluntarily disclose this matter to OFAC.

Labels: Cuba, OFAC, Sanctions, Sanctions; Iran

Today the Treasury Department's Office of Foreign Assets Control (OFAC) posted on its website a one-page PDF document entitled "Guidelines on Transactions With the Palestinian Authority." The Guidelines are intended to assist U.S. persons in understanding the scope of OFAC's General License No. 7 that was issued on June 20, 2007.

The guidelines, which do not provide a great deal of new information, state that despite the issuance of General License No. 7 that "dealings with designated terrorist entities such as Hamas or other designated persons remain prohibited."

The Guidelines can be found at the following link: www.treas.gov/offices/enforcement/ofac/programs/terror/ns/pal_guide.pdf.

Labels: OFAC, Palestinian Authority, Sanctions

The Securities and Exchange Commission (SEC) today announced that it has added to its Web site a new software tool that permits investors to obtain information directly from company disclosure documents about their business interests in countries that have been designated as "State Sponsors of Terrorism" (currently Cuba, Iran, North Korea, Sudan and Syria).

The SEC's software tool, which can be found at www.sec.gov/edgar/edgartlistfilings.htm, contains a menu listing the countries on the State Sponsors of Terrorism list. Clicking on the country name brings up a list of the companies whose 2006 annual reports disclosed business activities in that country. Clicking on the name of a company will then bring up the pertinent portions of that company’s annual report.

A quick review of this new software reveals that this new tool is a work in progress and needs to be refined. For example, included on the list are companies that that have already wound up their operations in the countries in question or are legally doing business with such countries pursuant to licenses issued by OFAC. Thus, anyone using this information to base their investment decisions should carefully review the information contained in the SEC filings.

In addition, although the SEC's press release announcing the new software tool stated that the "existence of a disclosure by a company concerning activities in one of the listed countries does not, in itself, mean that the company directly or indirectly supports terrorism or is otherwise engaged in any improper activity", this disclaimer does not appear anywhere on the new software tool.

Labels: Sanctions, SEC, Treasury Department

In order to implement the lifting of financial sanctions on the Palestinian Authority that were announced by the Secretary of State on Monday, the Treasury Department's Office of Foreign Assets Control (OFAC) today released General License No. 7. Effective immediately, the general license reauthorizes U.S. persons to engage in all transactions otherwise prohibited by the terrorism sanctions programs with the Palestinian Authority, which for purposes of the general license is specifically defined.

The text of General License No. 7 is reprinted below:

Labels: OFAC, Sanctions

In a special briefing today, Secretary of State Condoleeza Rice announced that the U.S. intends to lift the current financial restrictions imposed on the Palestinian government under the terrorism sanctions programs.

However, the current financial restrictions, which were imposed on parts of the Palestinian Authority controlled by representatives of Hamas and other terrorist organizations organizations, will remain in effect until the Treasury Department's Office of Foreign Assets Control (OFAC) issues general licenses or takes other legal action to modify the current restrictions imposed under the Terrorism Sanctions Regulations and other regulatory provisions.

Labels: OFAC, Sanctions

This week Senator Christopher Dodd (D-CT) introduced the International Emergency Economic Powers Act (S. 1612) (IEEPA Act), legislation that would increase the civil penalty amounts associated with violations of the International Emergency Economic Powers Act. The bill would increase the maximum civil penalties for violations of sanctions and dual-use export control laws (EAR violations are currently subject to IEEPA penalty provisions) from $50,000 to $250,000, or twice the amount of the transaction that is the basis of the violation with respect to which the penalty is imposed. The IEEPA Act would increase criminal penalties to $1,000,000 with a maximum jail sentence of 20 years.

One major cause of concern with this proposed legislation is that, in its current form, the bill would apply the increased penalties to any "enforcement action [that] is pending or commenced on or after the date of the enactment of this Act." This retroactive effect is a significant change from previous laws that have increased maximum civil and criminal penalties for violations of sanctions and export control laws.

This proposed legislation, which has the support of the Treasury Department, has been previously been approved by the Senate Banking, Housing and Urban Affairs Committee. The bill has been placed on the Senate calendar for consideration in the near future.

Labels: Congress, OFAC, Sanctions

The Miami Herald reports today that any changes to the U.S. embargo on Cuba are unlikely to occur during the current session of Congress. The article notes that after "Democrats seized control of Congress last November, the Bush administration's tough policies on Cuba appeared in trouble. Not anymore." The article further states that:

Since the elections, more than a dozen bills have been introduced to ease the U.S. sanctions, from relaxing or lifting travel restrictions to making it easier to export agricultural goods.

But the new Democratic leadership -- whose Republican predecessors had helped ensure that no anti-sanctions initiatives reached President Bush's desk -- has not pushed those bills and is unlikely to do so soon, Democratic congressional staffers and activists on both sides of the issue say.

The reasons include more pressing priorities like Iraq and immigration reform and an unusually early start of the presidential campaign -- with Florida figuring prominently, given its early primary date. Also, many Democrats prefer to wait for the political picture in Havana to clear up before moving to change policy, the staffers and activists say.

Labels: Cuba, Sanctions

The State Department published in Monday's Federal Register the annual list of countries that are not cooperating fully with U.S. antiterrorism efforts. This year's list includes Cuba, Iran, North Korea, Syria, Venezuela, which is unchanged from last year.

This annual certification is required by section 40A of the Arms Export Control Act (AECA) (22 U.S.C. 2781), which prohibits exports of defense articles and services to countries that are not fully cooperating with U.S. antiterrorism efforts. The statute also requires the President to determine and certify to Congress by May 15th of each year the countries that are not cooperating fully with United States antiterrorism efforts. Executive Order 11958 delegated the functions of the president under this provision of law to the Secretary of State.

Labels: DDTC, Sanctions

The AP has published an article on the wide variety of U.S. products that are readily available in Cuba. The article also discusses the legal and illegal ways U.S. products end up in Cuba.

Labels: Cuba, Sanctions

BAWAG P.S.K., an Austrian commercial bank that will soon be majority owned by New York-based Cerberus Capital Management, recently announced that it has reversed course and will revoke its previous decision to close accounts held by Cuban nationals.

The bank has been wrestling with the scope of U.S. sanctions ever since Cerberus announced that it would purchase the bank at the end of 2006. On April 13, 2007, BAWAG P.S.K. stated that as a result of its new ownership, the bank would be required to "terminate business relationships with clients of Cuban nationality" in order to comply with "American laws on economic sanctions administered by the U.S. Department of Treasury's Office of Foreign Assets Control."

On April 15th, the bank issued a statement that it "is not terminating or limiting its business relations with Iranian citizens in Austria" and the "the claims to this effect in the Sunday edition of the daily newspaper "Österreich" are misleading."

On April 25th, the bank "promised that in connection with the termination of the business relationships with Cuban Nationals no fees or charges will be levied from the affected customers. In addition to that BAWAG P.S.K. will also reimburse any costs incurred incurred in connection with the transfer of an account to another banking institution."

At the end of April, the Government of Austria announced that it commenced administrative criminal procedures against BAWAG P.S.K. for refusing to deal with Cuban customers. The bank subsequently sought and apparently obtained from OFAC a license permitting it to conduct business with Cuban nationals in Austria.

In its most recent announcement, the bank stated that it "offers its apologies to its customers for the problems and irritations in connection with the measures taken earlier. All costs eventually incurred by the customers concerned will of course be reimbursed" and that "the management board wishes to stress that the numerous critical statements of public and private parties received by it and addressing the matter in the last weeks were taken very seriously by BAWAG P.S.K. and were seen as support in the decision process."

Labels: Cuba, OFAC, Sanctions

On May 4, 2007, the Treasury Department's Office of Foreign Assets Control (OFAC) issued its monthly report of civil penalties imposed on companies and individuals for allegedly violating the sanctions regimes administered by OFAC.

OFAC's monthly report indicates that the agency settled five cases involving corporations and three cases against persons. The following is a summary of the settlements:

Entities:

• PSL Energy Services paid a civil penalty of $164,006.50 to settle allegations of violations of the Cuban Assets Control Regulations in 2004. PSL voluntarily disclosed to OFAC that it may have violated the Cuban Assets Control Regulations by engaging in the unlicensed exportation and re-exportation of oilfield servicing equipment and related skilled services to Cuba.
  

• Polek & Polek, a Fairfield, NJ distributor of imaging products, paid $3,350 to settle allegations of violations of the Iranian Transactions Regulations in 2004. OFAC alleged that Polek & Polek acted without an OFAC license or outside the scope of its license by exporting goods to Iran. Polek & Polek did not voluntarily disclose this matter to OFAC.

• Fleet National Bank on behalf of Suretrade, Inc. remitted $7,277 to settle allegations of violations of the Iranian Transactions Regulations in 2000. OFAC alleged that Suretrade acted without an OFAC license or outside the scope of its license by operating an account for a person located in Iran. This matter was not voluntary disclosed to OFAC.

• ACRA-CUT, Inc., an Acton, Massachusetts-based manufacturer of medical devices, paid $808 to settle allegations of violations of the Iranian Transactions Regulations occurring in February 2002. OFAC alleged that ACRA-CUT acted without an OFAC license by exporting goods to Iran. ACRA-CUT did not voluntarily disclose this matter to OFAC.

• Turkish Airlines was assessed a $2,226.24 civil monetary penalty for its violation of the Iranian Transactions Regulations occurring on July 28, 2004. OFAC imposed the penalty because of Turkish Airlines’ involvement in the transportation of photocopy machine parts to an individual located in Iran. Turkish Airlines did not voluntarily disclose this matter to OFAC. In an unusual move, OFAC provided the URL of OFAC’s penalty notice issued to Turkish Airlines, which shows that the airline did not respond to the agency's prepenalty notice.
  

• An individual agreed to pay $485 for allegedly engaging in transactions with an entity previously identified as a Specially Designated Narcotics Trafficker (SDNT). OFAC alleged that the individual made payments by cash and credit card to the SDNT for rent involving the use of a trailer. The individual did not voluntarily disclose this matter to OFAC.

• One individual has agreed to pay $6,088.85 to settle charges of allegedly dealing in property in which Cuba or a Cuban national had an interest. Specifically, OFAC alleged that the individual purchased Cuban-origin cigars offered for sale on the Internet. The person did not voluntarily disclose this matter to OFAC, however the person later provided information to OFAC concerning additional purchases of Cuban-origin cigars.

• Another individual has agreed to a settlement totaling $1,261.00 for purchasing Cuban-origin cigars offered for sale on the Internet. The individual did not voluntarily disclose this matter to OFAC.

Labels: OFAC, Sanctions, Sanctions; Iran

The recently issued June issue of Cigar Aficionado magazine is dedicated to Cuba.

According to the magazine's website, the issue "delves into the island nation from all angles. We sit down with top U.S. politicians, both Democrat and Republican, as well as government insiders, from Cuba and the United States, to examine the policy divide that splits Washington along party lines and two nations separated by a 90-mile stretch of sea."

"We follow that up with a comprehensive travel guide that will give any visitor the ins and outs of the island. We find the best hotels in Cuba; profile the home-style cooking that dominates the restaurant scene; lend a helping hand in navigating Havana's cigar shops; outline the increased travel restrictions and the channels that sidestep some of them; and highlight a new lineup of star cigars on the market."

Before traveling to Cuba or buying Cuban cigars, however, U.S. persons should be sure to review the Cuba sanctions page on the Treasury Department's Office of Foreign Assets Control (OFAC), which sets for the current rules and regulations on traveling to Cuba, including the rules applicable to purchasing Cuban cigars in Cuba and elsewhere.

Labels: Cuba, OFAC, Sanctions

Today's Tampa Tribune contains several interesting Cuba related articles:

• U.S.-Cuba Relations Could Be Modified - Discusses possible "sanding down of the edges of Cuba sanctions" and provides overview of the current U.S. political climate regarding Cuba.

• Pro-Sanctions Groups Spread Cash - Discusses the influence of the U.S.-Cuba Democracy PAC, which opposes softening of sanctions against the Castro regime, and other political action committees involved in Cuba issues.

• Bills That Affect Cuba Policy - Provides summary of the Cuba-related bills in the current session of the U.S. Congress.

Labels: Cuba, Sanctions

As noted above, I recently returned from a trip to Zimbabwe. While a trip to spectacular Victoria Falls (the Smoke That Thunders) should be high on your travel "to do" list, the country is a mess due to the policies imposed by long-time leader Robert Mugabe. Zimbabwe's current claim to fame is the world's highest inflation rate, which is running at an annual rate of 1,700% and is predicted by the IMF to rise to 5,000%. Zimbabwe also has the third highest unemployment rate.

While the U.S. currently imposes targeted financial sanctions on the Mugabe regime, there is growing support for other countries, particularly those in Africa, to impose targeted sanctions on the Harare government. The Democratic Alliance, an opposition party in South Africa, today called for the Government of South Africa to "immediately end its quiet diplomacy and enact smart sanctions against Zimbabwean President Robert Mugabe, all members of his family and members of his government" and that the South African Government should "should stop 'pussy-footing' around the deepening humanitarian crisis in neighbouring Zimbabwe."

Labels: OFAC, Sanctions, Zimbabwe

Representative Tom Lantos (D-CA), the incoming chairman of the House International Relations Committee, has announced that he will hold a hearing in January to determine if the China National Offshore Oil Corp (CNOOC) violated the Iran Freedom Support Act by entering into an agreement with the Government of Iran to develop gas fields in Iran.

It has also been reported that U.S. embassy officials in Beijing delivered a demarche to Chinese Government officials asking for additional information on the deal.

The Iran Freedom Support Act (previously known as the Iran-Libya Sanctions Act) requires the President to impose sanctions on foreign companies that make an "investment" of more than $20 million in one year in Iran's energy sector. To date, no sanctions have been imposed under the current or previous versions of the sanctions law.

Labels: Sanctions