International Trade Law News

Finding a Willing Buyer Only One Part of the Export Process

Exporters Looking to Boost Business Need to Mind Rules and Regulations Too

The Obama administration is launching a government-wide effort to double U.S. exports over the next five years as part of a plan to increase domestic employment and boost the U.S. economy. However, companies looking to take advantage of the new National Export Initiative to break into new markets should be aware that shipping goods overseas comes with potential perils as well as opportunities.

As part of the NEI, the federal government plans to increase its trade advocacy efforts, including educating U.S. companies about opportunities overseas, directly connecting them with new customers and advocating more forcefully for their interests. The NEI will also include a focus on improving access to export financing and helping to remove barriers that prevent U.S. companies from getting access to foreign markets. Only a very small percentage of U.S. companies currently export their products, and of those that do, 58% export to only one country. The Obama administration is looking to increase these figures in the expectation that doing so will also increase employment.

However, warns Doug Jacobson, head of Sandler, Travis & Rosenberg’s export controls practice group, while increasing the number of U.S. companies that export and increasing trade promotion assistance are laudable goals, U.S. exporters must be aware that finding a willing buyer is only the first step in the exporting process.

“In addition to taking the necessary steps to ensure they are paid for their goods, U.S. exporters must be aware of the wide range of U.S. regulatory and legal issues applicable to exports,” Jacobson said. “The benefits of exporting can be great for U.S. companies, but the penalties for violating export laws and regulations can be severe. ST&R often represents exporters in enforcement actions that learn of their export compliance obligations only after they receive an administrative subpoena from the Bureau of Industry and Security or the Office of Foreign Assets Control. Many of those violations could have been avoided if the exporters understood their export compliance obligations in advance.”

Examples of the important compliance-related issues that U.S. exporters should be aware of when selling goods overseas include the following.

Ultimate Destination. U.S. export restrictions and licensing requirements vary by the country of destination. Some countries are subject to comprehensive embargoes, while others are subject to targeted sanctions directed at certain individuals and companies.

Jurisdiction and Classification of Goods. Proper jurisdiction and classification of goods under the Export Administration Regulations or the International Traffic in Arms Regulations is required to determine export licensing requirements and end-use and end-user restrictions for all products being exported from the U.S. In addition, the proper export classification is required to be declared in the Electronic Export Information filing that must be transmitted via the Automated Export System.

Know Your Customer. To avoid engaging in transactions with parties that have been denied export privileges or are subject to U.S. sanctions, exporters should screen all customers and parties involved in the export against the government’s various restricted party lists.

Anti-boycott Compliance. Boycott requests, which often contain the words “boycott” or “blacklist” or provisions prohibiting the importation of goods from certain countries, are often found in documents involving sales to the Middle East, including purchase orders, tenders, contracts, shipping requests and letters of credit. Certain boycott requests must be reported to the Bureau of Industry and Security.

Foreign Corrupt Practices Act. The FCPA prohibits U.S. persons and their agents from making prohibited payments to foreign government officials to obtain and keep business.

For more information on these issues, or how ST&R can help you increase your exports while remaining compliant with applicable laws and regulations, please contact Doug Jacobson at (202) 216-9307.

You can also stay up-to-date on the latest developments on this issue by subscribing to ST&R’s WorldTrade\INTERACTIVE daily e-newsletter.

Sandler, Travis & Rosenberg, P.A., is a customs and international trade law firm concentrating in assisting clients with the global movement of goods, ideas and personnel and the setting of global trade policy. Our affiliated consulting company, Sandler & Travis Trade Advisory Services Inc., is a leading provider of trade-related management and consulting services to government and industry. For more information about ST&R and STTAS, please visit our Web site.

Reprinted with permission of Sandler, Travis & Rosenberg, P.A.

Labels: Export Controls, Exports, Sanctions

In order to implement yesterday's changes in certain aspects of the U.S. embargo on Cuba, the Census Bureau's Foreign Trade Division has issued Foreign Trade Letter No. 5 explaining the requirements for filing electronic export information (EEI) through the Automated Export System (AES) for shipments under new License Exception Consumer Communication Devices (CCD).

License Exception CCD authorizes exports and re-exports to Cuba of certain donated consumer communications devices, computers, and software to individuals in Cuba and to independent non-governmental organizations in Cuba. Exports or re-exports under the License Exception CCD may not be made to organizations administered or controlled by the Cuban Government or the Communist Party or to designated officials of the Cuban Government or Communist Party.

FTR Letter No. 5 also states that Census has modified the AES by adding the new License Type Code “C58” for the License Exception CCD. The AES filers who report “C58” are required to report CCD, regardless of value, in the license number field and the Export Control Classification Numbers 4A994, 4D994, 5A991, 5D991, 5A992, 5D992, or EAR99 corresponding to the License Exception. The country of destination and ultimate consignee reported in the AES must be CU.

Labels: BIS; EAR, Census, Cuba, Sanctions

Japan's Yomiuri Shimbun newspaper reports how North Korea acquired the controlled technology and products from Japan that was likely used in developing the missile launched on Sunday.

The article notes that at "a U.S. Senate hearing in May 2003, an engineer who had defected from North Korea testified that about 90 percent of the parts used for one type of North Korean missile originated in Japan, adding the components were brought into the country by a ferry every two to three weeks."

Labels: Export Controls, North Korea, Sanctions

The U.S. Government quickly reacted to North Korea's launch of a long-range Taep'o-dong 2 missile.

The U.S. Northern Command said that the stage one of the missile fell into the Sea of Japan and the remaining stages, along with the payload, landed in the Pacific Ocean. Despite North Korea's claims of launching a communications satellite into orbit, the Northern Command said no object entered orbit.

While in Prague, President Obama said that "North Korea broke the rules, once again, by testing a rocket that could be used for long-range missiles." He also said that such "provocation underscores the need for action - not just this afternoon at the UN Security Council, but in our determination to prevent the spread of these weapons. Rules must be binding" and "violations must be punished."

Representative Howard Berman (D-CA), Chairman of the House Foreign Affairs Committee issued the following statement:

It is alarming that North Korea carried out this missile launch in direct defiance of the international community. The test is an unnecessary provocation that raises tensions in the region, and I urge the North Koreans to stop using their missile and WMD programs to threaten their neighbors and the rest of the world. Since the launch violates UN Security Council resolution 1718, I urge the Security Council to take strong and concerted action to demonstrate that Pyongyang’s actions are unacceptable. I especially call on both China and Russia to work constructively with other members of the Security Council to show that the world is united in condemning North Korea’s disturbing behavior.

Labels: North Korea, Sanctions

A federal judge in the U.S. District Court for the Southern District of Florida recently struck down Florida’s "Act to Travel to Terrorist States" (the "Travel Act") -- the state legislature’s effort to prohibit academic -related travel to countries labeled as terrorist states by the U.S. State Department, including Cuba.

The American Civil Liberties Union of Florida filed the lawsuit in June 2006 on behalf of Florida International University’s Faculty Senate and six professors at several Florida universities challenging the law enacted by the legislature in 2006.

In Faculty Senate FIU et al., v. Winn et al., Judge Patricia A. Seitz ruled that the portion of the Florida law prohibiting the use of private and non-state funds for such trips was unconstitutional, citing precedent set in a 2000 U.S. Supreme Court decision declaring a Massachusetts law that prohibited firms doing business with Myanmar (Burma) from obtaining state contracts. The Burma Law was challenged by the National Foreign Trade Council, and unanimously overturned by the Supreme Court as a violation of Supremacy Clause of the Constitution.

“The Courts have been clear, states and local governments should not be in the business of setting foreign policy,” said Jake Colvin, NFTC Vice President for Global Trade Issues. “Florida’s attempt to undermine the ability of academic institutions to pursue their mission through international travel was not only unconstitutional but misguided. The United States should encourage international travel at every turn, particularly to places like Cuba where ordinary Americans would be superb ambassadors of freedom and democracy.”

The PDF version of the decision can be found here.

Labels: Cuba, Sanctions

In a story about U.S.-U.K. relations, the current edition of The Economist contains a list of "imbalances" in the areas of trade, justice and defense. Not surprisingly, issues relating to the extraterritorial application of U.S. economic sanctions and U.S. defense export controls were included in the list of five things that need to be fixed. Here is the complete list in the order presented in the article:

"Extradition treaty—A new extradition treaty signed between America and Britain in 2003 is seen as unfair because it has made it easier for America to extradite criminal suspects from Britain (with low requirements for evidence) than it is the other way round.

Internet gambling—America has closed its domestic gambling market to foreign (mainly British) internet betting companies despite clear rulings by the World Trade Organisation that the move is discriminatory.

Extraterritorial laws—Legislation such as the Helms-Burton Act and Patriot Act extends the reach of American law to other parts of the world, impeding trade and raising the risk that foreign firms and citizens may face prosecution in America for doing things that are legal in their home countries.

Investment barriers—America’s domestic air travel market is closed to foreign airlines, whereas American firms have full access to Europe’s.

Defence—British defence firms and its military worry that American efforts to close its markets and to limit exports of sensitive military technology do not take account of historical ties and will undermine further co-operation."

Labels: Export Controls, Sanctions, United Kingdom

Zimbabwe's Sunday Mail newspaper has reported that the Zimbabwe government "has begun auditing the ownership of Western firms in the country as part of a black empowerment drive' and to counter the possible withdrawal of investment under sanctions imposed and proposed by Britain and the U.S.'"

The preliminary results of the audit indicated that 499 companies in Zimbabwe had British ownership while 353 companies companies were owned by shareholders from other European countries.

Meanwhile, this week Zimbabwe will introduce a 100 billion Zimbabwe dollar bank note, as the country's inflation rate reached 2.2 million percent.

Labels: Sanctions, Zimbabwe

USA*Engage, a coalition that works to seek alternatives to unilateral U.S. foreign policy sanctions and to promote the benefits of U.S. engagement abroad, today held its annual luncheon on Capitol Hill in Washington, DC to honor Senator Chuck Hagel (R-NE) and Representative Earl Blumenauer (D-OR) for their leadership on issues relating to U.S. diplomacy and global engagement. Senator Hagel and Representative Blumenauer each delivered remarks on the importance of the United States maintaining an open dialogue with the rest of the world.

Senator Hagel was honored by USA*Engage for his strong support of U.S. global engagement, free trade and his efforts to reform the way in which U.S. sanctions are administered. Senator Hagel was one of the original sponsors of the Trade Sanctions Reform and Export Enhancement Act of 2000 (codified at 22 USC § 7201 et seq.) that authorized the licensed export and reexport of medicines, medical devices and agricultural products to countries subject to U.S. unilateral sanctions.

In his remarks, Senator Hagel said that "trade is not just an exchange of goods and merchandise. Trade is the only bridge into other nation’s culture and society. It is the one bridge that gets across the great chasm of differences; it is the one relevant and realistic option for countries to continue to grow and improve." He added that "we can fall prey to the narrowness of politics, but trade will overcome it. I believe free trade will be sustained."

USA*Engage honored Congressman Blumenauer for his commitment to a U.S. diplomacy, including his votes against new unilateral U.S. sanctions efforts against Cuba and Iran. Represenative Blumenauer has sought to promote humanitarian engagement abroad, and as a new member of the House Ways and Means Committee, has been a strong supporter of a bipartisan trade policy. Representative Blumenauer focused his remarks on the need for multilateral cooperation on a range of issues – from environmental protection and global poverty to international trade.

Jake Colvin, Director of USA*Engage, said "Senator Hagel and Congressman Blumenauer each take a thoughtful and nuanced approach to U.S. foreign policy and are champions of international engagement." He added that “their commitment to ensuring that the United States remains a respected diplomatic leader in the world is one reason we honor their public service today."

Editor's Note: Senator Hagel will be speaking tomorrow, June 26, on U.S. foreign and trade policy at the Brookings Institution in Washington, DC. During his speech, Senator Hagel will examine the inventory of global challenges that the next president will inherit and the responsibilities of the presidential candidates to address these challenges.

6/26 Update: The text of Senator Hagel's speech, entitled “Memo to the Candidates" delivered today at the Brookings Institution can be found here. The speech contained the following discussion of trade issues:

Trade is a driving force for sustained economic prosperity and job creation both in the United States and throughout the world. Trade, however, is not a guarantee. The ongoing credit crisis and skyrocketing world food and energy prices are among the recent temptations for countries to restrict markets and veer toward protectionism that leads to dangerous insular thinking. These temptations must be resisted and the hard-earned lessons of history not forgotten. The United States must continue to press for a successful conclusion to the Doha Round of global trade negotiations. America’s leaders should stand behind our trade agreements and support the pending Free Trade Agreements with Colombia, South Korea and Panama as well as renewing Trade Promotion Authority for the next President.

Labels: Congress, Sanctions, TSRA

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