At the end of last month, OFAC fined US insurance and financial services company AIG $148,698 for violating US sanctions on Cuba, Iran, and Sudan. OFAC said that although AIG’s compliance programme included recommendations for when to use exclusion clauses in its insurance policies where US sanctions were involved, the scope of most of those exclusion clauses was too narrow. As a result, AIG provided insurance coverage to parties that were engaging in shipments to or from Cuba, Iran, and Sudan, primarily under global insurance policies.
OFAC’s enforcement notice is here.
The US has extended the deadline for deciding whether to revoke its sanctions on Sudan for 3 months. They were due to expire on 12 July, if not prevented by the White House. The Obama Administration eased US sanctions on Sudan in January, in recognition of Sudan’s improved cooperation with the US including on counter-terrorism, improvements to humanitarian access, and the reduction in its military activity in conflict areas such as Darfur (see previous blog). The full lifting of the sanctions is contingent on Sudan continuing to address these areas, but the current administration decided that it needed more time to “ensure that, given the scope and gravity of this decision, we reached the proper outcome”.
Senior administration officials gave a press briefing on US sanctions on Sudan on Wednesday (link here).
President Obama has eased US sanctions on Sudan, in recognition of Sudan’s improved cooperation with the US including on counter-terrorism, improvements to humanitarian access, and the reduction in its military activity in conflict areas such as Darfur. Under a new general licence published by the US Treasury, several prohibited transactions have been authorised, including transactions involving persons in Sudan, transactions involving property in which the Government of Sudan has an interest, and imports to and from Sudan. The relevant sanctions provisions will be fully revoked on 12 July 2017 provided that the government of Sudan sustains this conduct.
OFAC has published a fact sheet and a new set of FAQs, which note that this action does not authorise transactions prohibited under US sanctions on Darfur or South Sudan. The details and FAQ are here.
OFAC has fined US firm National Oilwell Varco (NOV), and its subsidiaries Dreco and Elmar, $5,976,028 in settlement of their civil liability for allegedly violating US sanctions on Iran, Cuba, and Sudan. The settlement is concurrent with a settlement agreement between NOV and the Department of Commerce, and a Non-Prosecution Agreement (NPA) with the US Attorney’s Office for the Southern District of Texas. NOV’s settlement with OFAC will be deemed satisfied by its payment of $25,000,000 under the NPA.
OFAC determined that, between around 2002 and 2009, NOV repeatedly engaged in transactions involving the sale and export of goods to Iran, Cuba, and Sudan. NOV is said to have wilfully blinded itself to Dreco’s deliberate non-identification of Iran in its communications with NOV. It found NOV’s conduct to have been aggravated by, among other factors, the fact that it did not voluntarily disclose the violations, that senior management knew or had reason to know that several of the transactions were benefitting Iran, and that it is a large and sophisticated company involved in regions of high sanctions risk that had a wholly inadequate compliance programme in place. OFAC found NOV’s conduct to have been mitigated by its cooperation with the investigation into its conduct, and its efforts to remediate its compliance programme.
OFAC’s penalty notice is here.
The US Treasury has published reports on OFAC’s licensing activities under the Trade Sanctions Reform and Export Enhancement Act 2000 for the 2nd-4th quarters of 2015 (available here). Under that legislation, OFAC processes licence applications requesting authorisation to export agricultural commodities, medicine, and medical devices to Iran and Sudan.
The reports indicate that over the reporting period the average processing time for TSRA applications increased from 71 to 88 business days, not including still unprocessed applications. 328 applications (over half of all applications filed during the reporting period) were still unprocessed at the end of the period. No licence applications were denied during the reporting period.
OFAC has fined Alcon Laboratories, Alcon Pharmaceuticals, and Alcon Management (Alcon) $7,617,150 for violating US sanctions on Iran and Sudan. Alcon, a multinational medical company, is said to have violated the Iran sanctions on 452 occasions and the Sudan sanctions on 61 occasions when it sold and exported surgical and pharmaceutical products from the US to distributors in those countries without authorisation from OFAC.
OFAC found that Alcon did not voluntarily self-disclose its violations, but that the violations were non-egregious. The base penalty amount for the violations was $16,927,000, and the maximum was $138,982,584.
Among other factors, OFAC found Alcon’s conduct to have been aggravated by the fact that it had essentially no sanctions compliance programme in place at the time of the violations, despite doing substantial business involving sanctioned countries. In mitigation, OFAC noted that the harm to US sanctions programs caused by the violations was limited because the exports involved licensable medical end-use products, for which Alcon had previously been, and was subsequently, given a licence. OFAC made a similar finding in mitigation in relation to its fine against medical technology company HyperBranch last month (see previous blog).
OFAC’s enforcement notice is here.
OFAC has designated Tanzanian national Ali Hassan and the Hassan Drug Trafficking Organization as Specially Designated Narcotics Trafficking Kingpins. Mr Hassan is said to have used his organisation to smuggle multi-ton shipments of heroin and cocaine to Africa, Europe, Asia, and North America and bribed African government officials in order to avoid arrest and prosecution. The US Treasury’s press release is here.
In addition, OFAC has designated Chemplex Corporation, linked to designated Industrial Development Corporation of Zimbabwe, and Zimbabwe Fertiliser Company under its Zimbabwe sanctions, and de-listed Atbara Cement Company from its Sudan sanctions.
We reported in July last year (see previous blog here) that BNP Paribas had pleaded guilty to conspiring between 2004 and 2014 to violating the International Emergency Economic Powers Act and the Trading with the Enemy Act. It has now been sentenced for these offences, ie conspiring to breach US sanctions by processing billions of dollars’ of transactions through the US financial system on behalf of sanctioned Sudanese, Iranian, and Cuban entities.
This is the first time a global bank has pleaded guilty to violations of US sanctions. It has been sentenced to a 5-year term of probation, ordered to forfeit almost $8.9bn and pay a fine of $140m. This is largest financial penalty imposed in the US in a criminal case. Forfeiture and fines of $3.7bn against BNP Paribas in connection with a guilty plea in New York State Supreme Court for falsifying and conspiring to falsify business records and a penalty imposed by OFAC will count towards satisfaction of the criminal penalty. In its agreement with the New York State Supreme Court, BNP Paribas also agreed to terminate or separate from itself 13 employees, including the Group Chief Operating Officer and other senior executives, suspend US dollar clearing operations through any branches and affiliates closely associated with the misconduct, and extend for 2 more years monitoring put in place in 2013. The US Department of Justice press release is here.