On October 6, 2017, OFAC released a Statement, as well as Frequently Asked Questions (“FAQ”) and an accompanied General License, for the revocation of Sudanese Sanctions Regulations with respect to Sudan and the Government of Sudan effective on October 12, 2017.
Sections 1 and 2 of Executive Order No. 13067 have been revoked. This is a final decision after a two to six-month extension of the temporary revocation of sanctions on the Government of Sudan. Any U.S. person will still need to obtain licenses from the Department of Commerce and Bureau of Industry and Security before the export of certain items on the Commerce Control List.
The new General License A authorizes exports and re-exports of certain Trade Sanctions Reform and Expert Enhancement Act (“TSRA”) items to Sudan. The previous General License, which took effect January 7, 2017, was a temporary authorization for a U.S. person to engage in transactions prohibited under the Sudanese Sanctions Regulations, will be revoked upon the issuance of General License A. A knowledgeable OFAC lawyer could answer any questions an individual may have about Sudan’s sanctions program.
What Does the New General License Authorize?
Currently, the sanctions are still in place in Sudan and will include Executive Order No. 13607, OFAC sanctions related to Darfur imposed by Executive Order No. 13400, and OFAC designations of Sudanese persons under Executive Order Nos. 13607 and 13412.
Sudan still remains on the Federal Supply Class List (“FSC”) of terrorists. It lists government sanctions regulations which prohibit U.S. persons from engaging in transfers from the government of Sudan that would constitute donations to a U.S. person, or with respect to a U.S. person’s knowledge, or has a reasonable cause to know and pose a risk of furthering terrorist acts in the United States.
The revocation of Sudanese Sanctions Regulations will also affect any future, past or present OFAC Enforcement Investigations or actions where companies are deemed to violate the Sudanese Sanctions Regulation prior to October 12, 2017.
White Birch Investments Settlement Notice
On October 5, 2017, OFAC released the White Birch Investments Settlement Notice, wherein BD White Birch Investment LLC (“White Birch USA”), a Connecticut corporation, settled a potential civil liability for three apparent violations of the Sudanese Sanctions Regulations in the amount of $372,465 The violation transaction occurred in April and December of 2013 where employees of White Birch USA and its Canadian subsidiary, White Birch Paper Canada Company NSULC (“Nova Scotia Unlimited Liability Company”), were involved in discussing, arranging, and executing the export of paper products to Sudan.
Aggravating and Mitigating Factors in White Birch’s Case
OFAC determined that the aggravating factors, in this case, included records of disregard for U.S. sanctions requirements. White Birch, Canada employees attempted to conceal the ultimate destination of the goods from the U.S. financial Institution and White Birch USA’s activity and knowledge of the violating conduct, White Birch’s status as a commercially sophisticated company, the lack of a Sanctions Compliance Program that could have prevented the apparent violation, and the lack of cooperation by White Birch USA initially with OFAC.
Mitigating factors that reduced the eventual fine included no prior OFAC sanctions violations, remedial steps taken due to the violation, and OFAC compliance training. This enforcement action shows how it is very important for a multi-national corporation to have a stringent Sanctions Compliance Program implemented as soon as possible if they already do not have one. A quality sanctions program could have prevented something like this from taking place, could have alerted management and compliance officials that the transaction that would violate a sanctions regime as well. And, if an enforcement action is provided, then the Sanctions Compliance Program could be used as a mitigating factor for any eventual civil liability penalties.
Enforcement Action and Richemont
The last talking point is the Enforcement Action on September 26, 2017. This is the settlements of a civil liability for violations of the Foreign Narcotics, Kingpin Sanctions Regulations, known as the Kingpin Act, by Richemont North America Inc., d/b/a Cartier.
Richemont, a company in New York, New York, agreed to pay $334,800 for the settlement of the violations of the Foreign Narcotics Kingpin Sanctions Regulations. Richemont exported four shipments of jewelry to Shuen Wai Holding Limited in Hong Kong. This was an entity OFAC added to the List of Specially Designated Nationals and Blocked Persons (the “SDN” list).
Individuals purchased jewelry from Cartier stores in California or Nevada and provided Shuen Wai’s name mailing address as the shipping destination entity. The information provided contained the same information as that on SDN list. Richemont failed to identify the customer as a target on the SDN list prior to shipping the goods and shipped the jewelry to the SDN list customer. This violation lacks a voluntary self-disclosure prior to apparent enforcement action.
Aggravating and Mitigating Factors in Richemont’s Case
Aggravating factors included Richmond’s failure to exercise caution with respect to the conduct which led to the violations; they caused significant harm to the objectives of the U.S. Sanctions Regulations by selling a product to someone on the SDN list, and that Richemont is a commercially sophisticated entity with international activities operating in an industry that has the tendency for money laundering.
Mitigating factors include a lack of penalties, notice, or violations for the past five years prior to the earlier dates of transactions giving rise to the apparent violations; Richemont’s cooperation with OFAC during its investigation; and remedial actions to correct the issues that gave rise to the violation. This enforcement action shows that even consumer-based distributors must identify customers on the SDN List, or under any Sanctions Regime in place, prior to taking any action to avoid any OFAC violations. It is important for this type of company to have exemplary Sanctions Compliance Programs in place, including software applications, training of employees, screen costumers for Sanctions Regimes List. If an individual wants to know more about the revocation of Sudanese Sanctions Regulations, they should speak with a capable attorney that could answer their questions.