The first major regulatory development of 2017 came between the United States and Iran. On October 13th, President Trump chose not to certify Iran’s compliance with the Joint Comprehensive Plan of Action. President Trump also threatened to withdraw the United States from the Iran deal if the European parties as well as the P5+1 did not address his concerns with the deal in place. This de-certification allowed for a 60-day window where the US Congress could impose nuclear-related sanctions that were withdrawn by the Iran deal.
This did not take place, and although President Trump still has the authority to unilaterally remove the United States from the Iran deal, he has not decided to do so. On January 12th, President Trump certified the Iran deal but stated that this was the last time that he was going to do so. President Trump suggested that the European parties to the agreement had 90 days to come up with a different agreement in order for the United States to remain a part of the deal. If an individual wants to know more about regulatory development and sanction updates in the year of 2017, they should consult a knowledgeable OFAC attorney who can answer their questions.
Changing the Cuba Asset Control Regulations (CACR)
One of the regulatory development and sanction updates in the year of 2017 an individual should be aware of are the changes made to the Cuba Asset Control Regulations (CACR). On November 8th, the US Government changed the Cuba Asset Control Regulations, or CACR, by adding a large number of Cuban government military intelligence entities to a banned list. Additionally, general licenses for people-to-people travel were revoked to reduce the number of reasons that U.Ss persons can travel with authorization to Cuba. On October 12th, the U.S. Government in Sudan revoked the Sudanese Sanctions Regulations. This allowed for U.S. persons and entities to further engage with the Sudanese economy with legal certainty, although many exports still require a license from BIS pursuant to the Export Administration Regulations.
Executive Order 15808
Concerning Venezuela, in August, President Trump issued Executive Order 15808 that prohibits most transactions involving new debt to the Government of Venezuela, as well as certain bonds issued by the Government of Venezuela. OFAC (Office of Foreign Assets Control) allowed for a general license to authorize US persons to engage in transactions as well as specific bonds issued by the Government of Venezuela, as well as CITGO holding, which is a US-based subsidiary of CDVSA, a Venezuelan state-owned oil and gas company.
Sanctions Against North Korea
Next, OFAC has further designated companies, persons, and entities involved with supporting the regime in North Korea. OFAC sanctioned 9 entities, 15 individuals, and 6 vessels stating they had violated, or the U.S. government believes they had violated, various U.S. and U.N. sanctions. The properties and interests of these persons and entities are now blocked, and U.S. persons or anyone within U.S. jurisdiction are prohibited from dealing with any of these designated parties.
Executive Order 13687
The OFAC designated 10 representatives pursuant to Executive Order 13687 for being part of the Workers’ Party of Korea, the national political party running the North Korean government. Some of these individuals are representatives in China and in Russia as well. Other individuals that were designated were financial representatives. These include officials in Chinese banks representing North Korean interests.
Chinese and North Korean trading companies were also designated. This includes a company named (HANA) Electronics JDC. This is an electronic company that was designated for supporting the North Korean regime’s missile program. Five North Korean shipping companies that are involved in illegal trade with North Korea, from China and Russia, were also designated. OFAC also sanctioned the North Korean Ministry of Crude Oil Industries. This is the ministry that handles North Korean Oil.
Impact of Executive Order 103808 on Americans
A common question has arisen regarding the Venezuelan oil and mineral backed digital currency that President Nicolas Maduro is considering issuing at a later time. That question is “Would US persons be prohibited from purchasing or otherwise dealing in it under Executive Order 13808?” OFAC states that a currency such as this would be an extension of credit to a Venezuelan government, and therefore would be prohibited under Executive Order 13808. This is because U.S. persons are not permitted to extend or otherwise deal with new debts with a maturity of greater than 30 days with the Government of Venezuela. The Executive Order warns that any U.S. person that deals with the prospective Venezuelan digital currency known as the Petro may face U.S. sanctions and liabilities.
OFAC Statement on Civil Liability
Another one of the regulatory development and sanction updates in the year of 2017 to stay aware of is the statement in regards to civil liablity for violations of the Iranian Transactions and Sanctions Regulations. On December 6th 2017, OFAC released a statement in regards to civil liability for apparent violations of the Iranian Transactions and Sanctions Regulations, or ITSR, by Dentsply Sirona Inc., or DSI. This is a U.S. company that agreed to pay $1,220,400 to settle its potential civil liability for 37 apparent violations of the ITSR between November 25th, 2009 and July 5th, 2012. Dentsply, or its subsidiary in the UK, exported 37 shipments of dental equipment and supplies from the U.S. to distribute in their country with the knowledge that the goods were ultimately destined for Iran.
Aggravating and Mitigating Factors
OFAC stated that Dentsply did not disclose the violations, but that they are a non-egregious case. The aggravating factor was that UKI and Sultan, which are both Dentsply’s subsidiaries, willfully exported U.S. originated dental products to third-countries and distributors, with knowledge it was destined for Iran. Employees of these subsidiaries concealed that they were destined for Iran and continued to do business in violation of the ITSR. Several supervisors at UKI and Sultan had knowledge of and participated in the violations. Dentsply is also a large and commercially-sophisticated company with reason to know U.S. sanctions and export control requirements.
OFAC considered the mitigating factors that Dentsply has not received a penalty from OFAC before. The harm to the ITSR was limited because the exports were likely eligible for a specific license. Dentsply took remedial steps including voluntarily expanding the scope of their review to make sure that all violations were reported to OFAC, and Dentsply also cooperated with OFAC’s investigation. They also agreed to withhold the statute of limitations for a total of 1,104 days. If an individual wants to know more about regulatory development and sanction updates in the year of 2017, they should consult a skilled OFAC attorney that could answer their questions.