While sanctions programs implemented by the Treasury Department’s Office of Foreign Assets Control (OFAC) may be authorized by congressional legislations, most are authorized under executive orders issued pursuant to presidential national emergency powers in response to a declared emergency.
The International Emergency Economic Powers Act (IEEPA), which can be viewed here, grants the President of the United States broad authority to respond to “unusual or extraordinary threat[s]” to the national security, foreign policy, or economy of the United States. Invocation of such authorities are legally premised upon the official declaration of a national emergency by the President.
The emergency powers granted to the President under Section 1702 of the IEEPA statute include the following:
- Investigate, regulate or prohibit:
- any transactions in foreign exchange;
- transfers of credit or payment by, between, through, or to any banking institutions, to the extent that such transfers or payments involve any interest of any foreign country or foreign national;
- the importing or exporting of currency or securities.
The President may also:
- Investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition, holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest by any person, or with respect to any property, subject to the jurisdiction of the United States.
And when the United States is engaged in armed hostilities or has been attacked by a foreign country or foreign nationals, the President may:
- Confiscate any property, subject to the jurisdiction of the United States, of any foreign person, foreign organization, or foreign country that the President determines has planned, authorized, aided, or engaged in such hostilities or attacks against the United States.
There are certain exemptions to these broad national emergency powers granted to the president. These exemptions make certain that the President does not have the authority to regulate or prohibit, directly or indirectly:
- Personal communications, including those conducted via post, telegraphically, or telephonically;
- Donations of food, clothing, and medical supplies intended to relieve human suffering, unless such humanitarian efforts would hinder the nation’s ability to deal with the emergency situation, would create significant risk of harm to United States armed forces, or are sent in response to coercion by the recipient;
- The importation or exportation of any information or informational materials regardless of the format or medium of transmission, including commercial information; and
- Any transactions ordinarily incident to travel to or from any country, including importation of accompanied baggage for personal use, maintenance within any country including payment of living expenses and acquisition of goods or services for personal use, and arrangement or facilitation of such travel including nonscheduled air, sea, or land voyages.
These exemptions exists in almost all of the sanctions programs administered by OFAC. This is because most of the sanctions are promulgated pursuant to IEEPA. However, some of the sanctions programs do not contain all of the abovementioned exemptions because they are not authorized pursuant to IEEPA. A good example of this is the Cuba Sanctions program and its notable lack of the travel exemption. Unlike the Iran Sanctions, the Cuba Sanctions are primarily implemented pursuant to the Trading with the Enemy Act (TWEA).
Exercising Emergency Powers
When a president exercises emergency powers pursuant to the declaration of a national emergency, OFAC normally develops and drafts sanctions regulations to implement the executive order. These regulations are then codified in the Code of Federal Regulations (C.F.R.), and blocked persons, targeted foreign organizations and regimes, and Specially Designated Nationals (SDNs) are identified on OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List). When announcing new additions to the SDN List, OFAC will normally issue a press release here explaining (1) why the designation took place and (2) under what legal authority the action was taken.
As a result of these emergency powers, American individuals, businesses, and organizations are broadly prohibited from engaging in economic transactions that involve the property and interests in property of blocked individuals, entities, and regimes. Furthermore, blocking sanctions impose a further obligation upon U.S. persons to both freeze (i.e., block) the property of a blocked person and to report that freezing (i.e., blocking) to OFAC.
Additionally, with respect to country-based sanctions programs such as Iran, Syria, Sudan, and Cuba, U.S. persons and those subject to the jurisdiction of the United States are broadly prohibited from transacting with any person who is a national of or regularly resides in such countries. However, as was mentioned before, several exemptions may apply to these broad prohibitions.
One of the most important exemptions deals with information and informational materials. Prior to 1998 the President was authorized to regulate and prohibit the importation and exportation of information. However, in 1988, the IEEPA statute was amended to curtail the powers of the President. Congress adopted the Berman Amendment, which exempted from regulation the importation and exportation of information and informational materials.
Following the terrorist attacks of 9/11, the President’s IEEPA powers were again expanded as part of the USA PATRIOT Act. One significant change allowed the president to block foreign assets during the pendency of an investigation (i.e., BPI or blocking pending investigation). This allows OFAC to block assets of a foreign national or SDN without due process or clear evidence of wrongdoing pending the outcome of the Government’s investigation into such conduct. This provision was controversial, and has been litigated in cases such as Islamic Am. Relief Agency v. Unidentified FBI Agents, 394 F. Supp. 2d 34 (D.D.C. 2005); Holy Land Foundation for Relief and Development v. Ashcroft, 219 F. Supp. 2d 57 (D.D.C. 2002); and Kindhearts for Charitable Humanitarian Dev., Inc. v. Geitner, 710 F. Supp. 2d 637 (N.D. Ohio 2010).
OFAC Sanctions and Executive Orders
Over the past several decades, the President of the United States has exercised national emergency powers by signing executive orders in response to economic and security threats from global terrorists, proliferators of weapons of mass destruction (WMDs), international narcotics traffickers and kingpins, and others. Notable executive orders and related OFAC sanctions programs include the following:
- Executive Order 13059 – Prohibiting Certain Transactions With Respect to Iran – issued by President William J. Clinton
- Implemented, in part, by OFAC in the Iranian Transactions and Sanctions Regulations (31 C.F.R. Part 560)
- Executive Order 13224 – Blocking and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism – issued by President George W. Bush on September 23, 2001
- Implemented, in part, by OFAC in the Global Terrorism Sanctions Regulations (31 C.F.R. Part 594)
- Executive Order 12978 – Blocking Assets and Prohibiting Transactions with Significant Narcotics Traffickers – issued by President William J. Clinton on October 21, 1995
- Implemented, in part, by OFAC in the Narcotics Trafficking Sanctions Regulations (31 C.F.R. Part 536)
- Executive Order 13382 – Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters – issued by President George W. Bush on June 28, 2005
- Implemented, in part, by OFAC in the Weapons of Mass Destruction Proliferators Sanctions Regulations (31 C.F.R. Part 544)
Other executive orders target entire countries and regimes, and have led to the imposition of broad economic and trade sanctions against Cuba, Iran, Syria, North Korea, and Sudan. Sanctions have also been imposed against a host of specific persons and entities in foreign nations that are perceived to be a threat to the economic stability, the foreign policy, or the national security of the United States. These include the imposition of Ukraine-related Sanctions, South Sudan-related Sanctions, Rough Diamond Trade Controls, and sanctions against Transnational Criminal Organizations, among others.