The proliferation of weapons of mass destruction is a direct threat to the national security of the United States, and other nations, and through numerous Executive Orders, acts of Congress, and OFAC regulations, economic and trade sanctions have been imposed upon WMD proliferators and their supporters.
The Office of Foreign Assets Control (OFAC) implements and enforces three different WMD sanctions programs intended to combat the proliferation of weapons of mass destruction. These non-proliferation sanctions programs include the following:
Violating the non-proliferation sanctions regulations is considered tantamount to financial support for those who proliferate weapons of mass destruction, and is therefore considered an urgent threat to national security. Engaging in transactions with governments, entities, and individuals considered to be WMD proliferators will likely lead to blocked assets, asset forfeiture, civil fines, and criminal penalties. The penalties for non-compliance with OFAC sanctions regulations can be financially, professionally, and personally devastating.
Blocking Property of WMD Proliferators
In 2005, President George W. Bush, acting under the National Emergencies Act (NEA) and the International Emergency Economic Powers Act (IEEPA), signed Executive Order 13382 to block the property of those involved in the proliferation of weapons of mass destruction. Building upon the national emergency declared in Executive Order 12938, the instant Order initially pertained to eight specific organizations located in Iran, North Korea, and Syria:
- Aerospace Industries Organization, AIO, or Sazmane Sanaye Hava Faza – Tehran, Iran
- Atomic Energy Organization of Iran or Sazeman-E Energy Atomi –Tehran, Iran
- Korea Mining Development Trading Corporation, Changgwang Sinyong Corporation, External Techonology General Corporation, North Korean Mining Development Trading Corporation, or KOMID – Pyongyang, North Korea
- Korea Ryonbong General Corporation, Korea Yongbong General Corporation, or Lyongaksan General Trading Corporation – Pyongyang, North Korea
- Scientific Studies and Research Center, Centre D’Etudes et Recherches, or SSRC – Damascus, Syria
- Shahid Bakeri Industrial Group or SBIG–Tehran , Iran
- Shahid Hemmat Industrial Group or SHIG – Tehran, Iran
- Tanchon Commercial Bank, Changgwang Credit Bank, or Korea Changgwang Credit Bank – Pyongyang, North Korea
Although it initially applied to eight specified entities designated as proliferators of Weapons of Mass Destruction, the Executive Order gave the Treasury Department and the State Department authority to designate other proliferators and supporters, designated as NPWMDs on the SDN List.
U.S. persons, meaning any U.S. citizen, permanent resident alien, U.S. company (including their foreign branches) and any person or company in the United States, are prohibited from engaging in any transaction or dealing with any party designated under Executive Order 13382. In addition, all property within the possession or control of any U.S. person in which a target has an interest is blocked and must be reported to OFAC within ten days.
Weapons of Mass Destruction Trade Control Regulations
The Weapons of Mass Destruction Trade Control Regulations appears in the Code of Federal Regulations at 31 C.F.R. Part 539. These regulations are promulgated pursuant to the president’s national emergency powers in the NEA and IEEPA and the Arms Export Control Act, 22 U.S.C. §§ 2751 – 2799aa-2. The regulations are also derived from and build upon Executive Orders 12938 and 13094, authorizing the blocking of property and interests in property of persons determined to be WMD proliferators.
The sanctions also implement a nearly comprehensive ban on imports into the United States from those designated as NPWMDs. Specifically, the sanctions prohibit the direct or indirect import of any goods, technology, or services produced or provided by a person designated as a proliferator of weapons of mass destruction, or identified as a NPWMD on the OFAC SDN list. Furthermore, import-related transactions, such as financing, brokering, transfers, transportation or other participation in importation-related activities, are also prohibited.
Civil penalties equal the greater of $250,000 or twice the amount of the underlying transaction. Criminal penalties include a maximum sentence of 20 years in prison and a fine of up to $1 million.
Highly Enriched Uranium (HEU) Agreement Assets Control Regulations
Disarming Russian nuclear missiles was an important part of international peacekeeping efforts, and the agreement was a major coup for national security and global security. However, the United States and the world at large had to be certain that the fissile material which can sustain a nuclear reaction is converted to peaceful use once removed from nuclear weapons and is diverted from use in proliferation activities. In the early 1990s, the governments of Russia and the United States entered into an international agreement to convert the Highly Enriched Uranium (HEU) from nuclear weapons into low-enriched uranium that is used in commercial nuclear reactors rather than nuclear weapons.
In 2000, President Bill Clinton signed Executive Order 13159, “Blocking Property of the Government of the Russian Federation Relating to the Disposition of Highly Enriched Uranium Extracted From Nuclear Weapons.” The Executive Order was signed to take additional steps with respect to the risk of nuclear proliferation created by the accumulation of a large volume of weapons-usable fissile material in the territory of the Russian Federation.
According to 31 C.F.R. Part 540, “[e]xcept as otherwise authorized by regulations, orders, directives, rulings, instructions, licenses, or otherwise, the property or property interests of the Government of the Russian Federation that are directly related to the implementation of the Highly Enriched Uranium (HEU) Agreements, that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of U.S. persons are blocked and may not be transferred, paid, exported, withdrawn or otherwise dealt in.”
Penalties for violating OFAC-administered Highly Enriched Uranium sanctions are the same as penalties for violating or conspiring to violate other IEEPA-based sanctions: a civil penalty of the greater of $250,000 or twice the value of the underlying transaction amount and criminal penalties of 20 years imprisonment and a $1 million maximum fine.