Economic Sanctions Archives | Page 6 of 6

Treasury Issues CAATSA Reports on Russian Senior Foreign Political Figures and Oligarchs

January 30, 2018 by Bruce Zagaris Leave a Comment

On January 29, 2018, the U.S. Department of the Treasury, pursuant to the Countering America’s Adversaries Through Sanctions Act of 2017 (CAATSA), delivered five reports to the designated Congressional committees:

Sec. 241: Report on Senior Foreign Political Figures and Oligarchs in the Russian Federal;

Sec. 104(e): Report on Contributions to Iran’s Ballistic Missile Program:

Sec. 242: Report on Effects of Expanding Sanctions to Include Sovereign Debt and Derivative Products;

Sec. 273: Examining the Counter-Terror Financing Role of the Department of the Treasury in Embassies; and,

Sec. 311(d): Designation of Additional Persons Related to North Korea.

Section 241 of CAATSA required Treasury, in consultation with the Department of State and the Director of National Intelligence, to provide a report regarding senior political figures and oligarchs in the Russian Federation and Russian parastatal entities.

The names of senior political figures and oligarchs in the unclassified version of the report were selected based on objective criteria drawn from publicly available sources.

Senior political figures: The report included individuals who are: i) senior members of the Russian Presidential Administration; ii) members of the Russian Cabinet, Cabinet-rank ministers, and heads of other major executive agencies; iii) other senior political leaders, including the leadership of the State Duma and Federation Council, other members of the Russian Security Council, and senior executives at state-owned enterprises.
Oligarchs: The report included Russian individuals with an estimated net worth of $1 billion or more.
Parastatals: The report analyzed entities that are at least 25% owned by the Government of Russia and that had about $2 billion or more in revenues in 2016.

Treasury’s press release states the report is not a sanctions list. The inclusion of individuals or entities in any portion of the report does not impose sanctions on those individuals or entities. Nor does it create any other restrictions, prohibitions, or limitations on dealings with such persons by either U.S. or foreign persons. Treasury states that inclusion in the report does not constitute the determination by any agency that any of the individuals or entities meet the criteria for designation under the sanctions program.

The law is designed to punish Russia for its alleged interference in the 2016 U.S. elections and its actions in Ukraine.

The unclassified sections has 210 https://www.cnn.com/2018/01/30/politics/full-us-list-of-russian-oligarchs-with-putin-ties-intl/index.html names, 114 senior political figures and 96 oligarchs.

On Jan. 30, 2018, the Trump administration said it will not implement Russia-related sanctions mandated by Congress last year because the threat itself is acting as a “deterrent.”

Although inclusion on the so-called “Putin” list does not mean the persons have been sanctioned, the consequences are potentially significant; (1) financial institutions who subscribe to anti-money laundering and international enforcement watch lists will now encounter their names and some compliance officers will likely determine that the individuals are “high-risk” persons, requiring financial institutions to either close their accounts or pay enhanced due diligence; (2) some of the listed individuals may encounter problems when they travel internationally; and (3) some of the listed persons will likely have trouble doing business, because of the potential negative taint of doing business with listed persons, especially due to the risk that the may be sanctioned in the future.

A more comprehensive discussion will appear in the February issue of the IELR.

Use of Digital Currency to Evade U.S. Sanctions

January 5, 2018 by Bruce Zagaris 2 Comments

In the last month, the Venezuelan and Russian governments have discussed the use of digital currency to evade U.S. sanctions.

In particular, on December 3, 2017, Nicolas Maduro suggested the idea in a television speech. His plans are to create the Petro, which would be backed by Venezuela’s commodities (gold, oil, gas and diamond reserves) similar to the way gold has in the past supported the dollar.

Although the Russian government has expressed concern about the potential use of virtual currencies to commit crimes, more recently Russian President Vladimir Putin has indicated a willingness to explore the use of virtual currency to counteract U.S.. sanctions.

A recent book, Bitcoin and Cryptocurrency Technologies: A Comprehensive Introduction by Arvind Narayanan, Joseph Bonneau, Edward Felten, Andrew Miller & Steven Goldfeder, addresses fundamental questions about the pros and cons of using virtual currency. How does virtual currency operate? What makes it different? How secure is virtual currency? How anonymous are virtual currency users? What applications can we build using virtual currency (i.e., Bitcoin) as a platform? Can cryptocurrencies be regulated? If we were to design a new cryptocurrency today, what would we change? What might the future hold?

One obstacle for users of virtual currency involves ensuring that the payments are made without having to use a third party, such as a government agency. A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party (i.e., financial regulator) is still required to prevent double-spending.

Some experts have proposed a solution to the double-spending problem using a peer-to-peer network.

A recent article has mapped the design space for numerous proposed modifications, providing comparative analyses for alternative consensus mechanisms, currency allocation mechanisms, computational puzzles, and key management tools.

The same article surveys anonymity issues in Bitcoin and provides an evaluation framework for analyzing a variety of privacy-enhancing proposal.

In addition, the article provides new insights on what we term disintermediation protocols, which absolve the need for trusted intermediaries in an interesting set of applications.

As governments and other persons seek to evade sanctions regimes and otherwise circumvent international treaties and national laws, governments and stakeholders in those regimes, laws, and treaties will also seek to regulate virtual currency and crack the anonymity in order to implement and enforce the treaties and laws.

North Korea calls U.N. Sanctions an “Act of War” and Threatens Retaliation

December 28, 2017 by Madeline Henshaw-Greene Leave a Comment

On December 22, the U.N. Security Council voted unanimously to tighten economic sanctions on North Korea in response to its sixth nuclear test on November 29, which involved the launching of a missile that the regime warns could reach the United States. This is the Council’s third attempt this year to exert enough pressure on Kim Jong-Un to force him to halt his country’s nuclear weapons program and come to the table for negotiations. According to U.S. Secretary of State Rex Tillerson, in order for talks to begin North Korea must show “a sustained cessation” of its aggressive behavior, while Pyongyang vows that it will not consider joining the negotiations until the United States ends its practice of hostility towards the DPRK.

Until said negotiations take place, the Council has voted to drastically cut the number of crude oil and refined petroleum imports to North Korea by nearly 90 percent, which will likely be devastating to the North Korean military and nuclear programs. Furthermore, the Council called on its members to expel all North Korean guest workers within the next two years. Russia and China, both members of the Security Council and the closest nations North Korea has as allies, are two of the biggest employers of North Koreans working abroad and a major source of foreign income for the DPRK. On December 26, the United States put in place further sanctions against two North Korean individuals who are believed to be instrumental in the country’s development of ballistic missiles.

North Korea has not responded favorably to the tightened sanctions, referring to them as tantamount to an economic blockade and an “act of war”. In a statement from the North Korean foreign ministry, the government promised to “further consolidate [its] self-defensive nuclear deterrence”, in direct violation of the Council’s ostensible goal of eventual denuclearization. The foreign ministry in Pyongyang called on the United States to “wake up from its pipe dream of our country giving up nuclear weapons” if it “wishes to live safely”. North Korea also threatened retaliation against the member nations of the Security Council, saying that all those in favor of the resolution “will pay a heavy price for what they have done”.

For more on this, click the following links:

U.N. Security Council Cracks Down on North Korea After November Missile Launch – The Wall Street Journal

North Korea Calls U.N. Sanctions an “Act of War” – The New York Times

U.S. imposes sanctions on two key figures in North Korea’s weapons program – The Washington Post

U.S. Lifts Visa Ban on Magnitsky Activist Bill Browder

October 25, 2017 by Zarine Kharazian Leave a Comment

Bill Browder, a billionaire hedge fund manager known for his full-throated criticism of the Kremlin’s human rights abuses, has had his U.S. visa restored after an initial ban triggered as a result of an INTERPOL red notice issued against him.

Browder, who traded his American citizenship for British citizenship to avoid paying US taxes on foreign investments, rose to prominence in 2008 when his Russian tax attorney and friend, Sergei Magnitsky, died under mysterious circumstances in a Russian prison just days after his scheduled release. In 2008, Magnitsky had uncovered and publicized a $230 million tax fraud scheme implicating the Russian government, and had been investigated and imprisoned by Russian authorities as a result. Following Magnitsky’s death, Browder initiated a campaign calling for the international community to punish Russian government officials linked to Magnitsky’s death.

Browder’s campaign proved largely successful. In 2012, Congress passed the Magnitsky Act, which imposed sanctions and asset freezes on at least 18 individuals implicated in Sergei Magnitsky’s death, as well as other human rights abuses. Russia responded to the legislation by banning U.S. adoptions of Russian children.

Interest in the Magnitisky Act resurfaced in recent weeks following revelations in July 2017 that Donald Trump Jr. met with a Russian attorney, Natalia Veselnitskaya, during the elder Trump’s campaign. Trump Jr. has claimed that the meeting primarily concerned discussion of the Magnitsky Act, which Veselnitskaya had lobbied against in 2012.

In an interview with Newsweek, Browder said that he learned of the ban when the U.S. Department of Homeland security denied his application for an Electronic System Travel Authorization. According to statistics released by DHS, over 99% of all ESTA applications are approved within 5 seconds. Browser took to Twitter to voice his frustration on Saturday:

Not only did Putin add me to the Interpol list, but the US simultaneously revoked my visa. @jaynordlinger explains https://t.co/d8KskJ5CTK

— Bill Browder (@Billbrowder) October 22, 2017

Browder believes that the ban was triggered by an INTERPOL Red Notice issued against him at Russia’s request. INTERPOL’s infamous red notice “is the closest instrument to an international arrest warrant in use today,” according to the Department of Justice’s U.S. Attorneys’ Manual. The Kremlin has attempted to use the international police agency’s red notice system to punish Browder four times before, but all prior attempts had been rejected by INTERPOL’s internal oversight body on the grounds that they were politically motivated.

The International Enforcement Law Reporter has covered the abuse of INTERPOL’s notice system in recent issues. For more analysis of the phenomenon, see “INTERPOL Red Notice Abuse: Which Member Countries are the Primary Offenders?” and “Mass Prosecutions and INTERPOL Red Notice Abuse,” both by Yuriy Nemets, in the International Enforcement Law Reporter.

Trump Administration Issues Executive Order Outlining New North Korea Sanctions

September 22, 2017 by Zarine Kharazian 1 Comment

On Thursday, President Trump issued an executive order imposing additional sanctions on North Korea. The sanctions come in response to North Korea’s escalating weapons tests over the past months, including two intercontinental ballistic missile launches in July and a nuclear test in early September.

The new sanctions go significantly further than those imposed by the UN Security Council earlier this month. While the UN Security Council sanctions mostly focused on sanctioning those operating within North Korea (by instituting an assets freeze, as well as a partial oil embargo for example), the Trump administration’s sanctions more heavily target actors, such as China, that do international trade and business with North Korea, who then want to do business with the United States.

For the full text of the EO, see here. For a full text of OFAC’s updated FAQ related to the North Korea sanctions, see here.

BCR Sanctions Alert: Russia, Iran, North Korea

August 8, 2017 by Zarine Kharazian Leave a Comment

Berliner, Corcoran & Rowe has issued a Sanctions Alert detailing the newest U.S. sanctions imposed by the Trump administration on Russia, Iran, and North Korea.

OFAC Adds 13 Venezuelan Nationals to SDN List

July 27, 2017 by Jacob Rasch Leave a Comment

On July 26, 2017, the U.S. Treasury Department’s Office of Foreign Assets Control announced that it had placed 13 Venezuelan nationals on the list of Specially Designated Nationals with whom U.S. persons are forbidden from doing business. The people added to the list are high-ranking officials in buisnesspeople well-connected to the administration of Venezuelan President Nicolas Maduro, including Venezuelan interior minister Reverol Torres.

The sanctions come as Maduro has called for a national vote to elect a constituent assembly to re-write his country’s constitution, a move which critics including the Trump administration have derided as a power grab. The new constitution seems likely to be written in a way to solidify Maduro’s power by weakening democratic institutions, even as his approval ratings fall below 20% amidst an economic crisis which has caused widespread poverty and protest in the nation.

Treasury Secretary Steve Mnuchin, in the statement announcing the sanctions, explicitly stated that they were in response to the Maduro regime’s actions: “As President Trump has made clear, the United States will not ignore the Maduro regime’s ongoing efforts to undermine democracy, freedom and the rule of law. As our sanctions demonstrate, the United States is standing by the Venezuelan people in their quest to restore their country to a full and prosperous democracy.”

“Anyone elected to the National Constituent Assembly should know that their role in undermining democratic processes and institutions in Venezuela could expose them to potential U.S. sanctions,” Mr. Mnuchin added in his statement.

Among the names included on this round of sanctions includes Simón Zerpa, vice president of finance at Petróleos de Venezuela, known as Pdvsa, the state-run oil company. Mnuchin also mentioned in a conference call after the announcement that further sanctions could additionally target the state oil sector. Venezuela currently exports 700,000 barrels of crude oil a day into the U.S., and imports 100,000 barrels a day of refined oil from the U.S.; more expansive sanctions limiting that trade would further cripple the nation’s oil-reliant economy (an economy which has already suffered as oil prices have declined globally).

The full list of sanctioned individuals can be found here: https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20170726.aspx

World Bank Announces Debarment of AECOM

July 18, 2017 by Jacob Rasch Leave a Comment

On July 14, 2017, the World Bank Group announced that it had debarred two subsidiaries of American multinational engineering firm AECOM for malfeasance involving the misrepresentation of consultants. As part of two separate Negotiated Resolution Agreements (NRA), AECOM Asia Company Limited has been suspended for 18 months, and AECOM New Zealand Limited has been suspended for 6 months.

The AECOM Asia Company Limited suspension comes after a World Bank investigation revealed that AECOM Asia’s predecessor, Metcalf & Eddy Limited, had “failed to disclose a conflict of interest in its proposal for the Bengbu Integrated Environment Improvement Project.” The company also “misrepresented the input of key staff during implementation of its contract under the Tai Basin Urban Environment Project.” These violations constituted sanctionable practices, according to the World Bank press release announcing the debarment. In addition to the 18 month suspension, AECOM Asia will be required to adopt a Corporate Compliance Program consistent with the standards of the World Bank Group’s Integrity Compliance Guidelines.

AECOM New Zealand faces suspension after it “submitted documents that misrepresented the availability and experience of certain experts in its proposal for the Trung Son Hydropower Project in Vietnam.” In addition to creating a compliance program, both companies are required to cooperate fully with the investigations of the World Bank Integrity Vice Presidency.

The debarment of AECOM Asia Company Limited qualifies for cross-debarment by other Multilateral Development Banks under the 2010 Agreement of Mutual Recognition of Debarments.

In addition to the World Bank, parties to the cross-debarment agreement are the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter-American Development Bank, and the African Development Bank.

The press release announcing the debarment can be found here: http://www.worldbank.org/en/news/press-release/2017/07/14/world-bank-debars-aecom-asia-company-limited-and-aecom-new-zealand-limited

Chinese Telecommunications Company ZTE Reaches $100 Million Settlement With OFAC

March 7, 2017 by Jacob Rasch Leave a Comment

On March 7, 2017, the U.S. Department of Treasury announced that the Office of Foreign Assets Control (OFAC) had reached a settlement with Zhongxing Telecommunications Equipment (ZTE) Corporation of $100,871,266. The settlement, which is a part of a total resolution between ZTE and the U.S. government of $1.192 billion, relates to the Chinese telecommunications giant’s multi-year effort to circumvent and subsequently conceal their circumvention of U.S. sanctions against Iran. The settlement is OFAC’s largest to date with a non-financial entity.

In the press release announcing the settlement, the Treasury Department described ZTE’s action as a “multi-year and systemic practice of utilizing third-party companies to surreptitiously supply Iran with a substantial volume of U.S.-origin goods, including controlled goods appearing on the Commerce Control List.” The Treasury Department states in the release that ZTE utilized third parties to actively conceal their involvement in selling goods to Iran, and that top-level executives not only approved this plan, but had full knowledge of the legal risks of doing so before entering into contracts that were contingent on their selling goods to Iran.

Additionally, when ZTE’s business with Iran became public knowledge in 2012, the company assured the United States that it intended to cease this activity. However, in 2013, the company decided to resume this clandestine program, and “under the direction of its leadership, ZTE deleted evidence and provided the U.S. government with altered information to hide the fact that it had resumed its unlawful business with Iran.”

If ZTE’s criminal plea is approved in federal court, the resolution would also include the imposition of $430,488,798 in combined criminal fines and forfeitures on ZTE as part of a plea agreement with the U.S. Department of Justice, and a $661,000,000 penalty – of which $300,000,000 is suspended during a seven-year probationary period – to the U.S. Department of Commerce.

In addition to the financial penalty, the settlement dictates that ZTE maintain policies and procedures that minimize the possibility that they subsequently engage in the circumvention of U.S. export control law or economic sanctions. The settlement requires oversight from an independent auditor for a period of three years.

The press release can be found here: https://www.treasury.gov/press-center/press-releases/Pages/sm0023.aspx.

The text of the settlement can be found here: https://www.treasury.gov/resource-center/sanctions/CivPen/Documents/20170307_zte_settlement.pdf.