the foreign sanctions evaders sanctions a/k/a "the president and ofac are not messing around"...

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The Foreign Sanctions Evaders Sanctions a/k/a "The

President and OFAC Are Not Messing Around" SanctionsMay 2, 2012

I didn't see this coming at all, but yesterday President Obama signed anexecutive orderwhich willprohibit certain activities with, and entry into the United States of any individuals found to have

engaged in violations of U.S. economic sanctions targeting either Iran or Syria. These sanctions

will have a huge impact in further blocking parties engaged in sanctionable activity, by sanctioningthose who are merely engaged in violating sanctions. Whereas before, someone would have to be

engaged in any number of nefarious activities to find themselves on the United States Department

of the Treasury's Office of Foreign Assets Control (OFAC) Specially Designated Nationals and

Blocked Persons (SDN) List; now just the simple act of transacting with parties on the OFAC SDNList will be enough to be placed on the list.

In essence, this new executive order targets foreign individuals and entities who violate or attemptto violate U.S. economic sanctions targeting Iran or Syria or who have facilitated deceptive

practices on behalf of those parties already targeted for sanctioning by U.S. economic sanctions

against Iran or Syria. In sum, this means that those foreign parties who have violated U.S.sanctions against Syria or Iran can be placed on the OFAC SDN List, even if those parties are not

traditionally subject to U.S. jurisdiction. This is akin to what the U.S. government has already

engaged in when they prohibited the maintenance of correspondent or payable through accounts byU.S. depository institutions for foreign financial institutions engaged in significant transactions

with designated Iranian banks. The difference now is that it doesn't just cover financial institutions

but any dealings with those parties designated under these new sanctions.

This new executive order, ifimplemented aggressively, could be devastating. For example, if

Treasury uses this new authority to designate and cut off transactions with those parties facilitating

funds transfers on relating to dealings with Iran or Syria it could lead to large scale designations offoreign financial institutions, money exchange services, and those trading with Iran and Syria on a

barter basis. Again, depending on how aggressively these new sanctions are utilized, such

measures could have a chilling effect on the willingness of foreign parties to transact with Iran andthat could go a long way in cutting off both unlawful and lawful dealings with Iran and Syria.

The author of this article is Erich Ferrari, an attorney specializing in OFAC matters. If you have

any questions please contact him at 202-280-6370 [email protected].
http://www.treasury.gov/resource-center/sanctions/Programs/Documents/fse_eo.pdfhttp://www.treasury.gov/resource-center/sanctions/Programs/Documents/fse_eo.pdfhttp://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Documents/fse_fact_sheet_05012012t.pdfhttp://www.ferrari-legal.com/mailto:[email protected]:[email protected]://www.treasury.gov/resource-center/sanctions/Programs/Documents/fse_eo.pdfhttp://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Documents/fse_fact_sheet_05012012t.pdfhttp://www.ferrari-legal.com/mailto:[email protected]