Export Compliance Daily is providing readers with the top stories for Feb. 16-19 in case you missed them. You can find any article by searching on the title or by clicking on the hyperlinked reference number.
The Office of Foreign Assets Control updated two sanctions entries for a Russian entity and a vessel involved in the construction of the Russian gas pipeline Nord Stream 2 (see 2101190018), according to a Feb. 22 notice. The agency added identifying information for the entries and other sanctions information. OFAC didn’t comment on the update.
An American animal pharmaceutical company may have violated U.S. sanctions after acquiring a company that illegally sold goods to Iran, Zoetis disclosed in a Feb. 16 Securities and Exchange Commission filing. Zoetis said it acquired Platinum Performance in August 2019 and soon discovered that Platinum had sold food, medicine or “devices” to people or entities with ties to Iran, adding that the sales were not approved by a Treasury Department general license. Zoetis submitted an initial voluntary disclosure to the Office of Foreign Assets Control in February 2020 while it conducted an internal investigation, and in December 2020 submitted a final disclosure to both OFAC and the Justice Department. The agencies have said they don't comment on ongoing investigations.
An Atlanta-based Bitcoin service provider was fined more than $500,000 for allowing people in sanctioned countries to use its services. BitPay committed more than 2,000 sanctions violations when it allowed people in Cuba, North Korea, Iran, Sudan, Syria and the Crimea region of Ukraine to use digital currency on the company’s platform to transact with U.S. parties, the Office of Foreign Assets Control said Feb. 18. The company allowed the transactions even though it had information that revealed the people were located in sanctioned regions, OFAC said, adding that “deficiencies” in the company’s compliance program led to the violations. The agency said BitPay allowed $129,000 worth of digital currency transactions that should have been blocked.
A Treasury Department spokesperson declined to say whether a decrease in sanctions settlements from 2019 to 2020 was due to issues caused by the COVID-19 pandemic, saying sanctions investigations are completed on a “variety of timelines.” The Treasury’s Office of Foreign Assets Control “takes its enforcement activities very seriously, and treats every matter with the care and due diligence that it deserves,” the spokesperson said in a Feb. 17 email. “These cases don’t always follow a set schedule, and we finalize cases when they’re ready and when we have all the facts and documentation necessary to draw the appropriate conclusion and finding.” The agency in 2019 settled 26 cases worth nearly $1.3 billion, compared with 16 cases totaling $23 million in 2020 (see 2102120061).
The European Union won’t hesitate to push back on U.S. extraterritorial sanctions but wants to work more closely with the Biden administration on sanctions programs to ease compliance burdens for EU companies, a top EU official said. “There is no better way to protect against extraterritorial sanctions than to align sanctions implementation with partners like the United States,” said Mairead McGuinness, an EU commissioner overseeing financial markets.
Sen. Tom Cotton, one of the most prominent China hawks in Congress, thinks that the Bureau of Industry and Security is buried within an organization “hostile to the aggressive use of export controls,” and so it should be moved from the Commerce Department to the State Department, because, he says, that department puts national security first. Cotton, who has published a lengthy report on what he calls the economic long war with China, discussed his views during an online program at the Reagan Presidential Foundation on Feb. 18.
The Office of Foreign Assets Control deleted several designations, revoked five general licenses and removed three frequently asked questions from its website to reflect the State Department’s decision last week to revoke the terrorist designation of Ansarallah (see 2102100016). The changes, which took effect Feb. 16, rescinded several general licenses that authorized humanitarian-related trade and other transactions with Yemen and Ansarallah, the Iran-backed Houthi movement (see 2101250043 and 2101190016). OFAC clarified that U.S. people and companies no longer require OFAC authorization “to engage in transactions or activities with Ansarallah, provided such activities do not involve blocked persons or otherwise prohibited activities.”
In one of its first major decisions to reverse Trump administration-imposed sanctions, the State Department will revoke its terrorism designation of Ansarallah Feb. 16. The move, which reverses the designation of the Yemen-based group also known as Houthis as a Foreign Terrorist Organization, came after the State Department said it was reviewing the humanitarian implications of the designations. The Treasury Department's Office of Foreign Assets Control in January issued several general licenses and frequently asked questions to clarify that the sanctions wouldn't impact humanitarian exports to Yemen, including those sent by international organizations (see 2101190016 and 2101250043), but the State Department said the designation could still hamper some aid delivery.
Although the Treasury’s Office of Foreign Assets Control saw a decrease in total sanctions settlements last year, the agency increased its output of sanctions guidance and advisories, shedding more light on OFAC’s compliance expectations, sanctions lawyers said. Lawyers also said the agency flexed its enforcement jurisdiction by pursuing penalties against a variety of industries beyond large commercial banks, a trend that should continue this year.