Morgan Lewis US and Russia Sanctions Update
US Direct Sanctions - SDNS (cont'd)
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OFAC "Guidance on the Provision of Certain Services..." of 12 Jan. 2017 (and FAQs 495-499)
Provides some clarity as to what a US person (citizen or permanent resident) legal counsel (in-house or outside) or compliance
officer can/can't do in advising a non-US company (employer, client) on the legality of proposed transactions under the US
sanctions laws
Essential point: can advise on whether complies / violates (and approve if clearly complies ... e.g., upon OFAC authorization);
but can't otherwise "facilitate" a violative transaction... by voting at Board level, signing, etc.
Indeed, as a general matter, "facilitation" (re a US person's direct or indirect participation in a non-US person's sanctions-
relevant activity - involving not only SDNS but also SSIs) is a complex, case-by-case determination requiring careful factual
analysis to determine whether any such US person's actions may be viewed as facilitating prohibited transactions or activities
And OFAC general (some Russia-related, others not) 2019-21 releases of note
See slides 9 and 45 for OFAC settlement agreements announcements re US companies' dealings with Crimea
Oct. 2020 Settlement Agreement with a leading US private equity firm (trade with Iran) - see slide 32 above
9 Sept. 2020 OFAC Settlement Agreement with a US affiliate of a leading European bank for processing various USD payments
involving two SDN-designated entities under the Russia sanctions program: the bank's diligence lapses are highlighted
Sept. 2019 OFAC Settlement Agreement with British Arab Commercial Bank (BACB):
London-based bank, having no US offices, business, or presence, was found to have violated the Sudan sanctions regs by processing
many USD funding transactions for sanctioned Sudanese financial institutions that involved a nostro account at a non-US bank but
also indirectly involved funds flows to or through the US financial system
OFAC found that BACB "ignored warning signs that reasonably should have put the bank on notice" of violative conduct (as
elaborated in the settlement announcement)
FAQS 819-820 of Feb. 2020 on amendments to OFAC's Reporting, Procedures and Penalties Regulations (RPRR)
clarifying that both US persons and persons otherwise subject to US jurisdiction (e.g., foreign banks handling USD transactions) are
required to report to OFAC on a rejected transaction within 10 business days, and elaborating on the info required to be
collected/submitted
see the underlying RPRR amendments of June 2019 (re blocking, unblocking, and rejected transactions reporting, and licensing
procedures, etc.)
Framework for OFAC Compliance Commitments of May 2019 (including indication of OFAC intent to focus more on
enforcement against responsible executives of companies, US as well as non-US, that have violated sanctions)
And see May 2020 Guidance for shipping industry etc.
Morgan Lewis
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