Women At The Helm
The sanctions landscape continues to evolve with a number of executive orders issued by the Biden Administration throughout the second quarter of 2021.
As we progress through 2021, the sanctions landscape continues to evolve. In this publication, we discuss Executive Orders (E.O.) issued by the Biden administration, enforcement actions administered by the Office of Foreign Assets Control ("OFAC") and emerging trends in the sanctions environment which occurred during the second quarter of 2021.
Economic sanctions have been and continue to be part of United States foreign policy and often used to enforce pressure on actors engaged in misaligned activities and the Biden administration is committed to ensuring the protection of the U.S. economic policy, promoting accountability for human rights abuses and deter cyber attacks against the U.S.
The United States Treasury imposed sweeping new sanctions on Russia; sovereign debt prohibitions and designation of Russian entities in the technology sector, in response to its threat to national security and malicious cyber activities
Pursuant to E.O. 14024 “Blocking Property With Respect To Specified Harmful Foreign Activities of the Government of the Russian Federation”, issued on April 15th, 2021, US financial institutions are restricted from participating in the primary market for ruble or non-ruble denominated bonds issued after June 14, 2021 by the Central Bank of the Russian Federation and other Russian government agencies and lending ruble or non-ruble denominated funds.
Russian state owned entities, ERA Technopolis; Pasit, AO (Pasit); Federal State Autonomous Scientific Establishment Scientific Research Institute Specialized Security Computing Devices and Automation (SVA); Neobit, OOO (Neobit); Advanced System Technology, AO (AST); and Pozitiv Teknolodzhiz, AO (Positive Technologies), have been designated by OFAC for engaging in malicious cyber activities against the government systems, the US, including the 2020 SolarWinds attack and the deployment of chemical weapons on Russian journalists and civilians who criticize the regime.
Further, all property and provision of goods or services to parties designated under this executive order are blocked and restricted and must be reported to OFAC.
OFAC sanctions two Burmese state-owned enterprises, targeting key funding channels of the Burmese military regime
Myanma Timber Enterprise (MTE) and Myanmar Pearl Enterprise (MPE) responsible for timber and pearl exports on behalf of the Burmese military regime, have been sanctioned by OFAC pursuant to E.O. 14014, “Blocking Property With Respect to the Situation in Burma,” for being a political subdivision, agency, or instrumentality of the Government of Burma. This decision further enforces pressure on the Burmese military to discontinue its acts of ongoing violence against the people of Burma.
US sanctions Guatemalan officials involved in corruption and human rights violations
Gustavo Adolfo Alejos Cambara (“Cambara”), the former Chief of Staff for the Alvaro Colom presidential administration, and Felipe Alejos Lorenzana (“Lorenzana”), an elected delegate to the Congress of the Republic of Guatemala along with family members, were sanctioned by OFAC pursuant to the Global Magnitsky Human Rights Accountability Act (E.O.) 13818, due to corruption and human rights abuses. In February 2020, investigations by the Guatemalan Attorney General’s Office revealed Cambara was involved in making payments to congressional representatives and judges on the Supreme Court of Justice (“CSJ”) to influence members of the judicial system’s ruling on his release from prison and protect Lorenzana from legal penalties due to corrupt activities. Corruption and human rights abuses undermine the stability of the US and international economic systems, as such the US continues to impose significant consequences on participants engaged in corruption and human rights abuses.
OFAC announced sanctions against a significant Mexican narcotics trafficker pursuant to the Foreign Narcotics Kingpin Designation Act
One of the Cartel de Jalisco Nueva Generacion’s (CJNG) regional commanders in control, Flores Silva, who trafficked massive amounts of opioids and cocaine, was sanctioned by OFAC. This collaborative work with the Department of Justice and the Los Angeles Drug Enforcement Administration marks OFAC’s fourteenth action against CJNG for international narcotics trafficking. Following the action, the U.S. Department of State’s Narcotics Rewards Program also announced a reward offer of up to $5 million for information leading to the arrest or conviction of Flores Silva. These measures demonstrate ongoing aggressive efforts from OFAC, alongside their Federal partners, to safeguard communities from the surging violent crimes.
US sanctions Abid Ali Khan and the Abid Ali Khan Transnational Criminal Organization (TCO) for facilitating unlawful smuggling of foreign nationals into the United States
Pakistani national Abid Ali Khan was sanctioned by OFAC along with his network, the Abid Ali Khan Transnational Criminal Organisation (TCO) pursuant to Executive Order (E.O.) 13581, “Blocking Property of Transnational Criminal Organizations.” Khan and members of his TCO have been operating a global network of human smugglers that are responsible for the international smuggling of migrants into the United States. Additionally, OFAC designated Redi Hussein Khal Gul, Khan’s secretary; Shakeel Karim, who coordinated travel for migrants via Friends Travel Inn PVT LTD; and Mohammed Choudry Ikram Waraich, Khan’s contact in the Middle East.
OFAC sanctions members of Burma’s military regime and family members
The State Administrative Council (SAC), an agency of the Burmese military which was used to facilitate the Military’s coup in February, along with government and military personnels have been sanctioned by OFAC due to the continued repression and human rights violations conducted against the people of Burma. The prohibition, established under E.O 14014, “Blocking Property With Respect to the Situation in Burma”, include restrictions members of the Burmese military, persons engaged in trade in the defense sector, materially participate or support actions to undermine the democracy and stability in Burma, demonstrates the US continued pressure to ensure democracy is restored in Burma.
US and Allies impose sanctions on Belarus due to the Lukashenko government's forced landing of a Ryanair flight
In a coordinated effort, the US, Canada, European Union and the United Kingdom imposed additional sanctions on Belarus due to the May 23rd forced landing of a commercial Ryanair flight and the politically motivated arrest of journalist Raman Pratasevich and his companion Sofia Sapega. Sixteen individuals and five entities have been designated by OFAC subject to visa bans and other restrictions due to continued human rights abuses, the undermining of freedom and democracy of the Belarusian nation.
U.S. places sanctions on three Bulgarian individuals for their extensive roles in corruption in Bulgaria
OFAC announced sanctions against three Bulgarian individuals for their extensive roles in corruption in Bulgaria, as well as 64 entities said to be linked to them . This action targets Vassil Kroumov Bojkov, a prominent Bulgarian businessman and oligarch; Delyan Slavchev Peevski, a former Member of Parliament; Ilko Dimitrov Zhelyazkov, the former Deputy Chief of the Bulgarian State Agency for Technical Operations. The sanctions were authorized under E.O 13818, and constitute the largest Global Magnitsky action taken on a single day in the history of the program, targeting over 65 individuals and entities for their significant acts of corruption in Bulgaria.
OFAC sanctions network connected to Houthi aggression and instability in Yemen
Members of a smuggling network that helps fund Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and the Houthis in Yemen have been sanctioned by OFAC. The network is led by Iran-based Houthi financier Sa’id al-Jamal and generates tens of millions of dollars in revenue from the sale of commodities, like Iranian petroleum, a significant portion of which is then directed through a complex network of intermediaries and exchange houses in multiple countries to the Houthis in Yemen.
Additional sanctions on Russia are expected in response to the poisoning of Aleksei A. Navalny
The Biden administration is expected to impose additional sanctions on Russia for the poisoning and imprisonment of Aleksei A. Navalny. The US maintains a firm stance against the use of chemical weapons by state and non-state actors and has promised severe consequences for Russia for the mistreatment of Navalny.
US and Iran discuss lifting of sanctions and return to the Joint Comprehensive Plan of Action
The US and Iran have participated in various meetings as talks continue in Vienna in order to establish a path toward mutual agreement between the two nations. While the US is committed toward easing sanctions on Iran, to restore the 2015 Joint Comprehensive Plan of Action (JCPOA) and ultimately ease sanctions on the country’s oil sales in return for nuclear cooperation, Iran demands the lifting of sanctions before an agreement is made. Sanctions on Iran have created significant economic pressures on Iran’s economy. While talks have been put on hold until Iran’s president elect Ebrahim Raisi is sworn into office in August, there is an expectation that under Iran’s new government there will be mutual agreement.
SAP SE (“SAP”) entered into a settlement of $2,132,174 with OFAC due to potential civil liability for 190 apparent violations of the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560. SAP engaged in the export, report and sale of software services from the US facilitated through third parties to Iranian entities and employees in Iran. While SAP is a German software company, due to the US nexus, the services were conducted in violation of Iran sanctions. However, SAP voluntarily disclosed the violations and received a lesser penalty by OFAC.
Alliance Steel, Inc. (“Alliance”), a designer and manufacturer of prefabricated steel structures based in Oklahoma City, Oklahoma, has agreed to pay $435,003 to settle its potential civil liability for 61 apparent violations of OFAC regulations related to its importation of engineering services from an Iranian engineering company. Alliance harmed the objectives of the Iran sanctions program by maintaining an ongoing business relationship with an Iranian company for over at least five years that conferred more than $1 million in benefits to Iran.
US sanctions regulations can be complex, and third party sanctions risk and violations can incur significant penalties. OFAC expects all companies, whether operating in the US, internationally or engaging in activities with non-US companies, to operate in compliance with OFAC sanctions regulations. It is imperative for organizations to establish robust sanctions programs, implement the necessary controls to mitigate regulatory and reputational risks and monetary penalties. Sia Partners has the sanctions subject matter expertise to assess sanctions exposure, help financial institutions manage sanctions risks and align day to day operations with regulatory requirements.
Executive Orders:14024, 14014, 13818, 13581
US Department of the Treasury-OFAC
Treasury Sanctions Current and Former Guatemalan Officials for Engaging in Corrupt Activities
Treasury Sanctions Regional Commander of Mexico’s CJNG in Coordination with Justice and State Actions
Treasury Sanctions Pakistan-based Transnational Human Smuggling Organization Involved in Smuggling Migrants to the United States
Treasury Sanctions Influential Bulgarian Individuals and Their Expansive Networks for Engaging in Corruption
Treasury Sanctions Network Financing Houthi Aggression and Instability in Yemen
Settlement Agreement between the U.S. Department of the Treasury’s Office of Foreign Assets Control and Alliance Steel, Inc.
Settlement Agreements between the U.S. Department of the Treasury’s Office of Foreign Assets Control and MoneyGram Payment Systems, Inc., and SAP SE
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