It is evident now that the U.S. government officials charged with implementing U.S. sanctions policies remain hard at work, even while they are confined at homes during the COVID-19 pandemic. In June alone, the Office of Foreign Assets Control (“OFAC”) in the Department of the Treasury has acted 6 times to make new designations, amend, and remove designations under its sanctions programs on Iran, Syria, and Venezuela. These actions, among others, can be found on OFAC Recent Actions page.
On one hand, there is nothing very remarkable about OFAC’s tinkering with its Specially Designated Nationals (“SDN”) list, adding some parties here, amending entries, and sometimes removing some parties there. This is a routine activity for OFAC, and as long as your organization conducts restricted party screening using the U.S. government’s Consolidated Screening List, or, better yet, one of the many commercial solutions, that screening process should capture all the changes to the SDN list.
What is worth noting, though, is that a substantial portion of the individuals and entities designated by OFAC through these actions, are not in Iran, Syria, or Venezuela. In fact, the SDN parties hail from places as diverse as the United Kingdom, Germany, Greece, Malta, Liberia, India, Hong Kong, China, Singapore, Lebanon, United Arab Emirates, Qatar, Panama, Bahamas, Marshall Islands, Mexico, Canada, and . . . (drum roll), the United States of America.
(Another notable thing is that on June 17, 2020, OFAC designated as SDNs Bashar Al-Assad, President of Syria, and his family members. Though, arguably, these designations are well-deserved, it is highly unusual, as a matter of diplomacy, to designate a current head of a sovereign state.)
What is the significance of the fact that OFAC sanctions targeting Iran, Syria, and Venezuela are resulting in SDN designations in 18 other countries? Remember, also, that under OFAC’s so-called “50 percent rule,” U.S. persons (and, under some sanction programs, also their non-U.S. affiliates) are prohibited from dealing not only with the specifically-designated parties, but also with unlisted entities that are 50 percent or more owned by one or more designated parties.
I think the important takeaway from this is that you do not need to be doing business in Iran, Syria, and Venezuela, or even in the vicinity of these countries, to run afoul of OFAC sanctions. Almost any enterprise engaged in transnational business runs some risk of violating OFAC sanctions (and then there are the UN, EU, UK, Japanese, and other sanctions programs). Of course, not all international businesses have equally high risks. But, that is why OFAC and other sanctions enforcement authorities expect that companies engaging in business internationally maintain a risk-based sanctions compliance program. I have discussed OFAC’s expectations for sanctions compliance program earlier in this blog post.