Archive for the ‘OFAC’ Category

Dec

24

Reduced Sleigh Team Jeopardizes Christmas in the United States

Posted by at 9:56 am on December 24, 2018
Category: Cuba Sanctions • OFAC
Santa Flanked by F-16

BREAKING NEWS: North Pole spokeself Mr. Elf E. McElfface contacted Export Law Blog with unsettling information. Apparently Donner and Blitzen are under the weather meaning that Santa will have to make his annual Christmas Eve run with six reindeer instead of his normal complement of eight. As readers will recall from the Press Release posted below back in 2016, OFAC’s rules were amended to permit Santa to visit both the United States and Cuba, provided that he went to Cuba first and only gave Cuban children EAR99 gifts. Otherwise, he would be landing in the United States with a sleigh containing toys in which Cuban children had an interest in violation of section 515.207(b) which was not waived by section 515.550(b).

Santa is concerned that requiring the reindeer to fly over the United States from the North Pole to Cuba and then back to the United States will unduly strain the six reindeer that will be making the run. Mr. McElfface pointed out that none of us, including the reindeer who are somewhere around three hundred years old (except for Rudolph who is 262 years old), are getting any younger. So, although Santa and the six healthy reindeer will do their best under these constraints, children in the United States should be prepared that this year there may be nothing (not even a lump of coal) under the tree for them. A GoFundMe campaign is in the works to purchase several tons of coal to be delivered to OFAC should any U.S. children be impacted by OFAC’s Cuba First rules for Santa.

FOR IMMEDIATE RELEASE
MEDIA CONTACT: Elf E. McElfface, [email protected] or (951) 262-3062

Santa’s Village, North Pole – Santa Claus today, on behalf of himself, Mrs. Claus and the 40,000 elfployees of the Santa Foundation, expressed his gratitude to the Office of Foreign Assets Control for its timely revision of its rules to grant Santa clear authority this year to visit children both in the United States and Cuba. For years, Santa’s efforts to bring holiday cheer to children of both countries has been thwarted by section 515.207 of the Cuba regulations which would prohibit Santa’s sleigh from landing in the United States while toys for Cuban children remained in the sleigh or in landing in the United States if those toys had been delivered to Cuban children first.

Today’s action waives these restrictions if Santa’s sleigh only carries items that would, if they were subject to the EAR, be EAR99 or controlled only for AT reasons. This ends the long struggle over whether teddy bears and other toys — which are not food, medicine, or personal communications devices — could only be delivered to Cuban children in wrapped parcels with the child’s name and address written on the outside and with the statement “GIFT—Export License Not Required” also marked on the parcel package. Notwithstanding the diligence and timely efforts of Santa’s elfployees, compliance with these requirements for each non-naughty child in Cuba has heretofore been impossible.

News of the OFAC announcement led to loud cheers and applause throughout Santa’s Village. Elf E. McElfface, Santa’s spokeself, wiped a tear of joy from his eye as he said to the elves in one of Santa’s workshops that he never believed that this would occur in his lifetime, which was saying a lot given that the average life expectancy of an elf on the North Pole is currently just over 500 years.

As Christmas approaches, Santa said that he was looking forward to this year’s delivery of toys and goodies to the nice children throughout the world more than ever before and reminded children everywhere, both in Cuba and the United States, that they could call his hotline at +1 (951) 262-3062 to leave their Christmas wishes and toy requests.

This press release may include predictions, estimates or other information that might be considered forward-looking. While these forward-looking statements represent the Santa Foundation’s current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this press release. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events.

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Copyright © 2018 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)
Aug

29

Newsweek Gets Confused by OFAC Travel Rules

Posted by at 8:28 am on August 29, 2018
Category: Cuba Sanctions • OFAC

Image via https://pixabay.com/p-1202440/?no_redirect [Public Domain]Last week the State Department changed its travel advisory on Cuba from “reconsider travel” to “exercise increased caution.”  The “reconsider travel” warning was apparently based on the sonic attacks on diplomats in Cuba.  The decision to change to “exercise increased caution” came after the State Department concluded that sonic attacks on private U.S. citizens was unlikely.

Still this business of travel warnings appear to have little, if any, relation to the actual safety of the destination.  There are no warnings about the safety of travel to Belize even though between 2009 and 2016, 16 Americans were murdered in Belize.  That put Belize as the seventh most dangerous country for Americans as measured by its  death rate of 1.02 per 100,000 American tourists.  During that same period, only two people were killed in Cuba giving it a death rate of 0.08 per 100,000 American tourists, approximately 12 times lower than that of Belize.  Of course, given the U.S. homicide rate of  5.3 per 100,000, it’s probably safer to travel to Cuba, or even Belize, than to stay home in the United States.

A number of news sites commented on this change.  But one of them, namely Newsweek, caught my eye when it decided to add this statement about travel to Cuba:

 The only legal way for U.S. citizens to travel there is by applying to the Treasury Department’s Office of Foreign Assets Control for a license under one of 12 categories of travel.

Good grief.  Is Google not working at Newsweek these days?  Those twelve categories mentioned in the quote are for general licenses, you know, the ones that do not require a specific OFAC license application.  In case the Newsweek reporter wanders by and reads this post, here is the link to the OFAC regulation noting that general licenses are available for each of those categories.

So, as you’ve heard before, don’t believe everything you read on the Internet unless, of course, you read it here.

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Copyright © 2018 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)
Jul

25

Tinker, Tailor, Dinner Planner, Spy

Posted by at 3:44 pm on July 25, 2018
Category: Criminal Penalties • FARA • OFAC • Russia Designations • Russia Sanctions

Vladimir Putin via http://en.kremlin.ru/events/president/news/27394 [Fair Use]Prosecutions for violations of the Foreign Agents Registration Act (“FARA”) might kindly be thought of as press ops for prosecutors and catnip for reporters.  And the recent indictment of Maria Butina certainly fits that description:  Spies!  Sex!  Twitter exchanges!  Red Sparrow!  A duped “boyfriend”!!!  Sell me the movie rights now.

On the other hand, economic sanctions prosecutions are boring.  Specially Designated Nationals . . . yawn.  The International Emergency Economic Powers Act . . . big yawn.

But the, ahem, sex appeal of a FARA case as opposed to an IEEPA case may well be a possible explanation for why Butina was indicted under FARA rather than under IEEPA for having performed services in the United States on behalf of a Russian SDN.  It seems to me that the FARA case has some significant difficulties whereas the IEEPA case approaches being a slam dunk.

To simplify matters somewhat, to prosecute Butina for failing to register as a foreign agent, the government needs to prove that she engaged in political activities on behalf of a foreign person in the United States.   The Act defines “political activities” as

any activity that the person engaging in believes will, or that the person intends to, in any way influence any agency or official of the Government of the United States or any section of the public within the United States with reference to formulating, adopting, or changing the domestic or foreign policies of the United States or with reference to the political or public interests, policies, or relations of a government of a foreign country or a foreign political party.

But the affidavit in support of the criminal complaint against Butina, which provides the most detailed statement of the government’s case, summarizes Butina’s activities in the United States as follows:

BUTINA’s efforts in the United States to promote the political interests of the Russian Federation were diverse and multifaceted, including BUTINA’s efforts to organize a series of”friendship and dialogue” dinners, some of which are believed to have taken place in the District of Columbia, as well as BUTINA’s attendance at two National Prayer Breakfasts in the District of Columbia.

It certainly seems to me that going to two prayer breakfasts and arranging dinners probably don’t constitute “political activities.”  But perhaps the government thinks that if it can put a Russian in the dock and yell “Spy!” enough times, the jury won’t be bothered with such legal niceties as the proper outlines of “political activities” under the law.

On the other hand, the criminal complaint provides detailed information on Butina’s interactions with her handler in Moscow, who was not named, but is almost certainly Alexander Torshin.  Torshin was placed on OFAC’s SDN List on April 6, 2018.  To prove a violation of the Ukraine sanctions, it would only be necessary to show that Butina provided  “funds, goods, or services by, to, or for the benefit of” Torshin.  The definition of providing services is, of course, significantly broader than the definition of “political activities” in FARA.

Now although the actions in the criminal complaint pre-date Torshin’s designation in April 2018, there is no reason to believe that Butina was not continuing to act on Torshin’s behalf after his designation.   The complaint details actions by Butina in cooperation with Torshin as late February 8, 2017. Of course, there is a chance that government has no evidence after the designation or has reasons not to reveal such evidence, but I still think that a sanctions case, if there were services performed after April 6, 2018, would be a much easier case to win.

 

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Copyright © 2018 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)
Jul

11

Aspirin and Terrorism in Sudan

Posted by at 5:41 pm on July 11, 2018
Category: OFAC • Sudan • TSRA

Meroe (49) by joepyrek [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/dD4ue9 [cropped]In October 2017, OFAC started down the long and winding road of eliminating the sanctions on Sudan. As we noted in a post then, OFAC — rather oddly — did not just get rid of the Sudanese Sanctions Regulations but simply made effective section 538.540(a) which was a general license to do everything prohibited by the SSR. It also made effective section 538.540(b), which was a general license to export agricultural commodities, medicine and medical devices for one-year after signing a contract for the export of such goods.

Finally, a few days ago on June 29, OFAC took the momentous step of repealing the Sudan Sanctions Regulations in their entirety. Nothing in the Federal Register notice repealing the SSR indicates what had occurred since October 2017 that meant now — as opposed to last October — was a propitious time to repeal the SSR. But, as they say, better late than never.

In addition, the latest Federal Register notice moved the general license in section 538.540(b) for agricultural commodities, medicine and medical devices from the now defunct SSR to section 596.506 of the Terrorism List Governments Sanctions Regulations. This, of course, results in an odd situation where, due to the repeal of the SSR, you can send any and all EAR99 items to Sudan without needing to comply with a general license but aspirin requires you to comply with the terms of a general license.

This is the result of section 906(a)(1) of the Trade Sanctions Reform and Export Enhancement Act of 2000 (“TSRA”) which says that agricultural commodities, medicine and medical devices could only be exported to state sponsors of terrorism pursuant to a 1-year license. Of course, there is no way that Congress intended to impose more stringent controls on aspirin and tongue depressors than other EAR99 items like shoes (which can be made into bombs) and razor blades. The idea of TSRA was that where the President had comprehensively sanctioned a country, broader humanitarian reason would prohibit him or her from restricting exports of aspirin, tongue depressors and apples to the country. If the country was a state sponsor of terrorism then a license would be required. But there is no indication that Congress meant for section 906 to apply the license requirement to food and medicine when all other sanctions had been lifted. Not even Congress, well, not even most of Congress could imagine that aspirin is more useful to terrorists than shoes and razor blades.

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Copyright © 2018 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)
Jun

15

DOJ Limits What Lawyers Can Say to OFAC without Registering as a Foreign Agent

Posted by at 5:37 pm on June 15, 2018
Category: FARA • OFAC

By Another Believer [CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)], via https://commons.wikimedia.org/wiki/File:Department_of_Justice,_Washington,_D.C._2012.JPG [cropped and processed]Now that DOJ has started more actively prosecuting FARA violations, it decided to upload to its website a bunch of advisory opinions that apparently had been languishing in a file cabinet somewhere in the depths of Main Justice. Whether or not this is good news remains to be seen, but at least one of the advisory opinions given to a law firm handling a matter before the Office of Foreign Assets Control (“OFAC”) is more than a little troubling.

The advisory opinion responded to a request by an unnamed law firm that was representing an unnamed foreign company and an unnamed foreign individual in connection with the potential designation and blocking of the company and individual by OFAC. The opinion notes, rightly, that a law firm acting on behalf of a foreign company or a foreign individual would be an “agent of a foreign principal” (or as some newspaper reporters like to say, a “spy”) under section 1(c) of the Foreign Agents Registration Act of 1938, 22 U.S.C. § 611(c) and would be required to register under that act unless an exemption applies.

The discussion in the opinion then turns to the exemption in section 613(g) for “persons qualified to practice law.” That exemption expressly excludes, as the advisory opinion notes,

attempts to influence or persuade agency personnel or officials other than in the course of judicial proceedings, criminal or civil law enforcement inquiries, investigations, or proceedings, or agency proceedings required by statute or regulation to be conducted on the record.

The advisory opinion notes the further qualifications on this exclusion contained in section 5.306 of the FARA regulations, which limits such exclusion of activity outside the described proceedings to “only such attempts to influence or persuade with reference to formulating, adopting, or changing the domestic or foreign policies of the United States.” (Emphasis added.)

Now the ordinary, indeed the only, reading of this is that contacts with agencies outside of the proceedings, inquiries and investigations described in the exemption require registration only if they are designed to influence formulating, adopting or changing the domestic or foreign policies of the United States. But that’s not how DOJ reads it.  Instead, the opinion states that attempts to influence policy will require registration even if those attempts occur during the types proceedings described in the exemption.

[T]he two primary activities you described in your letter, first [US law firm]’s representation with respect to any investigation or enforcement proceedings undertaken by the Department of Justice or another U.S. government agency involving [foreign person] or [foreign bank], and second, [US law firm]’s December 8, 2017, request to OFAC on behalf of [foreign person] and [foreign bank], that OFAC stay designation of [US law firm]’s clients until [US law firm] could present facts to OFAC, fall within the definitions set out within Section [61]3(g) FARA and its implementing regulations. In particular, the limited scope of [US law firm]’s December 8, 2017, letter to OFAC, appears to stop short of an attempt to influence OFAC’s policies regarding its sanctions regime beyond its specific application to [US law firm]’s representation of [foreign person and foreign bank]. If at any point in the future, [US law firm] engages in a discussion or exchange with OFAC that implicates wider policy or political considerations, then it would not be able to avail itself of the exemption and could be required to register.

It is significant here that DOJ starts by saying explicitly that the activities before OFAC by the law firm on behalf of the foreign company and individual are the types proceedings covered by the exemption for lawyers set forth in section 613(g). Even so, it applies the restriction on attempts to influence policy even though section 5.306 only refers to lawyers contacts with agencies outside of the types of proceedings described in section 613(g). It isn’t hard to see the difficulty here. If a law firm argues that its client has not violated any rules that require designation by OFAC, no FARA registration is required. But if the law firm argues, as might often be the case, that even if the client has violated those rules there are policy reasons that the agency should consider in exercising its administrative discretion not to designate the client, FARA registration is required. Even if that is what the act and the regulations say (and they do not), that would be stupid policy. Oops. Wait, do I have to register now???

My guess is that the law firm had an entirely different concern than whatever it was that caused DOJ to jump down the rabbit hole of limiting policy arguments. Although DOJ readily conceded that the proceeding in front of OFAC was one of the types of proceedings described in section 613(g), that really is a rather difficult question. The language in 613(g) could be read to cover agency proceedings only if they are required to be “on the record.”

Nothing in the International Emergency Economic Powers Act or OFAC regulations require the determination to designate a foreign company or individual to be conducted “on the record.” Not even the rules in section 501.807 for setting aside a designation require these proceedings to be “on the record.” This is probably what prompted the law firm’s inquiry in the first place since it was attempting to influence the agency’s determination to designate its clients. a proceeding that was not arguably required to be “on the record.”  It seems DOJ here says, albeit indirectly, that the proceedings to designate were one of the type of proceedings described in the exemption for lawyers representing foreign clients and that, by implication, the exemption for lawyers covers agency proceedings that are not on the record.  But having said that, DOJ went on and, in violation of both the statute and the rules, imposed a troublesome limitation on what lawyers can do in those proceedings without registering as a foreign agent.

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Copyright © 2018 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

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