Archive for the ‘OFAC’ Category

Jul

16

One More List To Check . . . And Counting

Posted by at 8:10 pm on July 16, 2014
Category: OFAC • Russia Designations

Rosneft Moscow Headquarters http://www.rosneft.com/news/photogallery/About_Rosneft/3/ [Fair Use]
ABOVE: Rosneft Headquarters
Moscow

UPDATED (7/17/14):  Post corrected below to indicate that not every entity on the SSIL is subject to the “new equity” prohibition.

Treasury today announced new Russia/Ukraine sanctions. All the sanctioned entities are listed at the end of this post.

Of particular significance is that today’s sanctions include s new list to check. Yes, that’s right. There’s a brand new list at OFAC, which will be called the Sectoral Sanctions Identifications List. (Try saying that as fast as you can ten times in a row.)  And I wonder how long before the acronym, the SSIL, becomes simply the SILLY List.

The four entities on the SSIL are not blocked and all transactions with them by United States persons are not forbidden. Instead, certain specific transactions are not permitted as stated on the list itself, although the precise scope of these restrictions is not carefully defined. The list indicates that U.S. persons and persons in the United States are prohibited from “transacting in, providing financing for, or otherwise dealing in new debt of longer than 90 days maturity” with the listed persons. For some of the entities on the list, the prohibition also extends to dealing in “new equity” for those entities.  Needless to say, lawyers in Washington are going to be very busy for quite some time trying to figure out what sorts of transactions constituted “new equity.”

Here are the new listings:

Specially Designated Nationals List Update

In addition, the following individuals have been added to OFAC’s SDN List:

BESEDA, Sergey (a.k.a. BESEDA, Sergei; a.k.a. BESEDA, Sergei Orestovoch); DOB 1954; Commander of the Fifth Service of the FSB; Commander of the Service for Operational Information and International Communications of the FSB; FSB Colonel General; Colonel-General (individual) [UKRAINE2].

BORODAI, Aleksandr (a.k.a. BORODAI, Alexander); DOB 25 Jul 1972; nationality Russia (individual) [UKRAINE].

NEVEROV, Sergei Ivanovich (a.k.a. NEVEROV, Sergei; a.k.a. NEVEROV, Sergey); DOB 21 Dec 1961; POB Tashtagol, Russia; Deputy Chairman of the State Duma of the Russian Federation; Member of the State Duma Committee on Housing Policy and Housing and Communal Services (individual) [UKRAINE2].

SAVELYEV, Oleg Genrikhovich; DOB 27 Oct 1965; POB St. Petersburg, Russia; Minister for Crimean Affairs (individual) [UKRAINE2].

SHCHEGOLEV, Igor (a.k.a. SHCHYOGOLEV, Igor Olegovich); DOB 10 Nov 1965; POB Vinnitsa, Ukraine; alt. POB Vinnytsia, Ukraine; Aide to the President of the Russian Federation (individual) [UKRAINE2].

The following entities have been added to OFAC’s SDN List:

DONETSK PEOPLE’S REPUBLIC, Donetsk Region, Ukraine [UKRAINE].

FEDERAL STATE UNITARY ENTERPRISE STATE RESEARCH AND PRODUCTION ENTERPRISE BAZALT (a.k.a. FEDERAL STATE UNITARY ENTERPRISE, STATE RESEARCH AND PRODUCTION ENTERPRISE BAZALT; a.k.a. FSUE SRPE BAZALT; a.k.a. STATE RESEARCH AND PRODUCTION ENTERPRISE BAZALT), 32 Velyaminovskaya, Moscow 105318, Russia; Website www.bazalt.ru; Email Address [email protected] [UKRAINE2].

FEODOSIYA ENTERPRISE (a.k.a. FEODOSIA OIL PRODUCTS SUPPLY CO.; a.k.a. FEODOSIYA ENTERPRISE ON PROVIDING OIL PRODUCTS; a.k.a. FEODOSIYSKE COMPANY FOR THE OIL; a.k.a. THEODOSIYA OIL TERMINAL), Feodosiya, Geologicheskaya str. 2, Crimea 98107, Ukraine; Feodosia, Str. Geological 2, Crimea 98107, Ukraine [UKRAINE].

JOINT STOCK COMPANY CONCERN RADIO-ELECTRONIC TECHNOLOGIES (a.k.a. CONCERN RADIO-ELECTRONIC TECHNOLOGIES; a.k.a. “KRET”), 20/1 Korp. 1 ul. Goncharnaya, Moscow 109240, Russia; Website http://www.kret.com; Registration ID 1097746084666 [UKRAINE2].

JOINT STOCK COMPANY CONCERN SOZVEZDIE (a.k.a. JSC CONCERN SOZVEZDIE), 14 Plekhanovskaya Street, Voronezh, Russia; 14 ul. Plekhanovskaya, Voronezh, Voronezhskaya obl. 394018, Russia; Registration ID 1053600445337 [UKRAINE2].

JOINT STOCK COMPANY MILITARY-INDUSTRIAL CORPORATION NPO MASHINOSTROYENIA (a.k.a. JOINT STOCK COMPANY MILITARY INDUSTRIAL CONSORTIUM NPO MASHINOSTROYENIA; a.k.a. JSC MIC NPO MASHINOSTROYENIA; a.k.a. MIC NPO MASHINOSTROYENIA JSC; a.k.a. MIC NPO MASHINOSTROYENIYA JSC; a.k.a. MILITARY INDUSTRIAL CORPORATION NPO MASHINOSTROENIA OAO; a.k.a. OPEN JOINT STOCK COMPANY MILITARY INDUSTRIAL CORPORATION SCIENTIFIC AND PRODUCTION MACHINE BUILDING ASSOCIATION; a.k.a. VOENNO-PROMYSHLENNAYA KORPORATSIYA NAUCHNO-PROIZVODSTVENNOE OBEDINENIE MASHINOSTROENIYA OAO; a.k.a. VPK NPO MASHINOSTROENIYA), 33, Gagarina St., Reutov-town, Moscow Region 143966, Russia; 33 Gagarin Street, Reutov, Moscow Region 143966, Russia; 33 Gagarina ul., Reutov, Moskovskaya obl 143966, Russia; Website www.npomash.ru; Email Address [email protected]; alt. Email Address [email protected]; Registration ID 1075012001492 (Russia); Tax ID No. 5012039795 (Russia); Government Gazette Number 07501739 (Russia) [UKRAINE2].

JOINT-STOCK COMPANY CONCERN ALMAZ-ANTEY (a.k.a. ALMAZ-ANTEY CORP; a.k.a. ALMAZ-ANTEY DEFENSE CORPORATION; a.k.a. ALMAZ-ANTEY JSC; f.k.a. OTKRYTOE AKTSIONERNOE OBSHCHESTVO KONTSERN PVO ALMAZ ANTEI), 41 ul.Vereiskaya, Moscow 121471, Russia; Website almaz-antey.ru; Email Address [email protected] [UKRAINE2].

KALASHNIKOV CONCERN (a.k.a. CONCERN KALASHNIKOV; a.k.a. IZHEVSKIY MASHINOSTROITEL’NYI ZAVOD OAO; f.k.a. IZHMASH R&D CENTER; f.k.a. JSC NPO IZHMASH; f.k.a. NPO IZHMASH OAO; a.k.a. OJSC CONCERN KALASHNIKOV; f.k.a. OJSC IZHMASH; f.k.a. SCIENTIFIC PRODUCTION ASSOCIATION IZHMASH JOINT STOCK COMPANY), 3, Derjabin Pr., Izhevsk, Udmurt Republic 426006, Russia; Registration ID 1111832003018 [UKRAINE2].

KONSTRUKTORSKOE BYURO PRIBOROSTROENIYA OTKRYTOE AKTSIONERNOE OBSHCHESTVO (a.k.a. INSTRUMENT DESIGN BUREAU; a.k.a. JSC KBP INSTRUMENT DESIGN BUREAU; a.k.a. KBP INSTRUMENT DESIGN BUREAU; a.k.a. KBP INSTRUMENT DESIGN BUREAU JOINT STOCK COMPANY; a.k.a. “KBP OAO”), 59 Shcheglovskaya Zaseka ul., Tula 300001, Russia; Website www.kbptula.ru; Email Address [email protected]; Registration ID 1117154036911 (Russia); Government Gazette Number 07515747 (Russia) [UKRAINE2].

LUHANSK PEOPLE’S REPUBLIC (a.k.a. LUGANSK PEOPLE’S REPUBLIC; a.k.a. PEOPLE’S REPUBLIC OF LUHANSK), Luhansk Region, Ukraine [UKRAINE].

URALVAGONZAVOD (a.k.a. NAUCHNO-PROIZVODSTVENNAYA KORPORATSIYA URALVAGONZAVOD OAO; a.k.a. NPK URALVAGONZAVOD; a.k.a. NPK URALVAGONZAVOD OAO; a.k.a. OJSC RESEARCH AND PRODUCTION CORPORATION URALVAGONZAVOD; a.k.a. RESEARCH AND PRODUCTION CORPORATION URALVAGONZAVOD; a.k.a. RESEARCH AND PRODUCTION CORPORATION URALVAGONZAVOD OAO; a.k.a. URALVAGONZAVOD CORPORATION; a.k.a. “UVZ”), 28, Vostochnoye shosse, Nizhni Tagil, Sverdlovsk region 622007, Russia; 28 Vostochnoe shosse, Nizhni Tagil, Sverdlovskaya oblast 622007, Russia; 40, Bolshaya Yakimanka Street, Moscow 119049, Russia; Vistochnoye Shosse, 28, Nizhny Tagil 622007, Russia; Website http://www.uvz.ru/; alt. Website http://uralvagonzavod.com/; Email Address [email protected] [UKRAINE2].

Sectoral Sanctions Identifications List Update

The following entities have been added to OFAC’s Sectoral Sanctions Identifications List:

GAZPROMBANK OAO (a.k.a. GAZPROMBANK GAS INDUSTRY OJSC; a.k.a. GAZPROMBANK OJSC; a.k.a. GAZPROMBANK OPEN JOINT STOCK COMPANY; a.k.a. GAZPROMBANK OTKRYTOE AKTSIONERNOE OBSHCHESTVO; a.k.a. GPB, OAO; a.k.a. GPB, OJSC), 16, Building 1, Nametkina St., Moscow 117420, Russia; 63, Novocheremushkinskaya St., Moscow 117418, Russia; SWIFT/BIC GAZPRUMM; Website www.gazprombank.ru; Email Address [email protected]; Registration ID 1027700167110; Tax ID No. 7744001497; Government Gazette Number 09807684 [UKRAINE-EO13662].

OAO NOVATEK (a.k.a. FINANSOVO-INVESTITSIONNAYA KOMPANIYA NOVAFININVEST OAO; a.k.a. NOVATEK), 2, Udaltsova Street, Moscow 119415, Russia; 22 A, Pobedy Street, Tarko-Sale, Yamalo-Nenets Autonomous District 629580, Russia; 22a Pobedy ul., Tarko-Sale, Purovski raion, Tyumenskaya Oblast 629850, Russia; Email Address [email protected]; Registration ID 1026303117642 (Russia); Government Gazette Number 33556474 (Russia) [UKRAINE-EO13662].

OPEN JOINT-STOCK COMPANY ROSNEFT OIL COMPANY (a.k.a. OAO ROSNEFT OIL COMPANY; a.k.a. OIL COMPANY ROSNEFT; a.k.a. OJSC ROSNEFT OIL COMPANY; a.k.a. ROSNEFT; a.k.a. ROSNEFT OIL COMPANY), 26/1 Sofiyskaya Embankment, Moscow 115035, Russia; Website www.rosneft.com; alt. Website www.rosneft.ru; Email Address [email protected]; Registration ID 1027700043502 (Russia); Tax ID No. 7706107510 (Russia); Government Gazette Number 00044428 (Russia) [UKRAINE-EO13662].

VNESHECONOMBANK (a.k.a. BANK FOR DEVELOPMENT AND FOREIGN ECONOMIC AFFAIRS (VNESHECONOMBANK) STATE CORPORATION; a.k.a. BANK RAZVITIYA I VNESHNEEKONOMICHESKOI DEYATELNOSTI (VNESHEKONOMBANK) GOSUDARSTVENNAYA KORPORATSIYA; a.k.a. “VEB”), 9 Akademika Sakharova prospekt, Moscow 107996, Russia; SWIFT/BIC BFEA RU MM; Website http://www.veb.ru; Email Address [email protected]; BIK (RU) 044525060 [UKRAINE-EO13662].

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(No republication, syndication or use permitted without my consent.)
Jul

15

Who Sang First, Kraaipoel or Fokker?

Posted by at 6:36 pm on July 15, 2014
Category: Criminal Penalties • Iran Sanctions • OFAC

Rob KraaipoelBack in the early days of this blog in 2007, we reported on the case of Robert Kraaipoel, a Dutch businessman who was indicted for selling U.S. origin items to Iran, even though Mr. Kraaipoel had never set foot in the United States and even though the sales were completely legal under Dutch law. We challenged the notion that under international law, the U.S. origin of the items was enough of a basis to assert criminal jurisdiction over Mr. Kraaipoel.

In 2009, we reported that Mr. Kraaipoel had voluntarily flown to the United States to face the music. We expressed some surprise that he had done this and expressed even more surprise that the court let him fly back to the Netherlands after a guilty plea. At the time we noted that this was likely because he had agreed to cooperate with the government in indicting other bigger fish.  Indeed, the sentencing memorandum filed by the U.S. Attorney in 2012 cited substantial and extensive cooperation by Mr. Kraaipoel dating back to 2007.  The court ultimately sentenced Mr. Kraaipoel to sixty months of probation and no prison time, no doubt because of Mr. Kraaipoel’s cooperation with U.S. authorities vis-à-vis his dealings with Iran.

Now it appears that one of the companies that got snared by Kraaipoel’s cooperation may have been the Dutch company Fokker Services BV, about which we reported last month.  Fokker agreed to pay $21 million to OFAC and to the DOJ under a deferred prosecution agreement.  Interestingly, Kraaipoel’s role in the Fokker case may derail the deferred prosecution agreement itself.

The federal court judge charged with approving the deferred prosecution agreement was concerned that the agreement for lenient treatment was premised on Fokker’s voluntary disclosure in 2010.  Because Kraaipoel began talking with prosecutors back in 2007, there was some concern, and some sources who told Bloomberg News, that the government knew about Fokker’s misconduct well before the voluntary disclosure, which would, of course, substantially detract from the credit that Fokker should receive for having voluntarily disclosed the matter.

A hearing on the deferred prosecution agreement to resolve these issues is scheduled for July 24.

 

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(No republication, syndication or use permitted without my consent.)
Jul

9

Syrian Oil Supplier Sanctioned; U.S. Companies Still Maintain Its Website

Posted by at 8:23 pm on July 9, 2014
Category: OFAC • Syria

'Syria #1 Donkey, Bashar Assad' by Freedom House https://www.flickr.com/photos/syriafreedom/6731491031/ [CC-BY-2.0 https://creativecommons.org/licenses/by/2.0/]
ABOVE: Bashar al-Assad

The Office of Foreign Assets Control (“OFAC”) today announced that it had added Pangates International Corporation, Ltd. to its list of Specially Designated National and Blocked Persons (the “SDN List”). The designation is based on Pangates having supplied oil to the Assad regime in Syria. As a result of that designation, all property of Pangates in the control of U.S. persons is blocked and all transactions with Pangates by U.S. persons are forbidden.

If you clicked the Pangates link in the previous paragraph, you will have noticed that their rather crude website is still alive and well. And you will have noticed that it was a dotcom domain, meaning it is likely supplied by a U.S. registrar, which it is. Washington-based eNom is listed as the registrar for that domain name, and it is also providing domain name services, meaning that every time you click on Pangates domain name or put its URI in a browser, eNom provides the service to Pangates of directing your traffic to the Pangates website.

On top of that, the Pangates domain name redirects to 198.23.50.69, which is an IP address assigned to LiquidNet US LLC in Pompano Beach, Florida, meaning that LiquidNet in the United States is providing web hosting services to Pangates. This is also prohibited now that OFAC has designated Pangates.

In all fairness, of course, these companies may not yet be aware of the designation or understand its impact, even though the designation specifically lists Pangates’s website in the entry. The question, then, is this: how long do you think the Pangates site will be up and running?

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(No republication, syndication or use permitted without my consent.)
Jul

7

Who Elected Ben Lawsky to Conduct U.S. Foreign Policy?

Posted by at 5:18 pm on July 7, 2014
Category: Iran Sanctions • OFAC

Official Portrait of Ben Lawsky http://www.dfs.ny.gov/about/staff_bios/blawsky.htm [Fair Use]
ABOVE: Ben Lawsky

Of the $8.9 billion fine being paid by BNP Paribas for violations of U.S. sanctions on Cuba, Iran and Sudan, $2.24 billion is going to the State of New York and, specifically, to Ben Lawsky’s Department of Financial Services. All of this will gild Lawsky’s credentials, overstuff the NYDFS’s coffers, and pay for NYDFS’s holiday parties and expensive lunches for eons to come, while not a single cent of this astonishing sum of money being handed over to the New York agency will go to anyone whom the sanctions seek to protect like, say, Sudanese refugees.

The NYDFS consent order justifies this mega-fine, in part, on BNP’s processing of $160 billion in dollar-denominated transactions for Iranian customers. This is the overwhelming bulk of the $190 billion total of dollar-denominated transactions at issue here for all three sanctioned countries. This amount for Iran covers, according to the consent order, the ten-year period between 2002 and 2012. Astute readers will remember, from the NYDFS/Standard Chartered fiasco, that we’ve been here before with NYDFS. Prior to November 2008 — i.e., for most of the period cited by NYDFS — it was perfectly legal for BNP’s NY branch to process off-shore dollar-denominated Iranian transactions under the so-called U-Turn transactions rule.

So, when Lawsky and his crew complain in the consent decree that the failure of BNP to include references to Iran in the legal U-turn transactions “rendered its New York Branch and other New York-based financial institutions helpless to detect payments that should have been rejected or blocked under U.S. law,” they are spouting utter nonsense given that these payments were legal before November 2008 and not required to be rejected or blocked. But Lawsky’s goal is to enrich NYDFS here, not to observe legal niceties like what OFAC’s rules actually said before November 2008.

There are two major problems here. First, NYDFS’s case is completely dependent upon the scope and extent of federal sanctions, because without a federal sanctions violations, none of the record keeping issues are material. And, obviously, the New York state regulators either have no clue, or do not care, as to the actual scope of those sanctions. Second, and more importantly, to the extent that everything is based ultimately on federal sanctions, the enforcement of those sanctions is ultimately a matter of U.S. foreign policy, something that should be in the hands of OFAC, the DOJ and the rest of the federal government and not in the hands of either the State of New York or, worse, the hands of a single New York regulator.

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Jul

2

OFAC Gores Red Bull for Skateboarding in Havana

Posted by and at 6:45 pm on July 2, 2014
Category: Cuba Sanctions • Economic Sanctions • OFAC • Sanctions

Ryan Scheckler Skateboards in Havana via http://www.redbull.com/cs/Satellite/en_INT/Gallery/Ryan-Sheckler-shreds-Cuba-and-Panama-021242761792131#/image-12 [Fair Use]

Last Friday, OFAC announced that Red Bull North America, Inc. (“RBNA” or, when we’re feeling informal, “Red Bull”) agreed to pay $89,775 to settle allegations that “seven representatives” of RBNA traveled to Cuba in order to “film a documentary” in 2009 without OFAC authorization but with the approval of RBNA’s “management.”  RBNA is the U.S. subsidiary of Red Bull GmbH, the Austrian elder statesman of excessively caffeinated energy drinks.  Although OFAC provided no details about the film itself, it is likely a 2009 documentary, described by Red Bull here, which the company made about Ryan Sheckler skateboarding in Havana.  Apparently there is no place left in the world that is safe from skateboarders other than, perhaps, some interior stretches of Antarctica.

Of course, there is a general license for journalistic activities in Cuba, which would seem to cover making documentaries, as opposed to, say, filming Transfomers LVIII: The Final (And We Really, Really Mean It This Time) Apocalypse.  But OFAC’s general license is restricted to “persons regularly employed as journalists by a news reporting organization.”  As we’ve noted before OFAC has not applied this limitation in a consistent fashion, suggesting that Michael Moore wasn’t a journalist but Charlize Theron was. Although Red Bull seems quite active in the documentary business, OFAC apparently viewed them as simply a commercial marketing endeavor in a country where Red Bull is undoubtedly sold.  In fact, judging from the Red Bull Cliff Diving World Series event held in Havana this May, a good amount of Red Bull is being consumed in Cuba.

In considering the penalty amount, OFAC said it determined and took into account that “RBNA did not voluntarily self-disclose” and that “RBNA had prior knowledge of U.S. sanctions on Cuba and took steps to conceal the transactions.”  Of course, we don’t quite understand how you conceal a documentary, particularly where Red Bull posted extensive information about it on the Internet, which is where OFAC likely discovered this transaction. On the other side of the equation, OFAC cited  RBNA’s institution of an OFAC compliance program, no other sanctions violation from 2004 to 2009 and the “non-egregious” nature of the violation.

We have over the past few years called attention to the confusion and lack of information in OFAC’s enforcement action announcements.  Last April, we highlighted what we thought was one of the more egregious “non-egregious” settlements that OFAC has announced.   The latest settlement with RBNA, furthers the confusion by imposing a fine on the low scale even after OFAC finds, albeit wrongly, that Red Bull concealed the documentary.

While OFAC makes up for its small-ish RBNA fine in its hefty enforcements against banks (à la the almost $1 billion settlement OFAC reached with BNP Paribas this week), most U.S. companies’ dealings with Cuba are going to be more on par with isolated occurrences like the one involving RBNA.  In the end, the RBNA settlement is good news for RBNA, its Red Bull parent and any other U.S. company in a similar situation.  If a U.S. company ever finds itself in the future before OFAC in an isolated situation like RBNA, the first thing to do is to pull out RBNA’s settlement announcement and try negotiating from there.

 

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Copyright © 2014 Clif Burns. All Rights Reserved.
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