August 21, 2013
The first part of 2013 saw continuing vigorous sanctions activity, particularly in connection with Iran. This article reviews sanctions developments in the United States, the European Union and the United Kingdom during the first half of 2013 in regulatory and legislative matters and enforcement.
OFAC SANCTIONS
I. LEGISLATION
A. Iran Freedom and Counter-Proliferation Act of 2012 (IFCA)
On January 2, 2013, President Obama signed into law the Iran Freedom and Counter-Proliferation Act of 2012 as a subtitle in the National Defense Authorization Act for Fiscal Year 2013.[1] As set forth below, the IFCA expands the targets for U.S. sanctions on industries that are important to Iran’s economy. The sanctions also target the provision of certain goods and services to Iran. The IFCA expands the CISADA-style sanctions framework for foreign financial institutions.
Under the IFCA, five or more Iran Sanctions Act sanctions are to be applied to sanctioned persons. In addition to blocking (including blocking of principal executive officers of a sanctioned entity), the available sanctions include prohibitions on: Export assistance from the Export-Import Bank; export licenses; U.S. bank loans exceeding $10 million in any 12-month period; designation as a primary dealer in USG debt instruments or service as a repository of USG funds if the sanctioned entity is a financial institution; U.S. government procurement contracts; foreign exchange transactions subject to U.S. jurisdiction; financial transactions subject to U.S. jurisdiction; investment in equity of debt; entry into the United States by corporate officers. These prohibitions also may be applied to corporate officers of sanctioned entities.
The sanctions target the energy sector, including persons or entities found to be "part of" Iran’s energy sector as well as persons or entities that knowingly provide certain support to those determined to be "part of" Iran’s energy sector, and those that knowingly sell, supply, or transfer to or from Iran significant goods or services used in connection with Iran’s energy sector.
The sanctions expand the scope of targeted industries by imposing sanctions in connection with Iran’s shipping and shipbuilding sectors, as well as Iran’s port operators. Specifically, sanctions may be imposed on any person or company found to be "part of" Iran’s shipping or shipbuilding sectors, or to operate a port in Iran. The sanctions also target those who provide certain types of support to those industries, or sell, supply or transfer to or from Iran significant goods or services used in connection with Iran’s shipping or shipbuilding sectors.
In expanding U.S. sanction to metals and other minerals, the United States is targeting items that may be used for barter, swap or other means of exchange or transaction. The sanctions also may be available if the items are used in connection with Iran’s energy, shipping or shipbuilding sectors, or in the nuclear, military or ballistic missile programs. The sanctions may be applied to any person or company that sells, supplies, or transfers, directly or indirectly, to or from Iran any of the following:
- precious metal
- graphite (in certain applications)
- raw or semi-finished metals such as aluminum and steel (in certain applications)
- coal (in certain applications)
- software used for integrating industrial processes (in certain applications)
The IFCA specifically targets those dealing with Iranians on the SDN List, authorizing sanctions on any person or company that knowingly provides certain support to any Iranian person included on the SDN List (other than non-designated Iranian financial institutions). In addition, foreign financial institutions (FFIs) risk the loss of U.S. correspondent or payable-through accounts for knowingly facilitating a significant financial transaction on behalf of any Iranian person included on the SDN list (other than non-designated Iranian financial institutions).
Under the IFCA, FFIs also risk the loss of U.S. correspondent or payable-through accounts for knowingly conducting or facilitating significant financial transactions for the sale, supply or transfer, directly or indirectly, to or from Iran of precious metals and other materials (if used in certain ways); or for the sale, supply, or transfer to or from Iran of significant goods or services used in connection with Iran’s energy, shipping and shipbuilding sectors.
The IFCA expands the scope of U.S. sanctions in the financial sector by providing for sanctions on a person or company for knowingly providing underwriting services, insurance, or reinsurance for any activity with respect to Iran on which sanctions have been imposed under IFCA or any other provision of law relating to the imposition of sanctions with respect to Iran.
The IFCA incorporates waivers and exceptions to the prohibitions or sanctions. Sales of agricultural commodities, food, medicine, or medical devices to Iran are excluded from consideration under the IFCA sanctions, as are certain natural gas transactions and the Shah Deniz natural gas pipeline. Further, the Significant Reduction Exception[2] created by the NDAA for FY 2012 also applies to the IFCA sanctions. If the country with primary jurisdiction over an FFI is found to have significantly reduced their imports of Iranian crude oil, the FFI will be excepted from the sanctions.[3]
B. H.R. 850 — Nuclear Iran Prevention Act of 2013
Congress considered a bill intended to further U.S. efforts to prevent Iran from acquiring nuclear weapons capability. Introduced by Rep. Edward Royce (R-CA39) and last Reported by Committee on May 22, 2013, H.R. 850 would greatly expand the sanctions on Iran, functioning like a commercial trade embargo if fully executed.[4] Additionally, the bill penalizes foreign companies and individuals that violate American sanctions by threatening such persons with restrictions on doing business with the United States.[5]
Designation of the IRGC as a Foreign Terrorist Organization
The proposed legislation directs the Secretary of State to determine whether Iran’s Islamic Revolutionary Guard Corps (IRGC) meets the criteria for designation as a foreign terrorist organization (FTO).[6] If so, the bill directs the Secretary of State to designate the IRGC as a FTO.[7] If not, the Secretary of State must report to Congress regarding any unmet criteria.[8] Such a designation would make it illegal for any person in the U.S. or subject to U.S. jurisdiction to knowingly provide material support or resources[9] to the IRGC.[10]
Sanctions
The bill would also amend the Iran Threat Reduction and Syria Human Rights Act of 2012 (TRA) by authorizing the President to impose sanctions on a foreign person that knowingly conducts or facilitates any significant financial transaction with the Central Bank of Iran, or another Iranian financial institution subject to sanctions, for the purchase of goods or services by, from, or on behalf of a person in Iran.[11] This provision excludes agricultural commodities, food, medicine, or medical devices.[12]
In addition, the bill would amend CISADA to impose mandatory sanctions on financial institutions that facilitate significant transactions or provide significant financial services for a person that (1) is subject to human rights-related sanctions or (2) exports sensitive technology to Iran and is subject to the prohibition on procurement contracts.[13]
The bill directs the President to impose sanctions on any FFI that knowingly facilitates a significant financial transaction on behalf of any person directly or indirectly owned or controlled by an Iranian person included on the SDN List.[14]
The bill would further limit the sanctions exception for petroleum transactions, requiring foreign nations to significantly reduce their volume of crude oil purchases from Iran and of Iranian origin to avoid the application of sanctions against their financial institutions which knowingly conduct or facilitate any significant financial transaction with the Central Bank of Iran or another Iranian financial institution already subject to sanctions.[15]
Reporting on Sanctions
The President must report to Congress periodically regarding the projected economic effects of international sanctions on Iran.[16] Finally, the bill requires the Government Accountability Office to report to Congress regarding presidential implementation of specified sanctions on Iran.[17]
C. S. 960 — Syria Transition Support Act of 2013
Introduced by Sen. Robert Menéndez (D-NJ) and last Reported by Committee on May 21, 2013, S. 960 imposes further sanctions against the Assad regime in Syria, considers U.S. support of a regime transition in Syria, and plans for the removal of sanctions following a successful transition.[18]
The bill would authorize the President to impose sanctions with respect to any person that knowingly participated in or facilitated a significant transaction related to the sale, transfer, or transportation of defense articles, defense services, or military training to the Assad regime or any non-legitimate successor to the Assad regime.[19] Additionally, the bill requires the President to impose sanctions with respect to each person that knowingly participated in or facilitated a significant transaction related to the sale or transfer of petroleum or petroleum products to the Assad regime or any non-legitimate successor to the Assad regime.[20]
The bill would amend the Syria Accountability and Lebanese Sovereignty Restoration Act of 2003 by allowing for sanctions removal once a transitional government is in place and certain terrorism and weapons of mass destruction criteria have been met.[21]
D. S. 298 — North Korea Nonproliferation and Accountability Act of 2013[22]
In response to North Korea’s self-declared third test of a nuclear device, Sen. Robert Menéndez (D-NJ) introduced S. 298, which was passed by the Senate on February 25, 2013. The bill would require the Secretary of State to conduct, coordinate, and submit a comprehensive report on U.S. policy toward North Korea based on a full and complete interagency review of current policy and possible alternatives.[23] The report must consider policies related to North Korea’s weapons of mass destruction and missile programs, as well as human rights violations, and include the Secretary of State’s recommendations for appropriate legislative or administrative action.[24]
II. EXECUTIVE ORDERS
On June 5, 2013, President Obama signed Executive Order 13,645, "Authorizing the Implementation of Certain Sanctions Set Forth in the Iran Freedom and Counter-Proliferation Act of 2012 and Additional Sanctions with Respect to Iran."[25] The E.O. continues the tightening of controls on foreign financial institutions and persons by implementing the IFCA and installing new sanctions.
The Executive Order builds on the IFCA, which targets the energy, shipping and shipbuilding sectors, by including new sanctions on persons doing business with the automotive sector, which is a "major revenue generator for Iran."[26] Specifically, the E.O. authorizes sanctions against persons who are knowingly engaged, or are the owner or successor entity of a person who is so engaged, in significant transactions involving the "automotive sector of Iran," which encompasses the "the manufacturing or assembling in Iran of light and heavy vehicles including passenger cars, trucks, buses, minibuses, pick-up trucks, and motorcycles, as well as original equipment manufacturing and after-market parts manufacturing relating to such vehicles."[27] Although undefined, OFAC has indicated it will determine what qualifies as a "significant transaction" based on "broad factors" set out in the Iranian Financial Sanctions Regulations,[28] which afford considerable discretion.
When a person falls within the provision, they are subject to any of the following sanctions: denial of Export-Import Bank approval for any guarantee, insurance or extension of credit involving exports to the sanctioned person; agency refusal to issue licenses or grant permission to export under statutes requiring such approval; for financial institutions, denial of Federal Reserve Bank designation as a primary dealer of U.S. Government debt instruments or a prohibition against serving as a repository of U.S. Government funds; denial of government procurement contracts; denial of visas to corporate officers and controlling shareholders; or the application of any of these sanctions to a principal executive officer of the sanctioned person.[29]
In addition, a person found to violate the IFCA or the discussed automotive restrictions could face any of the following sanctions: a prohibition on the issuance of loans worth more than $10 million in a 12-month period; a prohibition on foreign exchange transactions subject to U.S. jurisdiction in which the person has an interest; a prohibition on financial institutions transferring credits or payments involving the sanctioned person’s interest; a block of all the sanctioned person’s property and interests in property subject to U.S. jurisdiction; a prohibition on U.S. persons investing in the sanctioned person; a restriction or prohibition on imports of goods, technology, or services from the sanctioned person; or the imposition of any of these penalties on the executive officers of the sanctioned person.[30]
Also pursuant to the IFCA, the E.O. blocks the property or interest in property of any person deemed to have engaged in or materially supported the corruption or diversion of goods, or the misappropriation of proceeds from the sale of goods, intended for the people of Iran.[31]
The E.O. includes two new sanctions targeted exclusively at foreign financial institutions. The first restricts the maintenance of accounts and blocks the property of institutions that conduct or facilitate significant transactions tied to Iranian rials, or maintain significant funds or accounts outside of Iran that are denominated in the rial. The second authorizes the Secretary of the Treasury to restrict the opening and use of accounts by institutions that conduct significant transactions on behalf of a SDN or in connection with the Iranian automotive sector.[32]
The E.O. also extends the reach of existing sanctions by blocking the property of those that materially assist Iranians on the SDN list or persons whose property and interests in property are blocked under Executive Order 13,599, which targets the Government of Iran, the Central Bank of Iran, all Iranian financial institutions, and persons owned, controlled by, or acting on behalf of persons whose property is blocked.[33]
Finally, the E.O. amends Executive Order 13,622 by clarifying that it extends not only to the purchase or acquisition of petroleum or petrochemical products from Iran, but also to the "sale, transport, or marketing" of such products.[34]
III. SIGNIFICANT OFAC REGULATIONS
On March 15, 2013, OFAC published a new rule with amendments to the Iranian Financial Sanctions Regulations (IFSR) implementing Sections 503 and 504 of the TRA and provisions of Executive Order 13,622.[35]
Pursuant to the rule, agricultural commodities, in addition to food, medicine, and medical devices are exempt from NDAA sanctions,[36] which punish financial institutions that knowingly conduct or facilitate significant transactions with the Central Bank of Iran or an Iranian financial institution. The regulations now treat private financial institutions and government-owned or -controlled institutions equally under the NDAA, except that central banks can only be sanctioned for conducting or facilitating petroleum-related transactions.[37]
Pursuant to the TRA, OFAC also narrowed the "significant reduction exception," which provides a limited exemption from NDAA sanctions for countries that significantly reduce crude oil purchases from Iran. The new regulation specifies that the exception only applies to bilateral trade between Iran and the exempted country, and that any funds payable as a result of the trade must be paid to citizens, nationals, or permanent residents of the exempted country, or entities organized under its jurisdiction.[38] Furthermore, any funds owed to Iran due to trade under the exception can only be used to pay for exports to Iran originating from the same country or used to purchase an exempted item, such as food or medicine, from a third country.[39]
The regulation also implements provisions of E.O. 13,622, which targets Iran’s petroleum exports.[40] A foreign financial institution that knowingly conducts or facilitates a significant financial transaction with the National Iranian Oil Company or the Naftiran Intertrade Company, or for the purchase of petroleum or petrochemical products, will be barred from opening a correspondent or payable-through account with a U.S. financial institution.[41]
Finally, OFAC issued an interpretation of what it means for goods or services to originate in a country. Goods must be grown, produced, manufactured, extracted, processed or substantially transformed in the originating country, while services must either be performed in the originating country or performed in the export destination by a citizen, national, or permanent resident of the originating country who ordinarily resides there.[42]
IV. GENERAL LICENSES
A. Iran
On May 30, 2013, OFAC released General License D,[43] under the Iranian Transactions and Sanctions Regulations.[44] This license permits the direct or indirect export or reexport, from the United States or by U.S. persons, of certain fee-based personal communication services subject to the Export Administration Regulations (EAR). These services include instant messaging, chat and email, social networking, photo and video sharing, web browsing, and blogging, as well as software necessary to enable such services. The license also includes software and hardware incident to personal communications, such as mobile and satellite phones and operating systems, modems and wireless internet equipment, laptops, tablets, and privacy software. The export or reexport of consumer Internet connectivity services and transmission facilities are also allowed by General License D. United States banks, brokers, and securities dealers are permitted to process transactions authorized under this license, so long as they are consistent with federal regulations governing payments and dollar clearing transactions with Iran.[45]
However, General License D does not authorize the direct or indirect export or reexport of any of the aforementioned services, software, or hardware if the exporter knows, or has reason to know, that they are intended for use by the Iranian government. Likewise, they may not be exported to any person whose property or interests in property are blocked by sanctions. Finally, General License D does not authorize the export or reexport of commercial-grade Internet services, transmissions facilities, web-hosting services, or domain name registration services.
B. WMD Proliferators
In January 2013, OFAC issued and then revoked General License No. 7,[46] pursuant to the Weapons of Mass Destruction Proliferators Sanctions Regulations,[47] and the Iranian Transactions and Sanctions Regulations.[48] General License No. 7 addressed transactions related to the seizure of the Iranian-flagged cargo ship MV Amina, which was detained in Sri Lanka in December after its owners defaulted on a payment to Germany’s DVB Bank SE.[49] Transactions involving the Amina had previously been blocked in September of 2008. OFAC issued General License No. 7 on January 9, permitting participation in transactions related to the arrest, detention and judicial sale of the Amina, including bidding on the vessel, financing its purchase, or providing services in furtherance of the detention or sale. The license was set to expire on January 31, 2014. However, on January 16, the Amina escaped Sri Lankan custody and fled into international waters, ultimately returning to Iran.[50] Consequently, OFAC revoked General License No. 7 on January 19.
C. Burma
As part of a general easing of sanctions on Burma, OFAC issued General License No. 19[51] of the Burmese Sanctions Regulations[52] on February 22, 2013. This license authorizes all transactions involving Asia Green Development Bank, Ayeyarwady Bank, Myanma Economic Bank, and Myanma Investment and Commercial Bank. However, this license does not cover any new investment in Burmese resource development, even if the transaction is conducted with or through one of the aforementioned banks.[53] In addition, General License No. 19 does not authorize the provision of financial services in connection with security services to the Burmese Ministry of Defense, or any armed group, and does not authorize the importation of Burmese jade or rubies, or any jewelry containing those gems.
D. Syria
OFAC issued General License No. 16 on March 14, 2013, to allow increased financial support for the National Coalition of Syrian Revolutionary and Opposition Forces (the "Coalition").[54] According to a Treasury spokesperson, this license allows U.S. individuals, companies, and financial institutions to contribute funds "for a wide range of activities, including reconstruction efforts and political organization."[55] Any transfer of funds must be conducted through the Coalition’s office in Washington, D.C., using a licensed account at a U.S. financial institution. The license does not permit the export, sale, or supply of any item listed on the United States Munitions List.[56] Furthermore, the license does not authorize transactions with any Coalition group designated as a terrorist organization, such as al-Nusrah.[57]
E. Sudan
On April 15, 2013, OFAC issued General License No. 1[58] of the Sudanese Sanctions Regulations.[59] This license authorizes several academic and professional exchanges between the United States and Sudan. These include academic exchange programs between U.S. and Sudanese academic institutions, even those which would otherwise be considered part of the Government of Sudan, and student exchange programs for undergraduate or graduate academic credit. The license also permits U.S. persons to provide teaching services in fields such as humanities, law, public health, and business at Sudanese academic institutions, as well as to conduct noncommercial academic research. U.S. academic institutions may also recruit, hire, and employ teachers from Sudanese academic institutions, provide scholarships to Sudanese students to allow them to participate in academic exchange programs, and administer standardized tests such as the SAT, ACT, TOEFL, and LSAT in Sudan. Likewise, U.S. financial institutions are permitted to process transfers of funds and student loan payments for Sudanese students pursuant to an academic exchange program. Finally, General License No. 1 permits 501(c)(3) nonprofit organizations, as well as nonprofit legal and medical associations, research institutions, and academic programs, to provide not-for-profit "professional training seminars" on topics such as sustainability, education, health, and civics, as well as to conduct noncommercial research.
However, it is important to note that General License No. 1 does not authorize the export of any goods, technology, or services requiring licensing by another federal agency. These include items listed on the Commerce Control List (CCL), such as laptops, computers, cell phones, and other handheld devices. Academic institutions may release certain computer software or devices to students, so long as it does not otherwise require a license and is ordinarily incident and necessary to the educational program. In addition, technology and physical sciences are absent from the list of permissible disciplines for teaching services and professional training seminars.
F. Zimbabwe
After the successful passage of Zimbabwe’s constitutional referendum in March 2013, which, among other provisions, limits the power of the presidency,[60] OFAC effectively lifted sanctions against two Zimbabwean banks by issuing General License No. 1 on April 24, 2013.[61] The license permits transactions involving the Agricultural Development Bank of Zimbabwe and Infrastructure Development Bank of Zimbabwe, provided that the transactions do not also involve a party already blocked by sanctions. More sanctions may be lifted in the future as part of an "action for action" strategy to promote democratic reform in Zimbabwe.[62]
G. Global Terrorism Sanctions (SDGT), Terrorism Sanctions (SDT), Foreign Terrorist Organization (FTO) Sanctions Regulations: The Palestinian Authority
In response to the announced resignation of Palestinian Authority Prime Minister Salam Fayyad, OFAC issued General License No. 7a, clarifying the definition of "Palestinian Authority."[63] The term "Palestinian Authority," as stated in this license, has been expanded to include "the Palestinian Authority government of President Mahmoud Abbas and Prime Minister Salam Fayyad, or any successor Prime Minister appointed by President Abbas, including all branches, ministries, offices, and agencies (independent or otherwise) thereof" (emphasis added). This license does not change the substantive sanctions regulations involving the Palestinian Authority.
V. GOVERNMENT AGENCY GUIDANCE
A. Advisory: Use of Exchange Houses and Trading Companies to Evade U.S. Economic Sanctions Against Iran
On January 10, 2013, OFAC issued an advisory on the use of exchange houses and trading companies, alerting U.S. institutions to practices intended to circumvent U.S. and international economic sanctions concerning Iran. The advisory gave several examples of these evasion practices: Omitting references to Iranian addresses; omitting the names of Iranian persons or entities in the originator or beneficiary fields; and transmitting funds from an exchange house or trading company without referencing the involvement of Iran or designated persons.
OFAC also highlighted fact patterns that U.S. financial institutions might encounter. For example,
[a] trading company attempts to send a payment through the United States on behalf of Company Z with an address in Iran. The payment is stopped for review by the U.S. financial institution’s filter due to the Iranian address on the payment, and is ultimately blocked or rejected in accordance with U.S. sanctions. The trading company later resends the funds in a payment of identical or similar value on behalf of Company Z, only this time the company’s address has been altered to reflect a non-sanctioned jurisdiction.[64]
OFAC identified measures U.S. institutions can take to mitigate the risk of processing transactions designed to evade U.S. sanctions.[65] Those measures include: 1) monitoring payments involving third-party exchange houses or trading companies that may be processing commercial transactions related to Iran; 2) conducting account and/or transaction reviews for individual exchange houses or trading companies that have repeatedly violated or attempted to violate U.S. sanctions against Iran; and 3) communicating with correspondents that maintain accounts for, or facilitate transactions on behalf of, third-country exchange houses or trading companies in order to request additional information and/or alert them to these practices.
B. SDN Search Tool ("Fuzzy Logic")
On March 13, 2013, OFAC launched an improved tool for searching the SDN List.[66] The new version uses multiple algorithms to provide the user with a broader set of results. The search algorithm accounts for differences in spelling and transliteration. In addition to returning results that are exact matches, SDN Search "can also provide a broader set of results using fuzzy logic."[67] This methodology uses character, string, and phonetic matching. Further, the user can broaden the search parameters by reducing the "name score" in order to capture less precise matches. This is particularly helpful where the name to be screened is incomplete.
C. Guidance: Iran Threat Reduction and Syria Human Rights Act of 2012
On February 6, 2013, OFAC published a "Frequently Asked Questions" (FAQ) page relating to key provisions of the TRA, which expands the scope of sanctionable transactions with the Central Bank of Iran and designated Iranian financial institutions.[68] The FAQ page specifically addresses questions related to sections 312 and 504 of the TRA, as well as section 4 of the executive order authorizing the implementation of certain sanctions set forth in the Act and additional sanctions with respect to Iran.[69]
Section 312 of the Act "requires the Secretary of the Treasury . . . to determine whether the National Iranian Oil Company (NIOC) or the National Iranian Tanker Company (NITC) is an agent or affiliate of Iran’s Islamic Revolutionary Guard Corps (IRGC) . . . ."[70] On September 24, 2012, the Treasury Department determined that NIOC is an agent or affiliate of IRGC. As a result of this finding, foreign financial institutions that knowingly facilitate significant transactions or provide significant financial services to NIOC are subject to CISADA sanctions, including prohibitions or the imposition of strict conditions on the opening or maintaining of correspondent or payable-through accounts in the United States.[71]
Section 504 of the Act, which took effect on February 6, 2013, amends the NDAA in several ways. Most notably,
it narrows the NDAA’s significant reduction exception to (a) exempt from sanctions only transactions that conduct or facilitate bilateral trade in goods or services between the country granted the exception and Iran, and (b) require that funds owed to Iran as a result of the bilateral trade be credited to an account located in the country granted the exception and not be repatriated to Iran.[72]
The OFAC FAQ page also addresses questions related to section 4 of the executive order that authorizes the implementation of certain sanctions set forth in the TRA. In particular, the Order prohibits foreign subsidiaries of U.S. entities from knowingly violating the Iranian Transactions Regulations, and imposes civil penalties on the U.S. parent company for any such violations.
D. Clarifying Guidance: Humanitarian Assistance and Related Exports to Iranian People
On February 6, 2013, OFAC published an updated version of its clarifying guidance on humanitarian assistance and related exports to Iranian people. The clarifying guidance "provides an overview of current policies with respect to humanitarian assistance and exports to the Iranian people for U.S. persons and financial institutions as well as for third-country financial institutions."[73] Under U.S. law, the sale and export of nearly all types of food, medicine, and basic medical supplies to Iran are broadly authorized. Some types of humanitarian exports may be authorized, as long as they meet specific OFAC licensing requirements. By extension, financial institutions that process or facilitate such transactions are generally permitted to do so by U.S. law.
The clarifying guidance is divided into two parts. In Part I, the clarifying guidance gives an overview of policies with respect to humanitarian assistance, remittances and exports to the Iranian people, and also provides guidance for license applications. [74] In Part II OFAC "provides guidance for those seeking to determine their eligibility to engage in activities already authorized by general license or that are exempt from sanctions."[75] Part II further identifies specific regulations that U.S. persons should consult when considering certain authorized transactions.
E. Guidance on Submitting Electronic Documents to OFAC Enforcement
On March 29, 2013, OFAC’s Office of Enforcement reissued its guidance on submitting electronic documents. The Guidance "describe[s] the technical requirements for the preferred format in which to submit electronic document productions to Enforcement, including self-disclosures, administrative subpoena responses, and other documents or reports."[76] The new Data Delivery Standards has an addendum that lists which data fields should be populated in electronic filings. Although the production of documents electronically is not required, Enforcement prefers to receive information on digital media instead of hardcopy if the number of pages exceeds 500.[77] If the submission is more than 2,500 pages, Enforcement prefers to receive the submission formatted for Concordance, as detailed in the guidance.
VI. REPORTS
A. Trade Sanctions Reform and Export Enhancement Act: 4Q FY 2012
Between July 1 and September 30, 2012, OFAC received 423 licensing applications requesting authorization to export agricultural commodities, medicine, and medical devices to Iran and Sudan. OFAC issued 495 licensing determinations (230 of which were received in the same quarter). Of the 495 determinations, 321 licenses were issued, and of the 321 issued licenses, 295 involved products for Iran and 27 for Sudan. [78]
B. 2012 Terrorist Assets Report
On May 28, 2013, OFAC released the 2012 Annual Report on Assets in the United States of Terrorist Countries and International Program Designees.[79] The purpose of the Report is to update Congress "concerning the nature and extent of assets held in the United States by terrorism-supporting countries and organizations engaged in international terrorism."[80]As of December 31, 2012, "51 organizations or groups had been designated as [Foreign Terrorist Organizations (FTOs)] by the Department of State."[81] These FTOs include 10 Middle Eastern terrorist organizations as well as terrorist organizations located in South America, Europe, Asia, and Africa. As of December 31, 2012, blocked assets relating to international terrorist organizations totaled $21,826,293.[82]
The Report further identifies and designates organizations inside the United States that are branches of, or have been determined to provide support to or be owned or controlled by, designated terrorist groups or individuals.[83] Additionally, the Report identifies assets relating to state sponsors of terrorism. The states currently designated as sponsors of terrorism are: Cuba, Iran, Sudan, and Syria.[84]
VII. DESIGNATIONS
A. Sergei Magnitsky Rule of Law Accountability Act of 2012
The Magnitsky Act was signed into law on December 14, 2012. On April 12, 2013, the Director of OFAC identified eighteen individuals whose property and interests in property are blocked pursuant to Section 406 of the Magnitsky Act.[85] The Magnitsky Act requires the President to submit to certain congressional committees a list of people who meet certain criteria under Magnitsky Act. The eighteen individuals appear on the SDN List.
Sixteen of the eighteen Blocked Persons are Russian officials who were involved in human rights violations against Sergei Magnitsky, a whistleblower and lawyer who was beaten to death in 2009 while awaiting trial for alleged tax fraud.[86] Also on the list is Kazbek Dukuzov, who was arrested, tried and exonerated in the 2004 murder of U.S. journalist Paul Klebnikov in Moscow.[87] It is believed that Dukuzov is in a prison in the United Arab Emirates for crimes unrelated to the killing of Klebnikov.[88] Letscha Bogatirov, another recently Blocked Person, is a Chechen man accused of killing a critic of Chechnya’s Moscow-backed ruler, Ramzan Kadyrov.[89]
B. List of Entities Sanctioned Under Iran Sanctions Act
Under the Iran Sanctions Act, the Secretary of State is authorized to impose a range of sanctions once a sanctionable activity has been committed. For each entity that has been sanctioned, different restrictions may apply.[90] On March 14, 2013, the United States imposed sanctions on Greek national Dr. Dimitris Cambis and the company of which he is president, Impire Shipping.[91] Dr. Cambis and Impire were sanctioned for disguising the origin of Iranian crude oil by concealing the control of a vessel by the National Iranian Tanker Company (NITC). Accordingly, Dr. Cambis is may not participate in the following:
1) Procurement contracts with the USG;
2) Export assistance from the Export-Import Bank of the United States;
3) Financial transactions subject to U.S. jurisdiction;
4) Transactions with respect to property and interests in property subject to U.S. jurisdiction; and
5) Foreign exchange transactions subject to U.S. jurisdiction.[92]
Impire is similarly sanctioned, but 5) does not apply. Instead, the issuance of visas to corporate officers of Impire is prohibited.[93] On the same day that Dr. Cambis and Impire were sanctioned, the United States also imposed sanctions on Kish Protection and Indemnity Club (Kish P&I), and Bimeh Markazi-Central Insurance of Iran (CII) for providing insurance or reinsurance to NITC.[94] The same sanctions that were applied to Impire Shipping were applied to Kish P&I and CII.
On April 12, 2013, the United States lifted sanctions applied to three companies: Tanker Pacific Management (TPM), Société Anonyme Monégasque D’Administration Maritime Et Aérienne (SAMAMA), and Allvale Maritime Inc. (AMI).[95] All three companies engaged in extensive consultations with the State Department and provided reliable assurances that they will not knowingly engage in sanctionable activity in the future. The three companies were previously sanctioned in May 2011 for "their respective roles in a September 2010 transaction that provided a tanker valued at $8.65 million to the Islamic Republic of Iran Shipping Lines (IRISL), an entity that has been designated by the United States and the European Union for its role in supporting Iran’s proliferation activities."[96]
VIII. MAJOR OFAC ENFORCEMENT ACTIONS
A. Ellman International, Inc.
Ellman International, Inc. agreed to settle apparent violations of the Iranian Transactions and Sanctions Regulations[97] (ITSR), 31 C.F.R. part 560. Under prior ownership and management, Ellman had exported medical equipment to Iran and purchased the services of a physician from approximately 2005 to 2008. The transactions totaled $317,211 in value, in violation of § 560.204 and § 560.201 of the ITSR. The base penalty was $426,000. Upon acquisition of the company, Ellman’s new owners reported the violations to OFAC, but the submission was determined not to be a voluntary disclosure under OFAC Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, Appx. A. OFAC noted the active involvement by senior management (under prior ownership); the absence of a sanctions compliance program; the likelihood that the transactions were eligible for OFAC licenses; and, substantial cooperation on the part of the new owners and management. Ellman agreed to pay $191,700.
B. Dal-Tech Devices, Inc.
OFAC alleged that Dal-Tech Devices, Inc. violated the ITSR by selling radio frequency measurement devices worth $3,226 to a firm in Austria with the knowledge that the items were intended for transport to Iran. When the devices were returned, undelivered, from Austria, Dal-Tech sent the goods to Slovenia, from where they were shipped to Iran. OFAC found the matter egregious. The base penalty was $500,000. The settlement coincides with a Deferred Prosecution Agreement with the United States Attorney’s Office for the District of Delaware. Del-Tech Devices has agreed to pay $10,000 to settle the violations. The settlement amount reflects knowing and willful conduct by an employee; knowledge, or reason to know, on the part of prior management that the goods were destined for Iran; and the absence of prior OFAC enforcement actions.
C. Offshore Marine Laboratories
Offshore Marine Laboratories (OML) allegedly violated the ITSR and Executive Order 13,382, "Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters," by exporting eight shipments of spare parts for offshore drilling rigs to the United Arab Emirates. The shipments were intended to supply an offshore rig in Iranian waters and were sent between July 2007 and July 2008. The rig owner and operator are located in Iran. Five of the shipment occurred after the rig owner’s property and property interests were blocked under E.O. 13,382. The base penalty was $167,000. To settle the case, OML agreed to pay $97,695. In establishing the settlement amount, OFAC considered the harm to the objectives of the U.S. sanctions program, as the transaction aided Iranian petroleum resources. OFAC also noted that OML had: no compliance program; no prior OFAC violations; provided substantial cooperation during the investigation; and taken the appropriate remedial measures.
D. American Optisurgical, Inc.
OFAC alleged that American Optisurgical, Inc. (AOI) violated the ITSR and the Reporting, Procedures, and Penalties Regulations, 31 C.F.R. part 501 (RPPR) when it exported or attempted to export unlicensed medical goods and services to Iran or to a third party with knowledge or reason to know that the goods were intended for Iran. Thirty-six such incidents are alleged to have occurred between 2005 and 2010. American Optisurgical is also alleged to have failed to fully respond to two administrative subpoenas issued by OFAC in 2009. The transactions were valued at approximately $202,765, the base penalty was $449,000 and AOI agreed to pay $404,100 to settle potential civil liability. In reaching this agreement, OFAC considered a number of factors, including the willful or reckless conduct of AOI; the direct involvement of senior management; the active concealment of the violations by the company; and AOI’s continued exports notwithstanding receipt of OFAC administrative subpoenas. Among the mitigating factors: AOI had not previously been subject to an OFAC enforcement action; the exports likely could have been licensed by OFAC; and AOI agreed to toll the statute of limitations.
E. Bank of Guam
The Bank of Guam allegedly twice violated the ITSR by processing wire transfers related to the delivery of furniture to Iran. The Bank of Guam agreed to pay $27,000 to settle the violations. As payment for delivery of furniture and other goods, the Bank of Guam originated a $2,265 wire transfer, on behalf of a customer, to a trading company in the United Arab Emirates. The transfer initially was rejected by a U.S. financial institution because of the reference to Iran in the originator to beneficiary portion of the payment message. The customer successfully made that wire transfer and one additional transfer after a Bank of Guam employee advised the customer to remove references to Iran in the payment message. By originating the wire transfers, the Bank of Guam may have violated OFAC’s regulatory ban on engaging in transactions related to "goods, technology, or services for export, reexport, sale, or supply, directly or indirectly, to Iran or the Government of Iran." 31 C.F.R. § 560.206. The bank did not voluntarily disclose the violations. The base penalty was $20,000. The settlement reflects an aggravation to the base penalty as a result of the recklessness of the bank’s staff in processing transfer notwithstanding the knowledge of the purpose of the payment, and in advising the customer to remove the reference to Iran from the payment detail. OFAC also noted the lack of any other violations in the preceding five years.
F. Tung Tai Group
The Tung Tai Group has agreed to pay $43,875 to settle alleged violations of the Cuban Assets Control Regulations, 31 C.F.R. part 515 (CACR). In August 2010, Tung Tai entered into contracts to buy and sell scrap metal originating in Cuba. Although the violation was not voluntarily disclosed by Tung Tai, the company has no history of OFAC regulations violations. As a result, the settlement was reduced from the base penalty amount of $65,000.
G. EGL, Inc.
EGL, Inc., now part of the CEVA Logistics group of companies (CEVA), is alleged to have violated both the CACR and the ITSR. In violation of the ITSR, affiliates of EGL, which by then was part of CEVA, allegedly acted as the freight forwarder for ten shipments of supplies to an oil drilling rig located in Iranian coastal waters from August to October of 2008. The rig was operated by Petropars, a company affiliated with the National Iranian Oil Company. Separately, from 2005 to 2008, EGL’s foreign affiliates engaged in 280 transactions providing freight forwarding services for shipments to and from Cuba. EGL has agreed to pay$139,650 to settle potential liability related to these events after it made a voluntary self-disclosure of the alleged CACR violations but did not disclose the alleged ITSR violations. The agreed payment was reduced from a base penalty of $206,889 after OFAC’s consideration of EGL’s substantial cooperation. The company agreed to toll the statute of limitations and produced responsive materials. However, OFAC also noted that the transactions had resulted in significant harm to OFAC sanctions programs, and found that EGL had reason to know that the supply shipments were destined for a rig owned by an Iranian company.
H. Maritech Commercial Inc.
OFAC alleged that Maritech Commercial, Inc. violated the Weapons of Mass Destruction Proliferators Sanctions Regulations by providing fuel inspection services on board five vessels affiliated with the Islamic Republic of Iran Shipping Lines (IRISL) between April 2009 and June 2010. The vessels had been identified as blocked property and were put on OFAC’s list of Specially Designated Nationals and Blocked Persons. The IRISL has been known to attempt to evade sanctions and had changed the names on four of the vessels in question to avoid detection, but Maritech Commercial failed to verify the ships’ identities through their unique International Maritime Organization (IMO) numbers. At the time, Maritech Commercial did not screen serviced ships by their IMO numbers. Maritech Commercial did not voluntarily disclose the violations. OFAC concluded that the violations were non-egregious. The base penalty was $32,000. To settle potential civil liability, Maritech Commercial agreed to pay $20,800. OFAC considered a number of factors in reaching the settlement: OFAC found that the company acted recklessly; Maritime Commercial lacked a sanctions compliance program at the time of the alleged violations; the company had no history of prior OFAC violations; and Maritech was a small company.
I. SAN Corporation
OFAC alleged that SAN Corporation violated the ITSR on or about September 30, 2007. SAN allegedly sold nutritional supplements to an entity in Kuwait with knowledge that the supplements were intended for use in Iran. The base penalty amount was $25,000. SAN agreed to settle potential civil liability by paying $22,500. In reaching the settlement, OFAC considered the following factors: SAN acted recklessly when it sold the goods knowing that they were destined for Iran and notwithstanding notice from the Iranian end user of the need for an OFAC license. Further, SAN did not fully cooperate with OFAC’s investigation. OFAC also noted that SAN had no history of prior OFAC violations, and SAN could have sought a license under the Trade Sanctions Reform and Export Enhancement Act of 2000 to legally sell the goods.
J. Toyota Motor Credit Corporation
Between April 6, 2008 and June 30, 2010, Toyota Motor Credit Corporation (TMCC) allegedly committed twenty-six violations of the Foreign Narcotics Kingpin Sanctions Regulations (FNKSR), 31 C.F.R. part 598. All twenty-six violations relate to one loan account for which TMCC processed 26 loan payments totaling $14,449 on behalf of Claudia Aguirre Sanchez. Sanchez had been designated by OFAC as a Specially Designated Narcotics Trafficker pursuant to the Narcotics Kingpin Designation Act, 21 U.S.C. 1901 et seq. ("Kingpin Act"), and has been added to the SDN List. The base penalty was $26,000. To settle potential liability, TMCC has agreed to pay $23,400. The settlement amount was determined after OFAC concluded that the violations were not self-reported and OFAC considered mitigating and aggravating factors. Among the mitigating factors, OFAC considered that TMCC had no other OFAC violations in the preceding five years and took appropriate remedial action. As aggravating factors, OFAC considered, among other reasons, that TMCC is a sophisticated financial company and that TMCC recklessly disregarded sanctions requirements.
K. American Steamship Owners Mutual Protection and Indemnity Association
American Steamship Owners Mutual Protection and Indemnity Association (The American Club) is a mutual insurance association for merchant ship owners and charterers. OFAC alleged that the American Club committed fifty-five violations in connection with three different regulation groups: the CACR, the ITSR, and the Sudanese Sanctions Regulations (SSR). The American Club allegedly processed three Protection and Indemnity (P&I) insurance claims totaling approximately $40,584 between January 2004 and June 2006 involving Cuba. It processed eighteen P&I claims, issued six Letters of Undertaking/Guarantee, and issued one letter of indemnity as security or countersecurity for a Letter of Undertaking/Guarantee involving Sudan. Those events took place between November 2003 and March 2007 and totaled approximately $686,000. Finally, the American Club processed twenty-one P&I insurance claims, one Letter of Undertaking/Guarantee, and issued five letters of indemnity involving Iran and totaling approximately $488,000. The total base penalty amount for all the alleged violations was $1,729,000. The company agreed to settle potential civil liability with OFAC by paying $348,000.
In determining the settlement amount, OFAC accounted for various circumstances of the alleged violations. The American Club had actual knowledge or reason to know that some of the actions involved sanctioned countries, and the company is a sophisticated commercial enterprise. OFAC found mitigating factors as well. The American Club did not appear to act willfully or recklessly; it took remedial steps and cooperated with OFAC; the P&I claims and LOUs may have been licensable at the time of the transactions; and the American Club had had no other violations during the preceding five years.
L. ATP Tours, Inc.
ATP Tours, Inc. allegedly violated the ITR by facilitating or making eighteen separate salary payments to an individual who is ordinarily a resident of Iran. The payments were completed between May 2007 and July 2010 for services rendered and expenses incurred in relation to ATP tennis tournaments that the individual officiated. OFAC determined that these actions were not self-reported by ATP, alleged that such payments violated 31 C.F.R. §§ 560.206 and 560.208, and concluded that the alleged violations were non-egregious. The base penalty was $135,000. To settle potential civil liability for the alleged violations, ATP agreed to pay $48,600. The settlement reflects OFAC’s consideration of the aggravating and mitigating circumstances. Contributing to the aggravating circumstances was the fact that eight of the eighteen payments were completed after OFAC had issued a "Warning Letter" to ATP on August 11, 2008, demonstrating reckless disregard for U.S. sanctions obligations. Additionally, ATP did not have an OFAC compliance program. Among the mitigating circumstances: ATP was a non-profit, member-based organization; in the preceding five years ATP had not been subject to an OFAC enforcement action; ATP cooperated with OFAC’s investigation; ATP established an OFAC compliance plan; and the alleged violations represented very low harm to the overall sanctions program.
M. Wells Fargo Bank, N.A.
Wells Fargo Bank, N.A. allegedly violated the Foreign Narcotics Kingpin Sanctions Regulations, 31 C.F.R. part 598, by maintaining accounts and processing transactions for two individuals who had been designated pursuant to the Kingpin Act. Wells Fargo opened accounts for Claudia Aguirre Sanchez prior to her designation in December 2007 as "Claudia Aguirre." The date of birth provided to Wells Fargo when Aguirre Sanchez opened the accounts matched the date of birth listed on the SDN List. In addition, Wells Fargo opened the accounts for Carlos Antonio Ruelas Topete after Ruelas Topete was designated under the name "Carlos A. Ruelas." Again, the date of birth provided to the bank matched the date of birth included on the SDN List. Wells Fargo processed 58 transactions with a total value of $22,211.94 on behalf of Aguirre Sanchez, and 756 transactions with a total value of $53,780.39 on behalf of Reulas Topete. The total base penalty was $37,996.
Wells Fargo agreed to settle the potential civil liability by paying $23,937. Wells Fargo had voluntarily disclosed the apparent violations and OFAC had concluded that the conduct was non-egregious. Among the mitigating considerations identified by OFAC: Wells Fargo had not had a violation in the five years preceding the transactions at issue; the transactions may have been licensable at the time of the violations; Wells Fargo cooperated in the investigation; and Wells Fargo had implemented signification remedial measures. In terms of aggravating considerations, OFAC noted that Wells Fargo was a sophisticated financial institution and had not incorporated screening based on date of birth into its compliance measures.
N. Intesa Sanpaolo S.p.A.
Intesa Sanpaolo S.p.A. allegedly violated the ITR, the CACR and the SSR. Intesa maintained a customer relationship with Irasco S.r.l., an Italian company owned or controlled by the Government of Iran. OFAC determined that Intesa failed to identify Irasco as fitting the definition of GOI. Further, Intesa did not take adequate precautions to prevent the processing of transactions for or on behalf of Irasco that terminated in the United States or with U.S. persons. Intesa processed 31 wire transfers totaling $3,142,565 between November 2004 and December 2006. The base penalty for the apparent violations of the ITR was $3,371,000.
In apparent violation of the CACR, between October 2004 and March 2008, Intesa processed 53 wire transfers, totaling $1,643,326, involving Cuba. The base penalty for the alleged violations of the CACR was $1,867,000. In apparent violation of the SSR, between November 2004 and October 2007, Intesa processed 67 funds transfers, totaling $2,858,065, involving Sudan. The base penalty of the apparent violations of the SSR was $4,124,000.
Accordingly, the total base penalty for the apparent violations of the ITR, the CACR and the SSR was $,9,362,000. The apparent violations were settled for $2,949,030. The settlement amount reflected aggravating factors including Intesa’s failure to maintain an adequate compliance program in connection with U.S. sanctions; OFAC also noted that Intesa knew or had reason to know that the customer met the definition of the GOI and that related payments to the United States violated the ITR; the payments caused harm to the integrity of the U.S. sanctions programs; and Intesa was a commercially sophisticated, international financial institution. OFAC also found mitigating factors. OFAC noted that Intesa’s conduct was not willful or reckless; no Intesa managers or supervisors had actual knowledge or awareness; Intesa cooperated with the investigation; Intesa implemented remedial measures; and Intesa had not been subject to an enforcement action in the five years preceding the transactions at issue.
O. Stanley Drilling Equipment & Supply, Inc.
Stanley Drilling Equipment & Supply, Inc. allegedly violated the ITR. Between June 2008 and October 2012 Stanley Drilling exported two shipments of goods and attempted to export four shipments to the UAE with reason to know that the shipments were intended for an oil drilling rig in Iranian waters. The total value of the goods was $93,329, and the base penalty was $156,000. Stanley Drilling did not voluntarily disclose the alleged violation, and OFAC concluded that the violations were non-egregious.
The matter was settled for $84,240. The settlement reflects several considerations. Stanley Drilling did not have an OFAC compliance program. Further, because of the connection to Iranian petroleum resources, the transactions were particularly harmful to U.S. sanctions. The harm to the objectives of the U.S. sanctions programs was reduced, however, because four of the shipments were detained and did not reach their destination. OFAC also noted that while Stanley Drilling had reason to know of the destination of the goods, it did not have actual knowledge. Finally, OFAC noted that Stanley Drilling was a small company and had not previously been found to have violated OFAC sanctions.
THE EUROPEAN UNION AND THE UNITED KINGDOM
I. REGULATION
A. European Union
The European Union (EU) has adopted a significant number of new sanctions legislation in the first half of 2013, most of which simply amend the list of persons, entities and groups targeted.[98] Substantive developments concerned the following countries:
Democratic People’s Republic of Korea (North Korea)
In response to the latest nuclear tests conducted on 12 February 2013, the EU adopted a new set of sanctions reflecting past sanctions,[99] e.g., an embargo on arms and related matériel, a ban on exports of certain goods and technology, a prohibition of procurement from North Korea of arms, related matériel and other goods and technology, a ban on provision of certain services, a ban on provision of new North Korean banknotes and coins, a ban on trade in gold, precious metals and diamonds with the Government of North Korea, a ban on exports of luxury goods, and a ban funding for trade where such support could contribute to North Korea’s nuclear, ballistic missile, or other WMD programmes.
Israel
On July 19, 2013 the EU published "Guidelines on the eligibility of Israeli entities and their activities in the territories occupied by Israel since 1967 for grants prizes and financial instruments funded by the EU from 2014 onwards."[100] These Guidelines apply to all Israeli entities with their place of establishment within the occupied territories, and make any such Israeli entity ineligible for any EU grants, prizes of other funding. The Guidelines also apply to the activities of any Israeli legal person conducted within the occupied territories, and make such activities ineligible for any EU grants, prizes of other funding.
The Guidelines do not apply to Palestinian entities, or to activities aimed at humanitarian purposes, and will come into effect in relation to prizes, grants and funding available under the EU’s 2014 budget.
Libya
In order to allow assistance to the Libyan government in its disarmament initiatives, the European Union amended the exceptions to the embargoes on arms and related material and on equipment which might be used for internal repression.[101]
Myanmar / Burma
As noted in our 2012 Year-End Sanctions Update, in April 2012 the EU suspended for one year its sanctions against Myanmar in response to significant progress towards democracy. As of May 2, 2013, the EU’s sanctions were lifted permanently. As before, however, the arms embargo continues.[102]
Republic of Guinea
Trade sanctions have been eased in order to allow:
(i) the sale, supply, transfer or export of explosives and related equipment; and (ii) the provision of financing, financial assistance, technical assistance, brokering services and other services related to explosives and related equipment, at the condition that the equipment be intended solely for civilian use in mining and infrastructure investments and that an independent body verify that the providers of the related services are identified.[103]
Syria
The European Union renewed its trade sanctions relating to Syria for a further year until June 1, 2014, with the exception of the arms embargo to allow weapons sales to the Syrian opposition.[104] The latter issue was a source of a strong division between EU Member States; Austria and Sweden, for instance, were strongly opposed to providing arms to the opposition, whereas France and the United Kingdom were in favour of easing the sanctions.[105]
Zimbabwe
The European Union concluded that a peaceful and credible constitutional referendum in Zimbabwe would represent an important milestone in the preparation of democratic elections, and would justify the suspension of the majority of all remaining EU targeted restrictive measures against individuals and entities.[106]
B. United Kingdom
The UK’s legislative activity during 2013 has been limited to implementing European sanctions into local law, and to extending some of those European measures to some of its overseas territories. As was mentioned in our 2012 Year-End Sanctions Update, the UK can legislate by way of Order in Council for its overseas territories in the area of sanctions. Each legislative instrument lists the particular overseas territories to which it applies, with most only applying to a sub-set of the whole.[107]
II. MAIN CASE-LAW IN THE FIRST HALF OF 2013
A. European Union
In the first half of 2013 there has been a raft of decisions by the European courts in Luxembourg regarding European sanctions, and the legality of imposing them on certain individuals or entities. These have covered the Iranian, Anti-Terrorism, Tunisian and Ivory Coast (Côte d’Ivoire) sanctions regimes.
Challenges to inclusion within the Iranian sanctions
Five successful challenges have been brought by entities included in the Iranian sanctions lists. Each of these claims turned on the evidence relied on by the European Commission in determining that the entity should be included in the list of sanctioned entities. In four such cases, the Council of the European Union sought to place reliance on classified or confidential information that it asserted could not be placed before the Court. The Court was unwilling to allow any weight to be attached to such evidence, and held that basing a listing on such evidence was an infringement of the applicants’ rights of defence. In broadly similar Judgments, the listings of Bank Mellat, Bank Sedarat, Qualitest FZE and Iran Transfo were each quashed.[108] The Council of the European Union has appealed the Judgments as to Bank Mellat and Bank Sedarat.
In a similar vein Hanseatic Trade Trust & Shipping (HTTS) GmbH successfully challenged its listing in the EU’s Iran Sanctions list. In this case, the European Council sought to rely on evidence that had come to light subsequent to the initial listing. The Court held that as such evidence could not have formed the basis for the original listing decision it could not be relied on to support that decision.[109]
These Iranian cases demonstrate that the evidential basis for a sanctions listing can be tested in the courts, and that the European Council will not be permitted to rely on undisclosed evidence. It is not a surprising outcome of these cases that the European Court of Justice is currently considering the adoption of special procedures to allow it to hear classified or secret evidence.[110]
Two unsuccessful challenges were brought by the UK subsidiaries of Bank Saderat and Bank Mellat, each challenging their respective inclusions on the Sanctions list. Both cases were dismissed on the basis that the sanctions imposed on a parent company are, in the case of the EU’s Iran sanctions, automatically imposed on a subsidiary and that, therefore, the only evidentiary consideration was whether the companies were actually subsidiaries in fact. Both of these Judgments regarding the subsidiaries were handed down after the respective parent companies had successfully challenged their listing.[111]
Challenges to inclusion within the Tunisian sanctions
The year to date has also seen three successful challenges to the Tunisian Sanctions regime, which were imposed post-Arab Spring on those "responsible for misappropriation of Tunisian state funds." The three applicants were included by way of a later amendment to the initial Sanctions list, on the basis that they were under investigation for money laundering. In all three cases the Court held that it was improper to necessarily equate money laundering with the misappropriation of state funds, and that the applicants could not properly be said to fall within the class of people who should be subject to the asset freeze.[112]
Challenges to inclusion within the Ivory Coast (Côte d’Ivoire) sanctions
The European Court has also heard seven challenges to the inclusion of particular individuals on the EU’s Ivory Coast (Côte d’Ivoire) Sanctions list. In two of these cases, the Court held that the basis for listing was clearly explained and allowed scope for rebuttal, while the evidence cited for the listing was sufficient.[113] The other cases all turned on whether the challenges to the listing had been brought within the required 2 months period. The Court held that the 2 month period ran from 14 days after the publication of the listing in the Official Journal and, as such, each of the challenges were out of time.[114]
The continuing interest in a listing challenge of those already de-listed
Due to the length of time it takes for a case to be heard in the European Court, it has been relatively common for an individual who is challenging his or her listing in the Court to have been de-listed from the particular sanctions regime before any hearing takes place. Despite the attempts of applicants to positively try to clear their name, it has been the practice of the Court in the past to dismiss such challenges as being no longer justiciable.[115] During the first half of 2013, however, two Judgments have demonstrated that the Court has changed its stance on this issue. In both Adulbasit Abdulrahim v. Council of the European Union and Chafiq Ayadi v. Council of the European Union, the Court has held that an applicant has a continuing interest in testing the original legality of a listing, even after the person has been de-listed.[116]
B. United Kingdom
Melli Bank — Commercial Court
On May 13, 2013, the Commercial Court in London heard an application for summary judgment by Melli Bank PLC against Holbud Limited. Melli Bank plc is the UK subsidiary of an Iranian bank. Both parent and subsidiary are included within the EU Sanctions regime. The claim was for unpaid commitment fees under a facility agreement. Holbud’s defence was that, as Melli Bank PLC had become a "designated person" under the EU’s Iran Sanctions list shortly after the facility agreement had been signed, the contract had been frustrated by the designation and/or repudiated by Melli Bank. Even at the summary judgment stage (where the test is that a defendant must have no real prospect of successfully defending the claim), the Court dismissed these arguments. It held that, as the EU’s sanctions allowed for licences to be granted for contracts in existence prior to a designation, and as Holbud had never applied for such a licence, the performance of the contract had not been frustrated. The Court further held that at all times the Bank was ready and willing to perform the contract and that there was thus no repudiation of the contract by Melli Bank.[117] The Judgment stands as a warning that commercial obligations can survive the designation of a contractual counterparty, so long as legal avenues to allow payments (such as licence applications) remain available.
Bank Mellat — Supreme Court
On June 19, 2013, the UK’s Supreme Court handed down two Judgments relating to sanctions or financial restrictions, imposed upon the Iranian Bank Mellat by way of the Financial Restrictions (Iran) Order, 2009, (S.I. 2009/2725) (U.K.) (the "2009 Order"). The more important of these Judgments is Bank Mellat v. Her Majesty’s Treasury (No. 2), [2013] UKSC 39. The 2009 Order had singled out Bank Mellat, but no other Iranian banks, as being a financial institution which had effectively aided and abetted Iran’s nuclear weapons program. The 2009 Order directed all UK financial institutions to cease any and all business relationships with Bank Mellat.
By a majority, the Supreme Court struck down the 2009 Order as being unlawful, on two principal grounds. The first was that the 2009 Order was discriminatory for singling out Bank Mellat without justification. Further, by allowing other Iranian banks to conduct the very business that Bank Mellat was restrained from conducting (a point expressly made by HM Treasury at the time of introducing the 2009 Order), the 2009 Order would arguably have had no actual preventative effect, and was therefore unnecessary and irrational or unreasonable. As stated by Lord Sumption, who delivered the Judgment of the majority:
"I think that the distinction between Bank Mellat and other Iranian banks which was at the heart of the case put to Parliament by ministers was an arbitrary and irrational distinction and that the measure as a whole was disproportionate. This is because once it is found that the problem is not specific to Bank Mellat but an inherent risk of banking, the risk posed by Bank Mellat’s access to those markets is no different from that posed by the access which comparable banks continued to enjoy. Moreover, the discriminatory character of the directions must drastically reduce its effectiveness as a means of impeding the Iranian weapons programmes . . . . The direction was irrational in its incidence and disproportionate to any contribution which it could rationally be expected to make to its objective. I conclude that it was unlawful."[118]
In effect, the Supreme Court held that the real error of HM Treasury was its failure to impose the same restrictions on all Iranian banks — an oversight long since corrected.
The Supreme Court also upheld Bank Mellat’s appeal that the 2009 Order had been imposed in breach of the obligation to allow it an opportunity to make representations to HM Treasury.
On June 21, HM Treasury issued a response to the Supreme Court’s decision, clarifying the current position of Bank Mellat:
"Judgment was handed down on 19 June 2013 in relation to Bank Mellat’s challenge to the Financial Restrictions (Iran) Order 2009 (SI 2009/2725). The Supreme Court found in favour of Bank Mellat. The Financial Restrictions (Iran) Order 2009 ceased to have effect in October 2010.
The Judgment does not affect the current EU asset freeze which remains in place against Bank Mellat. Banks and other financial institutions must continue to abide by the EU measure, and must apply all the financial restrictions that are imposed under EU Regulation 267/2012 as amended by EU Regulation 1263/2012".[119]
While strictly correct, HM Treasury might have added, as explained above, that Bank Mellat had successfully applied to the General Court to annul its designation under the EU’s sanctions regime, but that while the European Commission’s appeal against that Judgment is pending, the effect of the Grand Chamber’s judgment is suspended.
The second Supreme Court Judgment concerned an appeal regarding the use by the Supreme Court of the "closed material procedure" ("CMP").[120] CMP is used by the lower courts when the evidence advanced by the government is considered too sensitive to be used in open court, or even in private. Instead, the court sits in a closed hearing with one of the parties absent. The interests of that party are protected by special advocates appointed by the Court, who make submissions on behalf of the absent party. This question arose because both the High Court and the Court of Appeal had held closed hearings as part of this case, and indeed the Supreme Court — for the first time in its fairly shortly life — also held a closed hearing. Lord Neuberger — who delivered the majority Judgment — upheld the use of a CMP model by the Supreme Court, but signalled that any future applications for a CMP would be scrutinised carefully, and only be allowed in very limited circumstances.
Since the Supreme Court’s Judgment, Bank Mellat has indicated that it plans to sue HM Treasury for approximately £500 million ($744 million) in damages.[121]
John Bredenkamp – Administrative Court
An action for judicial review has been brought before the English courts by the Zimbabwean businessman John Bredenkamp against the UK’s Foreign and Commonwealth Office. Mr Bredenkamp was subject to an asset freeze under the EU’s Zimbabwe Sanctions list, and he alleges that his inclusion in those sanctions was based on the uncorroborated evidence of a conversation to which the UK ambassador to Zimbabwe had been a party. While the English courts are not empowered to declare an EU law to be invalid, it was held, as a preliminary issue to his judicial review application, that the English courts are competent to review actions effected by the UK authorities in the sequence of events leading to a sanctions listing, as well as decisions by the UK authorities not to delist an individual or entity (see R (on the application of Bredenkamp v. Secretary of State for Foreign and Commonwealth Affairs [2012] EWHC 3297 (Admin)). We understand that other claims for judicial review have since relied on this Judgment and have been allowed to proceed.
The hearing of the Bredenkamp judicial review application took place in June 2013 and the Judgment is awaited.[122]
III. EU MEMBER STATE ENFORCEMENT ACTIONS IN THE FIRST HALF OF 2013
A. United Kingdom
On July 1, 2013 the Financial Conduct Authority (one of the successor regulators that has taken over from the Financial Services Authority) published its Thematic Review in relation to banks’ responses to the risks of money laundering, terrorist financing, sanctions, and the export of dual-use goods in the trade finance sector.[123] The review covered 17 different banks of varying sizes operating both in the UK and in the UK’s offshore jurisdictions. The review was generally positive regarding the sanctions screening and due diligence processes effected by the banks on their own customers, but noted examples of poor controls with regard to third parties involved in the transaction such as agents, insurance companies, shippers, freight forwarders, delivery agents, inspection agents and, indeed, commercial counterparts. In relation to the export of dual-use goods, the FCA was highly critical of the approach of the banks, with inadequate staffing, inadequate staff training, and poor screening being recurring themes. The FCA has warned that some banks that formed part of the review will be the subject of further investigation, and possible future penalties.
In April 2013, it was reported that Royal Dutch Shell was exploring ways of repaying historic debts to the National Iranian Oil Company ("NIOC"), without breaching the EU’s sanctions. As the EU sanctions allow for the licensed export of foodstuffs or medicines to Iran, it was reported that one of the options being explored was a barter deal to pay the pre-sanctions debts with grain or pharmaceuticals. Although the UK government gave no official statement in relation to the proposal, no approval for the possible transactions was given.[124]
On February 22, 2013, the English Court of Appeal overturned the conviction of Ramin Pouladian-Kari (Ramin Pouladian-Kari v R, [2013] EWCA Crim 158).[125] Mr Pouladian-Kari had been convicted of shipping electrical switchgear to an Iranian company called Iran Tablo Company without the required export licence contrary to s.68(2) of the Customs and Excise Management Act 1979 and the Export Control Order. He had been sentenced to 12 months’ jail, suspended for 2 years and 200 hours of unpaid work. A co-accused, Arbrene Hussain, had pleaded guilty and been sentenced to 6 months jail, suspended for 2 years and 100 hours of unpaid work.
The conviction was overturned on the basis that the Recorder had not dismissed a juror who had sent a note to the judge indicating that, in his place of work (which involved trade finance in the Middle East and North Africa), the particular transactions in the case would have been met with "automatic rejection . . . on compliance grounds". The Court of Appeal held that leaving this juror on the case led to a "real possibility of unconscious jury bias such that a fair trial was not possible". The Court also ruled that a re-trial was not in the public interest.
In our 2012 Year-End Sanctions Update, we reported that UK citizen Michael Ranger had been sentenced to three and a half years’ jail for supplying North Korean weapons to Azerbaijan in breach of the Export Control Order. Mr Ranger was refused leave to appeal his sentence in March 2013.[126]
B. Spain
On January 11, 2013, the Spanish Interior Ministry announced that it had arrested two employees of Fluval Spain S.L. in relation to a shipment of nickel/chromium alloy valves destined (through UAE intermediaries) for Iran’s nuclear industry. The arrests were the culmination of an investigation commenced in March 2012. The Spanish police also conducted a raid and search of Fluval Spain’s offices[127] and, on January 10, 2013, the Spanish authorities raided a related company, Lazaro Ituarte S.A., and seized documents and computers as part of that investigation.[128] No formal charges against those men or company itself have yet been made.
In our 2012 Year-End Sanctions Update, we reported that in November 2012 Spanish customs officials had raided a company’s premises on suspicion of the supply of goods to Iran nuclear industry via Turkey. The company, ONA Electroerosión S.A., has since denied the allegations which relate to three shipments of turbine propellers valued at US$1.2m and, as yet, no formal charges have been made.[129]
C. Sweden
In our 2012 Year-End Sanctions Update, we reported that in December 2012 a Swedish man had been arrested and charged with attempting to export dual-use items in breach of Iranian sanctions. On February 6, 2013, a court in Lund, Sweden, convicted the man of knowingly trying to export dual-use goods to Iran via intermediaries in Dubai.[130] The man, whose identity has not been released, was given a suspended sentence.
D. Germany
On February 20, 2013, it was announced that the German authorities had charged two men (one Iranian the other of dual German-Iranian nationality) with supplying engines for the Ababil III drone to Iran between 2008 and 2009. The Frankfurt State Court has not yet decided whether to proceed to a trial.[131]
In our 2012 Year-End Sanctions Update, we reported that four men had been arrested in Germany in November 2012 on suspicion of supplying parts to an Iranian nuclear reactor. On April 26, 2013, the four men were charged with supplying 92 valves to an Iranian heavy water reactor in 2010 and 2011. The valves were valued at several million Euros, and were transhipped via a number of Asian countries.[132] The trial is awaited.
E. Cyprus
In April 2013, the Cypriot Supreme Court overturned an injunction granted by the Limassol District Court on the basis that to uphold the injunction would have served to frustrate the application of EU asset-freezing sanctions against Anatoly Ternavsky, a Belarussian oligarch included on the EU’s Belarussian sanctions list.[133]
The dispute concerned control over a Cypriot company called Rayhill Limited, which has an indirect ownership interest in the Russian oil transport company Naftatrans. One shareholder of Rayhill had called a shareholder meeting, at which a new board of directors was appointed. A second Rayhill shareholder called Prime Limited, a BVI company beneficially owned by Mr Ternavsky, did not attend the shareholder meeting but applied to Limassol District Court for an injunction to prevent the Cypriot Registrar of Companies from registering the new directors. The Limassol court granted the injunction, and it was this Judgment which was appealed to the Supreme Court.
The Supreme Court held that to allow the injunction to stand would be to allow Mr Ternavsky to deal with his assets within the EU, and thus would be contrary to the application of the EU’s asset-freezing sanctions against Mr Ternavsky.
The case is an illustration of the potentially-broad nature of the EU’s asset freezes. The company owned by Mr Ternavsky was physically located outside the EU (BVI) and is not itself included on the EU’s sanctions list. Moreover, the underlying assets held through the company were also outside the EU (Russia). Nonetheless, the Court looked through the corporate structure, and Mr Ternavsky’s indirect and beneficial interest, to determine that Mr Ternavsky was attempting to influence corporate actions in an EU company, and ruled that this would be in breach of the EU’s asset-freezing sanctions.
F. Countries Outside the EU Voluntarily Imposing the EU’s Sanctions
It is increasingly the case that non-EU countries are agreeing voluntarily to enforce some or all of the restrictions imposed by EU sanctions. For example, on May 14, 2013, the EU announced that 11 European countries outside the EU had signed up to the new Syrian sanctions regime that would allow some trade with the Syrian opposition. These countries were: Croatia,[134] Turkey, Macedonia, Montenegro, Iceland, Serbia, Albania, Liechtenstein, Norway, Moldova and Georgia.[135]
IV. BRITAIN’S OFFSHORE JURSIDICTIONS
Jersey
In our 2012 Year-End Sanctions Update, we reported that, although the United Kingdom had revoked its Iranian sanctions regime in favour of the heightened EU sanctions, Jersey was yet to issue a similar revocation as of the date of the Update. This remains the case today, and the Money Laundering and Weapons Development (Directions) (Iran) (Jersey) Order, 2013, with its direction that any individual or entity carrying on "financial services business" from or within Jersey, or any Jersey entity carrying on such a business anywhere in the world, cease all business with Iranian banks, will (unless revoked in the interim) remain in force until January 19, 2014.[136]
Isle of Man
In our 2012 Year-End Sanctions Update, we reported that the Isle of Man had also been slow to follow the UK’s lead in revoking its Iran sanctions. These were retrospectively revoked as of February 27, 2013, by way of the Financial Restrictions (Iran) (Revocation) Order, 2013 laid before the Manx Parliament on March 19, 2013.[137]
Bermuda
The piecemeal approach to sanctions legislation mentioned above in relation to the UK’s overseas territories has been abandoned by Bermuda. On March 21, 2013 Bermuda published the International Sanctions Regulations, 2013.[138] Schedule 1 lists all the sanctions-related Orders in Council which apply in Bermuda — including orders which had not previously been expressed to apply to Bermuda, while Schedule 2 lists those Orders now revoked from applying to Bermuda. It is now essential to consult these Bermudian regulations directly, rather than looking to the UK legislation in determining the application of various sanctions to Bermuda.
[1] National Defense Authorization Act for Fiscal Year 2013 §§ 1241-55, Pub. L. No. 112-239, 126 Stat. 1632, 2004-18, codified at 22 U.S.C. §§ 8801-11.
[3] The Significant Reduction Exception may be applied to countries that significantly reduce the volume of crude oil purchases from Iran or reduced those purchases to zero and maintaining the absence of purchases. 22 U.S.C. § 8513a(d)(4)(D).
[4] Rick Gladstone, Lawmakers Introduce Bipartisan Measure to Toughen Iranian Sanctions, N.Y. Times (Feb. 27, 2013), available at www.nytimes.com/2013/02/28/world/middleeast/lawmakers-offer-bill-to-toughen-iranian-sanctions.html.
[6] Nuclear Iran Prevention Act of 2013, H.R. 850, 113th Cong. § 304 (2013). The criteria for designation as a foreign terrorist organization is set forth in the Immigration and Nationality Act (8 U.S.C. § 1189).
[9] The term "material support or resources" is defined as "any property, tangible or intangible, or service, including currency or monetary instruments or financial securities, financial services, lodging, training, expert advice or assistance, safehouses, false documentation or identification, communications equipment, facilities, weapons, lethal substances, explosives, personnel (1 or more individuals who may be or include oneself), and transportation, except medicine or religious materials." 18 U.S.C. § 2339A(b)(1).
[26] Statement by the Press Secretary on the Announcement of Additional Sanctions Related to Iran, Office of the Press Secretary, The White House, (June 3, 2013) available at http://www.whitehouse.gov/the-press-office/2013/06/03/statement-press-secretary-announcement-additional-sanctions-related-iran.
[28] Office of Foreign Assets Control, Frequently Asked Questions and Answers, Question 289, available at http://www.treasury.gov/resource-center/
faqs/Sanctions/Pages/answer.aspx#289 (last updated July 1, 2013) [hereinafter "OFAC FAQ"].
[35] Iranian Financial Sanctions Regulations, 78 Fed. Reg. 16,403, 16,404 (Mar. 15, 2013) (to be codified at 31 C.F.R. pt. 561).
[43] Office of Foreign Assets Control, General License D: General License with Respect to the Exportation and Reexportation of Certain Services, Software, and Hardware Incident to the Exchange of Personal Communications (May 30, 2013), available at http://www.treasury.gov/resource-center/sanctions/Programs/Documents/iran_gld.pdf.
[46] Office of Foreign Assets Control, Revocation of Weapons of Mass Destruction Proliferators Sanctions Regulations General License No. 7, available at http://www.treasury.gov/resource-center/sanctions/Programs/Documents/wmd_gl7_rev.pdf.
[49] Samuel Rubenfeld, Iran’s Ship Escape Shows Cat-and-Mouse Game of Sanctions, Corruption Currents (blog), Wall St. J., Jan. 18, 2013, available at http://blogs.wsj.com/corruption-currents/2013/01/18/iran-ships-escape-shows-cat-and-mouse-game-of-sanctions/.
[50] Iranian Ship Held in Sri Lanka Flees Country’s Waters, Reuters, Jan. 17, 2013, available at http://www.reuters.com/article/2013/01/17/us-iran-vessel-srilanka-idUSBRE90G0P120130117.
[51] Office of Foreign Assets Control, General License No. 19: General License with Respect to Asia Green Development Bank, Ayeyarwady Bank, Myanma Economic Bank, and Myanma Investment and Commercial Bank (Feb. 22, 2013), available at http://www.treasury.gov/resource-center/sanctions/Programs/Documents/burmagl19.pdf.
[54] Office of Foreign Assets, General License No. 16: Authorizing Certain Services to the National Coalition of Syrian Revolutionary and Opposition Forces (Mar. 14, 2013), available at http://www.treasury.gov/resource-center/sanctions/Programs/Documents/syria_gl16.pdf.
[55] Samuel Rubenfeld, Treasury Allows US Aid to Syrian Opposition, Corruption Currents (blog), Wall St. J., Mar. 15, 2013, available at http://blogs.wsj.com/corruption-currents/2013/03/15/treasury-allows-us-aid-to-syrian-opposition/.
[58] Office of Foreign Assets Control, General License No. 1: Certain Academic and Professional Exchanges Authorized (Apr. 15, 2013), available at http://www.treasury.gov/resource-center/sanctions/Programs/Documents/sudan_gl1.pdf.
[60] Samuel Rubenfeld, U.S. Allows Transactions with Two Zimbabwean Banks, Corruption Currents (blog), Wall St. J., Apr. 24, 2013, available at http://blogs.wsj.com/riskandcompliance/2013/04/24/us-allows-transactions-with-2-zimbabwean-banks/.
[61] Office of Foreign Assets Control, Zimbabwe General License No. 1, General License with Respect to Agricultural Development Bank of Zimbabwe and Infrastructure Development Bank of Zimbabwe (Apr. 24, 2013), available at http://www.treasury.gov/resource-center/sanctions/Programs/Documents/zimbabwe_gl1.pdf.
[63] Office of Foreign Assets Control, General License No. 7a: Transactions with the Palestinian Authority authorized (May 14, 2013), available at http://www.treasury.gov/resource-center/sanctions/Programs/Documents/plc_gl7a.pdf.
[64] Office of Foreign Assets Control, The Use of Exchange Houses and Trading Companies to Evade U.S. Economic Sanctions Against Iran, (Jan. 10, 2013), available at http://www.treasury.gov/resource-center/sanctions/Programs/Documents/20130110_iran_advisory_exchange_house.pdf.
[66] James Kostiw, OFAC Launches New SDN Search Tool, U.S. Dep’t. Treas. (March 13, 2013), available at http://www.treasury.gov/connect/blog/Pages/OFAC-Launches-New-SDN-Search-Tool.aspx.
[67] SDN Search Tool, U.S. Dep’t. Treas., available at http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/fuzzy_logic.aspx (last updated May 30, 2013).
[68] OFAC FAQ, Questions Relating to the Implementation of Section 504 of the Iran Threat Reduction and Syria Human Rights Act of 2012 http://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20130206.aspx (last updated Feb. 6, 2013) [hereinafter "Guidance & Clarifying Guidance"].
[70] Iran Threat Reduction and Syria Human Rights Act of 2012 § 312, 22 U.S.C. § 8513(c) (2013) ("TRA")
[71] OFAC FAQ, Question 234, http://www.treasury.gov/resource-center/faqs/Sanctions/Pages/answer.aspx#234
[74] Office of Foreign Assets Control, Clarifying Guidance: Humanitarian Assistance and Related Exports to Iranian People,http://www.treasury.gov/resource-center/sanctions/Programs/Documents/hum_exp_iran.pdf. at 2-4 ("Clarifying Guidance: Humanitarian Assistance").
[76] Office of Foreign Assets Control, Guidance on Submitting Electronic Documents to OFAC Enforcement (Mar. 29, 2013), available at http://www.treasury.gov/resource-center/sanctions/CivPen/Pages/enforcement_data.aspx.
[78] Office of Foreign Assets Control, Report of Licensing Activities Pursuant to the Trade Sanctions Reform and Export Enhancement Act of 2000 (July – Sept. 2012), available at http://www.treasury.gov/-resource-center/sanctions/Documents/4quarter2012.pdf.
[79] Office of Foreign Assets Control, Publication of 2012 Terrorist Assets Report (May 28, 2013), available at http://www.treasury.gov/resource-center/sanctions/Programs/Documents/tar2012.pdf
[86] U.S. Publishes Names of Blacklisted Russians, Al Jazeera (Apr. 13, 2013), available at http://www.aljazeera.com/news/americas/2013/04/2013412202410971469.html; see Richard Behar, Kremlin Hits Back After Forbes Editor Paul Klebnikov’s Alleged Killer and Others Denied U.S. Visas, Forbes (Apr. 13, 2013), available at http://www.forbes.com/sites/richardbehar/2013/04/13/kremlin-hits-back-after-forbes-editor-paul-klebnikovs-alleged-killer-and-others-denied-u-s-visas/.
[90] U.S. Department of State, Sanctioned Entities List (as of Mar. 2013), available at http://www.state.gov/e/eb/tfs/spi/iran/entities/index.htm .
[95] Press Release, U.S. Dep’t of State, Delisting Companies Sanctioned under the Iran Sanctions Act (Apr. 12, 2013), available at http://www.state.gov/r/pa/prs/ps/2013/04/207440.htm.
[97] On October 22, 2012, OFAC changed the heading of 31 C.F.R. part 560 from the Iranian Transactions Regulations ("ITR") to the Iranian Transactions and Sanctions Regulations ("ITSR"), amended the renamed ITSR, and reissued them in their entirety. See 77 Fed. Reg. 64,664 (Oct. 22, 2012).
[98] See European Commission Restrictive measures in force (Article 215 TFEU), 5 June 2013, available at: http://eeas.europa.eu/cfsp/sanctions/docs/measures_en.pdf. Countries for which new acts simply amend the list of persons, entities and groups targeted are: Afghanistan, Al Qaidi, Belarus, Democratic Republic of Congo, Iran, Liberia, Republic of Guinea-Bissau, and Terrorist Groups.
[99] See Council Decision 2013/183/CFSP (OJ L 111, 23.4.2013, p. 52) and Council Regulation (EU) No 296/2013 (OJ L 90, 28.3.2013, p. 4).
[100] Guidelines on the eligibility of Israeli entities and their activities in the territories occupied by Israel since 1967 for grants prizes and financial instruments funded by the EU from 2014 onwards, available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2013:205:0009:00011:EN:PDF.
[101] See Council Decision 2013/182/CFSP (OJ L 111, 23.4.2013, p. 50) and Council Regulation (EU) No 488/2013 (OJ L 141, 28.5.2013, p. 1).
[104] See Council Decision 2013/255/CFSP (OJ L 147, 1.6.2013, p. 14) and Council Regulation (EU) No 325/2013 (OJ L 102, 11.4.2013, p. 1).
[105] See, e.g., European Nations End Weapons Embargo, Creating Path to Arming Syrian Rebels, New York Times, 27 May 2013, available at: http://www.nytimes.com/2013/05/28/world/middleeast/syria.html?pagewanted=all&_r=0
[106] See Council Decision 2013/160/CFSP (OJ L 90, 28.3.2013, p. 95) and Council Regulation (EU) No 298/2013 (OJ L 90, 28.3.2013, p. 48).
[107] During 2013 the UK has published seven such Orders in Council for its Overseas Territories in relation to Burma, Guinea, Iran, Somalia, Zimbabwe, and UN sanctions more generally, available at http://www.legislation.gov.uk/2013?title=overseas%20territories.
[108] Case T-496/10, Bank Mellat v. Council of the European Union, 2013 ECJ EUR-Lex (Jan. 29, 2013), available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62010TJ0496:EN:HTML; Case T-494/10, Bank Saderat v. Council of the European Union, 2013 ECJ EUR-Lex (Feb. 5, 2013) available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62010TJ0494:EN:HTML; Case T-421/11, Qualitest FZE v. Council of the European Union, 2013 ECJ EUR-Lex (Dec. 5, 2012), available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2013:026:0043:01:EN:HTML; and Case C-392/11, Iran Transfo v. Council of the European Union, 2013 (ECJ Eur-Lex (May 16, 2013), available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2011:290:0009:02:EN:HTML.
[109] Case T-128/12 and T-182/12, HTTS Hanseatic Trade Trust & Shipping GmbH v. Council of the European Union, 2013 ECJ Eur-Lex (Jun. 12, 2013), available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2012:174:0029:01:EN:HTML.
[110] Maya Lester, European Sanctions Blog, Proposals for Rule changes in the European Court to permit use of classified evidence, available at http://europeansanctions.com/2013/05/10/proposals-for-rule-changes-in-the-european-court-to-permit-use-of-classified-evidence/.
[111] Case T-495/10, Bank Saderat plc v. Council of the European Union, 2013 ECJ EUR-Lex (Mar. 20, 2013), available at http://curia.europa.eu/juris/document/document.jsf?text=&docid=135263&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=504774; and Case T-492/10, Melli Bank plc v. Council of the European Union, 2013 ECJ EUR-Lex (Feb. 20, 2013), available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62010TJ0492:EN:HTML.
[112] The three cases are: Case T-187/11, Mohamed Trabelsi and others v. Council of the European Union, 2013 ECJ EUR-Lex (May 28, 2013), available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62011TJ0187:EN:HTML; Case T-200/11, Fahed Mohamed Sakher Al Matri v. Council of the European Union, 2013 ECJ EUR-Lex (May 28, 2013), available at http://eur-lex.europa.eu/Notice.do?val=729048:cs&lang=en&list=729048:cs,&pos=1&page=1&nbl=1&pgs=10&hwords=al matri~; and Case T-188/11, Mohamed Slim Ben Mohamed Hassen Ben Salah Chiboub v. Council of the European Union, 2013 ECJ EUR-Lex (May 28, 2013), available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2011:145:0038:01:EN:HTML.
[113] Case T-119/11, Simone Gbagbo v. Council of the European Union, 2013 ECJ EUR-Lex (Apr. 25, 2013), available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2013:164:0015:01:EN:HTML; and Case T-130/11, Marcel Gossio v. Council of the European Union, 2013 ECJ EUR-Lex (Apr. 25, 2013), available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2013:164:0015:02:EN:HTML.
[114] Conjoined cases C-478/11 to C-482/11, Gbagbo, Koné, Boni-Claverie, Djédé, N’Guessan v. Council of the European Union, 2013 ECJ EUR-Lex (Apr. 23, 2013), available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2013:171:0007:01:EN:HTML.
[115] The principal case in this line of authority is T-145/09, Bredenkamp and others v. European Commission, 2012 ECJ Eur-Lex (Sept. 6, 2012), available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2012:331:0023:03:EN:HTML.
[116] Case C-239/12 P, Abdulbasit Abdulrahim v. European Commission and Council of the European Union, 2013 ECJ EUR-Lex (May 28, 2013), available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62012CJ0239:EN:HTML, and Case C-183/12 P, Chafiq Ayadi v. European Commission, 2013 ECJ EUR-Lex (Jun. 6, 2013), available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62012CJ0183:EN:HTML.
[118] Bank Mellat v. Her Majesty’s Treasury (No. 2), [2013] UKSC 39, [27], available at http://www.supremecourt.gov.uk/decided-cases/docs/UKSC_2011_0040_Judgment.pdf.
[119] Press Release, H.M. Treasury, (21 June 2013), available at https://www.gov.uk/government/publications/financial-sanctions-iran-nuclear-proliferation.
[120] Bank Mellat v. Her Majesty’s Treasury (No. 1), [2013] UKSC 38, available at http://www.supremecourt.gov.uk/decided-cases/docs/UKSC_2011_0040_Judgment.pdf.
[121] Litigating Iran Sanctions. The U.K. Supreme Court wades into foreign policy, Wall St, J., June 25, 2013, available at http://online.wsj.com/article/SB10001424127887324183204578567160760847942.html.
[122] Tom Harper, Zimbabwean arms dealer sues Foreign Office for freezing assets, Independent, June 21, 2013, available at http://www.independent.co.uk/news/uk/crime/zimbabwean-arms-dealer-sues-foreign-office-for-freezing-assets-8669188.html
[123] Financial Conduct Authority, Thematic Review. Banks’ control of financial crime risks in trade finance (TR13/3), available at http://www.fca.org.uk/your-fca/documents/thematic-reviews/tr13-03.
[124] Richard Mably, UK blocks Shell paying Iran oil debt in food, medicine, Reuters, Apr. 22, 2013, available at http://www.reuters.com/article/2013/04/22/shell-iran-debt-idUSL6N0D903E20130422.
[125] Ramin Pouladian-Kari (Ramin Pouladian-Kari v R, [2013] EWCA Crim 158, available at http://www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWCA/Crim/2013/158.html.
[126] Damien McElroy, North Korea and the British arms dealer, The Telegraph, Jul. 3, 2013, available at http://www.telegraph.co.uk/news/worldnews/asia/northkorea/10143946/North-Korea-and-the-British-arms-dealer.html
[127] Kings College London, Department of War Studies, Centre for Science and Security Studies, Alpha Non-proliferation Hub, About Proliferation, Case Studies, Fluval Spain S.L, available at http://www.kcl.ac.uk/sspp/departments/warstudies/research/groups/csss/alpha/About-proliferation/Case-Studies/Valves/Fluval-Spain-SL.aspx
[128] Basque Firm Suspected of Sending Forbidden Machinery to Iran, EITB World News, Jan. 11, 2013, available at http://www.eitb.com/en/news/world/detail/1223382/lazaro-ituarte-iran–firm-suspected-exporting-machinery-iran/
[129] David Roman and Ilan Brat, Spain Raids Company Over Suspected Iran Exports, Wall St, J., Nov. 26, 2012, available at http://online.wsj.com/article/SB10001424127887324469304578142892948556144.html.
[130] Swedish Man Convicted for Nuclear Use Export to Iran, Foreign Affairs Committee of the National Council of Resistance of Iran, News, Nuclear, Feb. 6, 2013, available at http://www.ncr-iran.org/en/news/nuclear/12792-swedish-man-convicted-for-nuclear-use-export-to-iran
[131] David Rising, Germany Charges 2 With Selling Iran Drone Motors, Associated Press, Feb. 20, 2013, available at http://bigstory.ap.org/article/germany-charges-2-selling-iran-drone-motors
[132] Germany Charges Four Over Iran Nuclear Equipment Sales, Global Post, Apr. 29, 2013, available at http://www.globalpost.com/dispatch/news/afp/130429/germany-charges-four-over-iran-nuclear-equipment-sales
[133] Cypriot Court Denied Defence to Belarusian Oligarch due to Sanctions, Charter 97, Apr. 4, 2013, available at http://www.charter97.org/en/news/2013/4/4/67507/.
[134] Croatia was added to the European Union as of July 1, 2013. This had two immediate consequences: (i) Croatian individuals and companies must now comply with the various EU sanctions regimes; and (ii) there are no longer any restrictions on the sale of dual-use goods to Croatia.
[135] Several Non-EU states To Apply Changes Made to Syria Oil Sanctions, RTT News, May 14, 2013, available at http://www.rttnews.com/2116932/several-non-eu-states-to-apply-changes-made-to-syria-oil-sanctions.aspx?type=gn&utm_source=google&utm_campaign=sitemap.
[136] Money Laundering and Weapons Development (Directions) (Iran) (Jersey) Order, 2013, available at http://www.jerseylaw.je/Law/display.aspx?url=lawsinforce%5chtm%5cROFiles%5cR%26OYear2013%2fR%26O-007-2013.htm.
[137] Financial Restrictions (Iran) (Revocation) Order, 2013, S.D. 0067/13, available at http://www.tynwald.org.im/links/tls/SD/2013/2013-SD-0067.pdf.
[138] International Sanctions Regulations, 2013, BR 14/2013, available at http://www.bermudalaws.bm/Laws/Annual%20Laws/2013/Statutory%20Instruments/International%20Sanctions%20Regulations%202013.pdf.
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