Trade Prohibitions (1)
Prohibited trading partners
The Office of Foreign Assets Control (“OFAC”) of the US Department of the Treasury administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries, terrorists, international narcotics traffickers, and those engaged in activities related to the proliferation of weapons of mass destruction. OFAC acts under Presidential wartime and national emergency powers, as well as authority granted by specific legislation, to impose controls on transactions and freeze foreign assets under US jurisdiction. Many of the sanctions are based on United Nations and other international mandates, are multilateral in scope, and involve close cooperation with allied governments.
Following are links to the Sanctions and Program Summaries documented on the Office of Foreign Assets Control (OFAC) web site.
- Narcotics Trafficking
- Burma (Myanmar)
- North Korea
- Diamond Trading
Foreign Assets Control Regulations for exporters and importers (2)
The Office of Foreign Assets Control (OFAC) administers a series of laws that impose economic sanctions against hostile targets to further U.S. foreign policy and national security objectives. Economic sanctions are powerful foreign policy tools. Their success requires the active participation and support of U.S. companies. The use of sanctions by the U.S. goes back to the earliest days of the Republic through trade embargoes, blocked as sets controls, and other commercial and financial restrictions. Many of them have been multilateralized within the global community against pariah countries, as well as being used against groups, such as narcotics traffickers and terrorists, who threaten the security, economy, and safety of the United States. Management of sanctions on the U.S. side is entrusted to the Secretary of the Treasury.
While OFAC is responsible for promulgating, developing, and administering the sanctions for the Secretary under eight basic statutes, other regulatory agencies, including Export Enforcement in Commerce and the U.S. Customs Service, cooperate in ensuring corporate compliance with the Regulations. OFAC has designed this brochure to provide convenient, concise, up-to-date, helpful information about its programs, including in formation on the laws and regulations OFAC administers. We have tried to be complete and accurate. We must caution readers, however, that there is no substitute for reading the actual statutes, regulations, and other documents that apply. Those are controlling in the event of any inconsistency with material in this brochure.
OFAC Laws, Embargoed Countries, and Criminal Penalties
A —— , 50 U.S.C. App. §§§§ 1-44 (“TWEA”) [North Korea, Cuba, Transaction Control Regulations] provides for ten years imprisonment, a USD1,000,000 fine for corporations, and a $100,000 fine for individuals, as well as forfeiture of funds or other property involved in violations [In addition, 18 U.S.C. §§ 3571 provides that organizations or individuals convicted of violating a criminal statute may be fined the greater of the amount specified in the statute, or twice the pecuniary gain or loss from the violation and that individuals may be fined $250,000 for felonies];
B —— , 50 U.S.C. §§§§ 1701-06 (“IEEPA”) [Iraq, Sudan, Iran, Terrorism, Narcotics, Nonproliferation, Sierra Leone, Zimbabwe, the Balkans, Syria, and Burma] provides for ten years imprisonment, and a USD50,000 fine for corporations and individuals [In addition, 18 U.S.C. §§ 3571 provides that organizations or individuals convicted of violating a criminal statute may be fined the greater of the amount specified in the statute, or twice the pecuniary gain or loss from the violation, or $500,000 for felonies and that individuals may be fined $250,000 for felonies];
C —— , Pub.L. 101-513, 104 Stat. 2047-55 (“ISA”)
[Iraq] provides for twelve years imprisonment and a USD1,000,000 corporate or personal fine [In addition, 18 U.S.C. §§ 3571 pro vides that organizations or individuals convicted of violating a criminal statute may be fined the greater of the amount specified in the statute, or twice the pecuniary gain or loss from the violation];
D —— , 22 U.S.C. §§ 287c (“UNPA”) [Iraq and Diamond Trading] provides for ten years imprisonment, a $10,000 criminal fine for corporations and individuals, and criminal forfeiture of funds or other property involved in violations [In addition, 18 U.S.C. §§ 3571 provides that organizations or individuals convicted of violating a criminal statute may be fined the greater of the amount specified in the statute, or twice the pecuniary gain or loss from the violation, or $500,000 for felonies and that individuals may be fined $250,000 for felonies];
E —— (“ISDCA”) codified at 22 U.S.C. 2349 aa-9 (Iran) has no criminal penalties, but general Customs and other relevant penalty provisions may apply to particular circumstances;
F —— (“CDA”), 22 U.S.C. §§ 6001-10 [relating to Cuba] has the same fines as TWEA above;
G —— (“LIBERTAD”) Act, 22 U.S.C. 6021-91, [relating to Cuba] has the same fines as TWEA above and codifies the Cuban Assets Control Regulations;
H —— , (enacting 8 U.S.C. 219, 18 U.S.C. 2332d and 18 U.S.C. 2339b) [Cuba, North Korea, Iran, Iraq, Syria, and Sudan] provides for criminal penalties of $500,000 per count against corporations, and ten years imprisonment and/or $250,000 per count for individuals, for willful violations;
I —— , Pub L. No. 106-120, tit. VIII, 113 Stat 1606, 1626-1636 (1999) (to be codified at 21 U.S.C. §§§§ 1901-1908) provides for criminal penalties of $10,000,000 per count against corporations, and thirty years imprisonment and/or $5,000,000 per count for individuals, for willful violations;
J —— at 18 U.S.C. §§ 1001 provides for five years imprisonment and a USD10,000 criminal fine for knowingly making false statements or falsifying or concealing material facts when dealing with OFAC in connection with matters under its jurisdiction.
OFAC has authority to impose civil penalties for violations under IEEPA (USD11,000), TWEA (USD65,000), the Iraqi Sanctions Act (USD325,000), and the Foreign Narcotics Kingpin Designation Act (USD1,075,000), as well as $55,000 for banking transactions under the Antiterrorism Act. Each set of regulations contains procedures for Civil Penalties in Sections 701 through 706 of the pertinent regulations.
Over the past several years, OFAC has had to impose millions of dollars in civil penalties involving payments and exports. The majority of the fines resulted from illegal transfers referencing targeted countries or SDNs. When it comes to OFAC’s attention that an illicit transaction has occurred.
OFAC normally sends an administrative demand for information, called a “602 letter” to the exporter requesting an explanation of the transaction. Upon receipt of a response to this letter, the case may be referred to the Civil Penalties Division, which issues a “Pre-penalty Notice” citing the violation and stating the amount of the proposed penalty. The exporter then has thirty days to make a writ ten presentation as to why a penalty should not be imposed, or, if imposed, why it should be in a lesser amount than proposed.
It is critical to answer such “Pre-penalty Notices” since failure to respond may result in default judgments levying maximum fines. Mitigating factors in Civil Penalty procedures include self-disclosure, the use and sophistication of interdict software, and other compliance initiatives.
TWEA Civil Penalty and forfeiture proceedings include the opportunity for an administrative hearing and pre-hearing discovery prior to imposition of a penalty or forfeiture.