Category Archives: Sanctions

How are non-trial enforcement mechanisms facilitating the resolution of foreign bribery cases?

by Sandrine Hannedouche-Leric, Elisabeth Danon, and Brooks Hickman

A new Study on Resolving Foreign Bribery Cases with Non-Trial Resolutions builds a typology of non-trial resolutions available to the Parties to the OECD Anti-Bribery Convention and takes stock of how these resolutions have been used to resolve foreign bribery cases in recent years.

The Study focuses on key legal, procedural and institutional challenges attached to the use of non-trial resolutions to conclude foreign bribery cases. It provides data demonstrating a clear trend to resolve these cases outside the court room. In particular, it shows that nearly 80% of foreign bribery cases concluded since the OECD Anti-Bribery Convention entered into force 20 years ago have been resolved with a non-trial enforcement vehicle. Relying on data and case examples, it analyses how these instruments have driven the enforcement of foreign bribery laws. In some countries, non-trial resolutions have provided the exclusive means for sanctioning legal persons, while other countries have used non-trial resolutions to impose sanctions in their first-ever foreign bribery resolutions. Continue reading

Two Truths and a Lie About Settlements in Bribery Cases

by Pascale Hélène Dubois, Kathleen May Peters, and Roberta Berzero

If we were playing “Two Truths and a Lie,” we would say the following: (a) settlement agreements are used in a variety of jurisdictions as an alternative to litigation; (b) settlement agreements can offer parties the opportunity to save time and resources while securing a predictable outcome; (c) there is a book that will tell you everything you need to know about settlements in bribery cases. The last, of course, is the lie. But only until Spring 2020.

What do settlements within the World Bank Group Sanctions System look like? Why do entities and individuals choose to enter into settlements with the Bank Group? How do settlements support the Bank Group’s mission to further development impact and contribute to safeguarding donor funds in the projects it finances worldwide? These and other questions will be addressed by the chapter “Settlements Within the World Bank Group Sanctions System” to be published in spring 2020 in the forthcoming book from Edward Elgar Publishing, “NEGOTIATED SETTLEMENTS IN BRIBERY CASES – A Principled Approach,” edited by Tina Søreide, Norwegian School of Economics (NHH), Norway and Abiola Makinwa, The Hague University of Applied Sciences, the Netherlands. Continue reading

OFAC Takes Enforcement Action Against U.S. Parent Company for its Recently Acquired Chinese Subsidiary’s Iran Sanctions Violations

by Brad S. Karp, H. Christopher Boehning, Jessica S. Carey, Christopher D. Frey, Michael E. Gertzman, Roberto J. Gonzalez, Richard S. Elliott, Rachel M. Fiorill, Karen R. King, Joshua R. Thompson

Enforcement Action Shows the Importance of Pre-Acquisition Sanctions Due Diligence and Post-Acquisition Sanctions Compliance Enhancements

On March 27, 2019, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) announced a $1,869,144 settlement agreement with Connecticut-based Stanley Black & Decker, Inc. (“Stanley Black & Decker”), a manufacturer of industrial tools and household hardware, regarding 23 apparent violations of OFAC’s Iran sanctions regulations.[1] OFAC determined that Stanley Black & Decker’s Chinese subsidiary, Jiangsu Guoqiang Tools Co. Ltd. (“GQ”), knowingly provided power tools and spare parts to Iranian end-users.[2] According to OFAC, GQ’s shipments were made via third-party intermediaries, located in the United Arab Emirates and China, with the knowledge that the products were ultimately destined for Iran.[3]  Under U.S. law, non-U.S. companies owned or controlled by U.S. companies are required to adhere to Iran sanctions as if they were U.S. persons.  The settlement,  along with the Kollmorgen Corporation (“Kollmorgen”) settlement in February 2019, signals the Trump Administration’s willingness to hold U.S. parent companies liable for their subsidiaries’ Iran sanctions violations, which is an area that, prior to this year, had seen little enforcement activity to date. Continue reading

New Technologies to Better Understand the Sanctions Ecosystem and Manage Risk

By Matthew Epstein and Robert Werner

A surge of investor capital into FinTech has created new offerings in data and network analytics that are impacting expectations for financial crime and legal compliance. A number of leading financial institutions and global corporates have embraced the opportunities created by emerging technologies, thereby setting new standards for risk management. The U.S. Department of the Treasury and bank regulators have taken notice, and are encouraging the private sector to explore innovative technologies as a better means of protecting financial integrity, in particular with respect to illicit financial activity conducted by networks targeted by sanctions.

At the Financial Crimes Enforcement conference hosted by the American Bankers Association and the American Bar Association on December 3, Treasury Under Secretary for Terrorism and Financial Intelligence Sigal Mandelker said, “Private sector innovation, including new ways of using existing tools or by adopting new technologies, can be an important element in safeguarding the financial system against an array of threats.” That day, five U.S. regulatory agencies released a statement (PDF: 67.4 KB) encouraging banks to use new technologies to help “identify and report money laundering, terrorist financing, and other illicit financial activity.”

This is not the first time the U.S. government has called for deployment of new technologies to manage risk. Continue reading

UK Treasury Publishes First Post-Brexit UK Sanctions Regulations and Guidance

 by Jane Shvets, Konstantin Bureiko, Tom Cornell, and Satish M. Kini

On 31 January 2019, the UK’s HM Treasury published the first set of regulations (the “Regulations”) under the Sanctions and Anti-Money Laundering Act 2018 (“SAMLA”).[1] The Regulations are due to come into force on “exit day”—29 March 2019 at 11.00pm—if the UK leaves the European Union without a deal. The UK Office of Financial Sanctions Implementation (“OFSI”) has also published new guidance on post-Brexit financial sanctions, which should be read in tandem with the Regulations.[2] In many respects, the Regulations mirror sanctions measures currently in force in the UK under EU regulations and merely give them an independent statutory footing in the UK. But the Regulations do diverge from established EU sanctions practice in certain places and may require companies in the UK to change their sanctions compliance practices. Continue reading

Economic Sanctions and Anti-Money Laundering Developments: 2018 Year in Review

by Brad S. Karp, Christopher Boehning, Jessica S. Carey, Michael E. Gertzman , Roberto J. Gonzalez, Richard S. Elliott, Rachel M. Fiorill, and Karen R. King.

Executive Summary

This memorandum surveys economic sanctions and anti-money laundering (“AML”) developments and trends in 2018 and provides an outlook for the year ahead. These areas remained a high priority last year, with the Trump administration making major changes in U.S. sanctions policy and federal and state agencies imposing over $2.7 billion in penalties for sanctions/AML violations. We also provide some thoughts concerning compliance and risk mitigation in this challenging environment.

After a period of relative quiet on the sanctions enforcement front, the last months of 2018 saw a $1.3 billion multi-agency resolution with Société Générale S.A., a burst of enforcement actions by Treasury’s Office of Foreign Assets Controls (“OFAC”), and Treasury Under Secretary Sigal Mandelker’s announcement that OFAC will soon publish guidance on the “hallmarks of an effective sanctions compliance program” and incorporate these principles in future settlements. Last year also witnessed significant and constant changes to the sanctions policy landscape. In a dramatic break from the Obama administration’s policy towards Iran, President Trump withdrew the United States from the Joint Comprehensive Plan of Action (“JCPOA”) in May 2018, and fully revoked JCPOA-era sanctions relief by November 2018, creating new sanctions risks for U.S. and non-U.S. companies across industries, generating conflict-of-law issues, and straining relations with U.S. allies.  The administration also took a number of significant actions with respect to Russia/Ukraine sanctions, including designating a number of Russian “oligarchs” and their global companies and taking further steps to implement the Russian secondary sanctions regime enacted by Congress in the 2017 Countering America’s Adversaries through Sanctions Act (“CAATSA”).  The administration also imposed several new sanctions against the Maduro regime in Venezuela (and recently sanctioned Venezuela’s national oil company), continued its campaign of “maximum pressure” on North Korea, implemented Global Magnitsky Act sanctions targeting human rights abuses and corruption worldwide, and established new sanctions programs targeting the Nicaraguan regime and non-U.S. interference in U.S. elections. Continue reading

Trends in U.S. Sanctions Enforcement During the Trump Administration

by Dr. Bryan R. Early and Keith A. Preble

U.S. Economic Sanctions Policy

Economic sanctions are coercive foreign policy tools that work by disrupting otherwise profitable commerce between the governments imposing them and their targets. In order to be effective, governments imposing sanctions must obtain the compliance of their constituents, or the sanctions will not harm their targets as intended. Complying with sanctions is costly for companies not only in terms of the commerce they disrupt, but also with respect to the investments required to prevent unintentional violations. Thus, as policy tools, economic sanctions inherently create costly compliance obligations for companies. Given that employing sanctions appears to run counter to U.S. President Donald Trump’s goal of reducing regulatory burdens on U.S. firms, it is surprising that he has heavily relied upon threatening and imposing sanctions as part of his administration’s foreign policy.

Two years into the Trump Administration, we can begin to see evidence of how this tension in President Trump’s policy preferences has affected the implementation of U.S. sanctions. Despite the fiery rhetoric directed at the targets of U.S. sanctions, our research indicates that the U.S. Department of Treasury’s Office of Foreign Asset Control (OFAC) has adopted a softer stance on sanctions enforcement during the Trump Administration than during his predecessors’ administrations. The major area in which OFAC’s recent enforcement policies have been more stringent is in punishing foreign sanctions violators. This suggests that OFAC has resolved the tension between reducing regulatory burdens on U.S. firms and President Trump’s sanctions preferences by focusing more of its attention on punishing foreign firms instead of American ones for violating sanctions. Continue reading

Will This One Stick?

by Veronica Root

Over the past several years, there have been many attempts to garner greater transparency of the government’s use of nonprosecution agreements and monitorships.  On three occasions the party attempting to obtain a ruling that would reign in the government’s authority over these matters has won at the district court level.  In each of these instances, however, the court of appeals reversed. Continue reading

Repeat Corporate Misconduct

by Veronica Root

But for other more salacious political concerns, the biggest story of the last couple weeks likely would have been Mark Zuckerberg’s testimony before Congress.  Zuckerberg spent two days answering hundreds of questions from lawmakers.[1]  Much of the questioning was concerned with Facebook’s protection, or alleged lack thereof, of its users’ privacy.  The testimony, however, once again raises questions about how companies that engage in repeated instances of misconduct should be sanctioned. Continue reading

Global Magnitsky Sanctions Target Human Rights Abusers and Government Corruption Around the World

by David S. Cohen, Kimberly A. Parker, Jay Holtmeier, Ronald I. Meltzer, David M. Horn, Lillian Howard Potter, and Michael Romais

On December 20, 2017, President Trump issued a new Executive Order (PDF: 235 KB) (EO) targeting corruption and human rights abuses around the world.

The EO implements last year’s Global Magnitsky Human Rights Accountability Act (the Global Magnitsky Act), which authorized the president to impose sanctions against human rights abusers and those who facilitate government corruption.[1] The US Department of the Treasury’s Office of Foreign Assets Control (OFAC), which will administer the EO, also added 15 individuals and 37 entities to its Specially Designated Nationals and Blocked Persons List (SDN List). Continue reading