OFAC sanction activity

The U.S. and the U.K. this week released a new round of sanctions against people and entities helping to finance the terror group Hamas and Palestinian Islamic Jihad. The designations target various PIJ and Hamas officials, a Lebanon-based money exchange company and others.

The Office of Foreign Assets Control this week issued a new guidance to make non-governmental organizations and others aware of the licenses and authorizations available for humanitarian-related transactions involving the Palestinian people. OFAC stressed that its “sanctions do not stand in the way of legitimate humanitarian assistance” to the region, and the guidance outlines what types of transactions and services are allowed.

The Canadian government should release more sanctions guidance to lower the business uncertainty that has spiked since Russia’s invasion of Ukraine last year and the implementation of Canada’s new deemed ownership rules in June, lawyers said at a conference this week. A Canadian official said the government is working on guidance but stressed that the wide scope of the country’s sanctions laws, particularly against Russia, is unlikely to change.

The Office of Foreign Assets Control this week sanctioned 13 Sinaloa Cartel members and four Mexican companies for their ties to fentanyl trafficking. The designations, coordinated with the Mexican government, target several high-ranking cartel officials, including Sinaloa's Sonora-based “plaza boss” Juan Carlos Morgan Huerta and his adult family members.

Petitioning to be delisted from a sanctions regime has become increasingly difficult and often lacks transparency, both in the U.S. and Canada, trade lawyers from both countries said this week. Several lawyers, including a former high-ranking senior U.S. sanctions official, said designated people often aren’t given an adequate explanation for why they were sanctioned and therefore aren’t able to fairly challenge the basis for their designation.

Multinational banks are more often choosing not to authorize payments involving sanctioned jurisdictions or people, even if those payments are authorized by a general license or not subject to restrictions, said Richard Newcomb, a DLA Piper lawyer and former director for the Office of Foreign Assets Control. “Even if authorized, banks increasingly will not process a transaction involving or touching a sanctioned country or do business with anyone that has unlawfully done business with a sanctioned person or country,” Newcomb said.

An Illinois-based financial services firm reached a $206,213 settlement with the Office of Foreign Assets Control this week after the company allowed its prepaid reward card programs to be used by people in sanctioned regions, including Iran, Syria, Cuba and the Crimea region of Ukraine. OFAC said Swift Prepaid Solutions’ lack of “comprehensive geolocation controls” led to 12,391 violations of U.S. sanctions programs.

The Office of Foreign Assets Control last week sanctioned Ekaterina Zhdanova, a Russian national who the agency said has laundered money and moved funds on behalf of wealthy Russians using virtual currency.

The U.S. this week announced a spate of new Russia-related sanctions and export controls, targeting people and companies supplying Russia’s military, aiding its defense industrial complex or operating in various Russian financial, metals, government and procurement sectors. The measures include additions to the Commerce Department’s Entity List and more than 200 combined sanctions by the Treasury and State departments targeting businesses in China, the United Arab Emirates and elsewhere for sending export-controlled components to Russia.

The U.S., the U.K. and Canada issued new sanctions this week against Myanmar, targeting various entities and officials with ties to the country’s military regime and its purchase of weapons.