National Emergencies | OFAC settlement re Iranian clinker | Venezuelan officials sanctioned
In this update, Edward Carlson and Jonas Patzwall of Floyd Zadkovich (US) LLP assess the latest series of US sanctions ranging across Libya, Cuba, Iran and Venezuela. US sanctions continue to command the attention of any businesses or individuals operating in or with counter-parties in these countries, with caution the prevailing wind.
1. National Emergency Sanctions remain in effect
In a February 19, 2019 letter to Congress, the Trump administration announced that the U.S. government’s national emergency with respect to Libya remains in effect, as the present situation poses “an unusual and extraordinary threat” to both the national security and the foreign policy of the United States. To “protect against the diversion of assets or other abuse by persons hindering Libyan national reconciliation,” the property of certain Libyan government officials, agencies, and Qadhafi family members remains blocked if subject to U.S. jurisdiction. Persons doing business with Libya will thus need to continue to exercise a high level of due diligence to ensure no sanctionable connection with Libya.
President Trump also advised Congress that the national emergency with respect to Cuba shall remain in effect beyond February 22, 2019, citing U.S. concerns that “mass migration from Cuba would endanger the security of the United States.” The unauthorized entry of vessels subject to U.S. jurisdiction into Cuban territorial waters continues to violate U.S. law, due to the risks such vessels pose to “safe, orderly, and legal migration” from Cuba to the U.S.
2. OFAC settlement in Iran Sanctions Civil Penalty Case
On February 21, 2019, OFAC announced a settlement agreement in the amount of USD 506,250 with ZAG IP, LLC (formerly known as ZAG International, LLC), a U.S. commodities trader located in Connecticut. The settlement results from several apparent violations of U.S. sanctions against Iran. The violations stem from five separate transactions carried out between 2014 and 2015, totaling USD 14,495,961.
According to OFAC, ZAG purchased 263,563 metric tons of Iranian clinker from a company located in the United Arab Emirates with knowledge that the cement clinker was sourced from Iran. It then resold and transported the clinker to a company in Tanzania. ZAG self-disclosed the apparent violations, which OFAC found constituted a non-egregious case. The main take away from this action: self-reporting sanctions violations to OFAC can result in significant penalty reduction. (The statutory maximum civil monetary penalty amount for the apparent violations: $28,991,922. Base civil monetary penalty amount: $625,000).
3. OFAC designates Venezuelan officials aligned with Maduro Regime
OFAC continues to target Venezuelan government officials.
On February 15, 2019, OFAC sanctioned five officials in charge of Maduro’s security and intelligence apparatus due to systematic human rights violations and ongoing suppression of democracy in Venezuela. OFAC also sanctioned the President of Venezuela’s state-owned oil company, Petroleos de Venezuela, S.A. (PdVSA).
The list of sanctioned Venezuelan individuals expanded on February 25, 2019, with the targeting of four governors of Venezuelan states who continue to stand by President Maduro. OFAC justified these sanctions due to the individuals’ ongoing involvement in “endemic corruption” and blocking the delivery of humanitarian aid. These actions further illustrate the United States’ strong support for Interim President Juan Guaidó, and his effort to establish an alternative interim government replacing the Maduro regime. As such, all property and interest in property of the above individuals subject to US jurisdiction is blocked.
Should you require any further details, please contact Edward Carlson on (firstname.lastname@example.org or +1 917 714 0189) or Jonas Patzwall (email@example.com or +1 251 414 6317) or your usual contact at Floyd Zadkovich (US) LLP.
Floyd Zadkovich is an international law firm comprising a US law firm registered in New York and an English law firm regulated by the SRA in London. We have extensive and continuing experience advising an array of clients on sanctions and related issues, including the effect of sanctions of international commercial contracts and business, confirming whether or not certain companies or individuals are subject to sanctions, dealing with incidents or issues occurring in real-time as a result of potentially sanctioned conduct, and applying to and liaising with OFAC to obtain special licenses or clarifications on contemplated trade for clients.