Posts Tagged ‘OFAC’


NYT surprised by bypassed sanctions

December 28, 2010

The New York Times printed an article on Dec. 24 expressing surprise about the number of licenses granted to American companies to do business in countries under U.S. economic sanctions.  The licenses, which are more like waivers, are granted by a “little known” agency.  “Little known,” perhaps, to the New York Times, but Money Jihad follows OFAC closely (see here, here, and here for example).

The New York Times managed to get some rare public comments from OFAC director Adam Szubin, who is quoted as saying his organization is too under-resourced to adequately evaluate all license requests.  It’s a curious statement given Treasury official Daniel Glaser’s testimony before Congress earlier this year that Treasury has all the resources–legally and financially–that it needs in order to maintain its CFT and sanctions programs.  Which assistant secretary is off message here?

Anyway, the New York Times piece is worth a look.  For now I would just like draw readers’ attention to part of the interesting data that NYT compiled from Treasury’s database about the number of licenses granted to companies.  Here are ten businesses with the highest number of waivers to engage in commercial activities with sanctioned countries:

Which corporations have the most OFAC waivers

Top 10 licensees operating in sanctioned countries

Note in particular the licenses for Iran.  General Electric, Coico Medical LLC, and American Pulp & Paper are busy beavers there.

Many of the licenses are for valid humanitarian purposes.  Some aren’t.  Popcorn seller Henry Lapidos told the New York Times that Iranian soldiers wouldn’t  “be taking microwavable popcorn” to war …  Pretty glib, buddy.  Sell the popcorn if you like, but don’t fool us into believing that your local distributor and retailers aren’t run by an Iranian bonyad under the control of a mullah or IRGC commander who’s using the profits to fund a crackdown on pro-reform dissidents.


Thirty-seven designations and a hill of beans

November 14, 2010

False names, false flags, rapid changes in owners, managers, and operators—all of this is part of Iran’s effort to use IRISL, its shipping fleet, to evade international sanctions.  Iran doesn’t just sit down and take its medicine from the U.S., Europe, and the United Nations.  It does everything it can to move goods, supplies, weapons, and materials in and out of the world’s ports without detection.

Although the U.S. has already designated IRISL’s known ships, it took an additional step forward last month by designating 37 companies that own or control IRISL ships.  From Treasury’s press release:

The U.S. Department of the Treasury today announced the designation of 37 front companies based in Germany, Malta, and Cyprus and five Iranian individuals for being owned or controlled by, or acting for or on behalf of, the Islamic Republic of Iran Shipping Lines (IRISL) and its affiliates.  Today’s action…targets IRISL’s complex network of shipping and holding companies and executives and further exposes Iran’s use of its national maritime carrier to advance its illicit weapons of mass destruction (WMD) program and to carry military cargoes.

“We will continue to expose the elaborate structures and tactics Iran uses to shield its shipping line from international scrutiny so that it can continue to facilitate illicit commerce,” said Under Secretary for Terrorism and Financial Intelligence Stuart Levey. “This pattern of obfuscation is leading the private sector around the world to refuse business with Iran rather than risk becoming involved in its nuclear and missile programs.”

Tighter sanctions are a plus, but there are always limits.  In an investigation into IRISL earlier this year, the New York Times found that Iran’s abilities to evade “goes well beyond the knowledge of even the Treasury Department” and that, “As difficult as it is to keep track of ships that are on the blacklist, ships that have never been listed present an even greater challenge.”  The New York Times suggests that no matter how many ships and companies Treasury designates, Iran will just keep finding ways around the sanctions. 

But when our leaders basically take military options off the table, and Iran writes-off diplomatic options, futile economic restrictions are about all that’s left.


Treasury mysteriously de-lists Faraj Farj Hassan al Saadi

October 20, 2010

Yesterday, lumped in with a laundry list of Columbian drug dealers designated under the Kingpin Act, the Treasury Department quietly deleted Faraj Faraj Hussein al-Sa’idi (also known by five aliases) from their terror listing of specially designated nationals.

The reasons for the de-listing are unclear, and few if any media outlets have published any further detail, much less a proper justification for the removal.

According to Kufr Akbar’s Notes on Sunni Terrorists blog, Faraj al-Sa’idi was convicted by a court in Milan, Italy, in 2006 to a five year prison sentence, a conviction which was upheld on appeal, for membership in the terrorist organization known as the Libyan Islamic Fighting Group.  Nevertheless, al-Sa’idi was never extradited from Britain where he has lived since 2002.

The U.N. Security Council Al-Qaida and Taliban Sanctions Committee conducted a review of Mr. al-Sa’idi’s case and apparently decided NOT to de-list him.  The U.N.’s review was completed in January 2010.

The Brits give him safe haven, the U.S. removes him from its terror list, but Italy and the UN stick to their guns on this slug.  Here’s the question for Adam Szubin, the director of the agency within Treasury that removed Sa’idi from Treasury’s list:  what gives?


Sometimes you feel like a nut…

August 15, 2010
Two Iranian nuts

Ahmadinejad & Mr. Pistachio (a.k.a. Ayatollah Rafsanjani)

OFAC issued guidance last week related to the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, which was signed into law by Pres. Obama this summer.  “International Trade Law News” tells us what this means for Americans:  no more Persian rugs, no pistachio nuts:

OFAC’s Iranian Transactions Regulations currently contain a general license authorizing the importation into the U.S. of foodstuffs from Iran that are classified under chapters 2-23 of the Harmonized Tariff Schedule of the United States (HTS) (such as pistachios and non-beluga caviar (which is prohibited by other aspects of law). In addition, the importation of carpets and other textile floor coverings of Iranian origin that are classified under chapter 57 or heading 9706.00.0060 of the HTS are also authorized.

However, due to the additional Iran sanctions recently passed by Congress, OFAC will soon issued [sic] a regulation amending the Iranian Transaction Regulations to eliminate the general license and such imports will be no longer permitted starting on September 29, 2010. OFAC has also indicated that any authorized Iranian products must be imported by September 28, 2010 and it will not issue any specific licenses authorizing any imports after that date. As a result, importers must move quickly to ensure that any pending orders are entered for consumption by their customs brokers by September 28, 2010.

Attempts to import Iranian origin foodstuffs and carpets after September 28th can lead to significant civil and criminal penalties. For example, civil penalties of up to $250,000 or twice the amount of the transaction that is the basis of the violation can be imposed administratively. Criminal penalties of up to $1,000,000 in fines and imprisonment for up to 20 years can be imposed for willful violations of the Iranian Transaction Regulations.

The move could seem punitive considering that thousands of Iranian pistachio farmers rely on exports, which have already been hurt by crop shortfalls and the “Dutch Disease”.  Food sanctions would also seem to undercut the administration’s argument that they are pursuing “smart” sanctions that only target specific individuals, businesses, and technologies tied to Iran’s nuclear program.

On the other hand, the days of the small, family pistachio farm are numbered.  The sector has long since been taken over by multi-millionaire mullahs & bonyad conglomerates.  The nuttiest politicians of Iran like Ayatollah Rafsanjani have acquired a fortune by exploiting the pistachio industry.

In any case, and Levi Johnston’s pistachio advice notwithstanding, I think I’ll stick to eating good old-fashioned Georgia peanuts for a while.


Butt out of Lebanon, says Treasury

July 30, 2010

OFAC has announced renewed sanctions blocking the assets of “persons” who would seek to interfere with Lebanon or undermine its sovereignty.  Persons = Syria.

For more, has run an article, “Obama renews asset freeze of people working with Hezbollah.”

If for some reason you forgot to read the always riveting Federal Register today, the specific sanctions rules are available here.


Feckless asset freezes?

April 6, 2010

The Wall Street Journal ran an excellent article by Steve Stecklow yesterday on the teeny tiny amount of assets frozen under U.S. and international sanctions regimes against Iran.  The experts are saying that it’s not about the dollars, but the pressure—let’s hope they’re right.

In its latest proposed set of tougher United Nations sanctions on Iran, the U.S. is again relying on asset freezes as one tool to pressure the country not to build nuclear weapons.

But a close look at how much Iranian money has been frozen to date in the U.S. under existing sanctions shows that the total amount is surprisingly small, less than $43 million, or roughly a quarter of what Iran earns in oil revenue in a single day.

Other countries also haven’t frozen very much, despite freezes implemented by the European Union and the U.N., interviews show. Switzerland, for example, has frozen only about $1.4 million in Iranian assets—a tiny fraction of the $712 million Swiss companies exported to Iran last year.

“It’s peanuts,” says Jeremy P. Carver, a British attorney who has advised governments on implementing sanctions. “It’s not going to really change a thing.”

U.S. officials do not dispute that current amounts of frozen Iranian assets seem small. In some cases, Iran has shifted the money outside the U.S. or EU to avoid sanctions. The officials emphasize that their strategy is not to seize many assets, but to pressure Iran to change its ways by making it extremely difficult for it to do business.

“The strategy is not to freeze as many assets as we can,” says Stuart Levey, the Treasury Department official who has headed the U.S. sanctions initiative during both the Obama and Bush administrations. “That alone, without the full range of measures we can bring to bear, would be a failing strategy.”

The proposed new asset freezes come as an Iranian firm recently acquired hardware used to enrich uranium, circumventing current sanctions designed to prevent such purchases, The Wall Street Journal reported over the weekend. The International Atomic Energy Agency is investigating how the Iranian firm procured valves and vacuum gauges used in uranium enrichment that were made by a French company owned by Tyco International Ltd. until December. The French and U.S. companies have said they knew nothing about it.

Iran insists it is trying to develop civilian atomic power—not weapons. A spokesman for Iran’s U.N. mission in New York did not respond to requests for comment for this story.

Asset freezes remain part of the U.S. and its allies’ arsenal in trying to pressure Iran not to develop atomic weapons…

The full WSJ article is here.  My closing comment is that if I were one of the bankers required to report information on my customers all the time to the Treasury, I would be disappointed to hear that the heavy federal regulations on my industry hadn’t amounted to much.


Tightening the nuke noose? Lloyds fined for helping Iranian banks evade sanctions

January 4, 2010

Over the holidays, the U.S. Treasury’s Office of Foreign Asset Control announced a settlement with Lloyds Banking Group for its role in channeling Iranian money through American banks.  (Or as one commenter put it, “English whorehouse Lloyds TSB Bank settles out of court.”)

Here’s how it worked:  banks in Iran, Libya, and the Sudan held accounts with Lloyds.  Then Lloyds allowed money from those accounts to be wired or transferred through U.S. financial institutions after stripping identifying information such as bank names, customer names, and addresses.

Naturally, Lloyds knew who their own clients were, and they knew they weren’t supposed to allow transactions through the U.S., which is why they stripped the information from the transactions.

Lloyds clients include:

  • Bank Melli, Iran
  • Bank Saderat, Iran
  • Bank Sepah, Iran
  • National Bank of Khartoum, Sudan

In allowing these transactions to take place, Lloyds violated the U.S. International Emergency Economic Powers Act.  The money may have benefited terrorism or furthered Iranian nuclear ambitions.  How?  For one thing, once the money was transferred, it could be put into the coffers of front companies to pay for “goods and services” (such as sensitive weapons, technologies, or other materials).

As I noted in my review of Out of the Ashes, a powerful case can be made against the effectiveness of economic sanctions on Middle Eastern dictatorships.  The news that major financial institutions such as Lloyds have allowed for the circumvention of the sanctions regime casts doubts on both the strategy behind the sanctions and the how the sanctions are being administered.

But, congratulations are in order for the New York DA’s office and OFAC for uncovering and penalizing the activity, and for making our sanctions regime slightly less sieve-like.


Feds tighten definition of “supporting” terror

December 14, 2009

The U.S. Treasury’s Office of Foreign Assets Control (OFAC) has amended language in its rules about what constitutes material support of terrorism.  The added definition is fairly thorough:

The term financial, material, or technological support, as used in § 594.201(a)(4)(i) of this part, means any property, tangible or intangible, including but not limited to currency, financial instruments, securities, or any other transmission of value; weapons or related materiel; chemical or biological agents; explosives; false documentation or identification; communications equipment; computers; electronic or other devices or equipment; technologies; lodging; safe houses; facilities; vehicles or other means of transportation; or goods. ‘‘Technologies’’ as used in this definition means specific information necessary for the development, production, or use of a product, including related technical data such as blueprints, plans, diagrams, models, formulae, tables, engineering designs and specifications, manuals, or other recorded instructions.

OFAC’s notice in the federal register says that they were not legally required to obtain public input to adopt this rule.  But they did provide phone and fax numbers for further information.

So, to seek clarification on some of the above wording, I tried to contact OFAC.  I have no fax access at the moment, so I tried their non-toll-free phone numbers only to get somebody’s voicemail repeatedly.  Later I found an OFAC email address, but I have not received a response to the email I sent them on Dec. 2.

Anyway, one question I had was whether the provision of medical care to a terrorist considered to be material support of terrorism?  It’s not a purely theoretical question.  Foreign insurgent jihadists who are wounded by U.S. military forces will seek medical attention by sympathetic entities.  If we know which entities provide their care, would we seek to block their assets or transactions?

Time for a follow-up email…