Office of Foreign Assets Control

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Office of Foreign Assets Control
Logo of the U.S. Office of Foreign Assets Control (OFAC).jpg
Agency overview
Formed December 1950
Preceding
  • Office of Foreign Funds Control
Headquarters Washington, D.C.
Employees Approximately 200 (2013)[1]
Annual budget $30.9 million (2013)
Agency executive
Parent department Department of the Treasury

The Office of Foreign Assets Control (OFAC) is a financial intelligence and enforcement agency of the U.S. Treasury Department charged with planning and execution of economic and trade sanctions in support of U.S. national security and foreign policy objectives. [3] Under Presidential national emergency powers, OFAC carries out its activities against foreign states as well as a variety of problematic organizations and individuals, like terrorist groups, deemed to be a threat to U.S. national security.[4]

As a component of the U.S. Treasury Department, OFAC operates under the auspices of the Office of Terrorism and Financial Intelligence and is primarily composed of intelligence targeters and lawyers. While many of OFAC's targets are broadly set by the White House, most individual cases are developed as a result of lengthy investigations by OFAC's Office of Global Targeting (OGT).[5]

Often described as one of the most powerful yet unknown government agencies,[5][6] OFAC has been in existence for more than a half-century and is playing an increasingly significant role as a foreign policy lever of the U.S. government. The agency is empowered to levy significant penalties against entities that defy it, including imposing colossal fines, freezing assets, and altogether barring parties from operating in the U.S. Notably, in 2014, OFAC reached a record $1 billion settlement with the French BNP Paribas, which was a portion of approximately $9 billion penalty imposed in relation to the case as a whole.[7]

History[edit]

Involvement of the U.S. Department of the Treasury in economic sanctions against foreign states dates to the War of 1812, when Secretary Albert Gallatin administered sanctions against Great Britain in retaliation for the harassment of American sailors.[4][8]

The Division of Foreign Assets Control, the immediate predecessor to OFAC, was established in December 1950. Predecessor agencies of the Division of Foreign Assets Control include Foreign Funds Control, which existed from 1940 to 1947, and the Office of International Finance (1947 to 1950). OFAC's earliest predecessor, Foreign Funds Control, was established by Executive Order 8389 as a unit of the Office of the Secretary of the Treasury on April 10, 1940. The authority to establish Foreign Funds Control was derived from the Trading with the Enemy Act 1917. Among other operations, Foreign Funds Control administered wartime import controls over enemy assets and restrictions on trade with enemy states. It also participated in administering the Proclaimed List of Certain Blocked Nationals, or the "Black List", and took censuses of foreign-owned assets in the United States and American-owned assets abroad. Foreign Funds Control was abolished in 1947, with its functions transferred to the newly established Office of International Finance (OIF). In 1948, OIF activities relating to blocked foreign funds were transferred to the Office of Alien Property, an agency within the Department of Justice.[9]

The Division of Foreign Assets Control was established in the Office of International Finance by a Treasury Department order in 1950, following the entry of the People's Republic of China into the Korean War; President Harry S Truman declared a national emergency and blocked all Chinese and North Korean assets subject to U.S. jurisdiction. In addition to blocking Chinese and North Korean assets, the Division administered certain regulations and orders issued under the amended Trading with the Enemy Act.[8]

On October 15, 1962, by a Treasury Department order, the Division of Foreign Assets Control became the Office of Foreign Assets Control.[9]

Authority and activities[edit]

In addition to the Trading with the Enemy Act and the various national emergencies currently in effect, OFAC derives its authority from a variety of U.S. federal laws regarding embargoes and economic sanctions.[10]

In enforcing economic sanctions, OFAC acts to prevent "prohibited transactions," which are described by OFAC as trade or financial transactions and other dealings in which U.S. persons may not engage unless authorized by OFAC or expressly exempted by statute. OFAC has the authority to grant exemptions to prohibitions on such transactions, either by issuing a general license for certain categories of transactions, or by specific licenses issued on a case-by-case basis.[8] OFAC administers and enforces economic sanctions programs against countries, businesses or groups of individuals, using the blocking of assets and trade restrictions to accomplish foreign policy and national security goals. See United States embargoes for a list of affected countries.

OFAC is headquartered in the Treasury Annex, located on the corner of Pennsylvania Avenue and Madison Place, N.W., in Washington, D.C.

Under the International Emergency Economic Powers Act (IEEPA), the President of the United States is empowered during national emergencies to block the removal of foreign assets under the jurisdiction of the United States. That mandate is then executed by OFAC through issue of regulations that direct financial institutions accordingly.

Between 1994 and 2003, OFAC collected over $8m in violations of the Cuban embargo, against just under $10,000 for terrorism financing violations. It had ten times more agents assigned to tracking financial activities relating to Cuba than to Osama Bin Laden.[11]

As part of its efforts to support the Iraq sanctions, in 2005, OFAC fined Voices in the Wilderness $20,000 for gifting medicine and other humanitarian supplies to Iraqis.[12] In a similar case, OFAC is still attempting to collect (as of 2011) a $10,000 fine, plus interest, against Bert Sacks for bringing medicine to residents of Basra.[13]

In October 2007, a set of Spanish travel agency websites had their domain name access disabled by eNom: the domain names had been on the OFAC blacklist.[14][15] When queried, the United States Treasury referred to a 2004 press release that claimed the company "had helped Americans evade restrictions on travel to Cuba".[14]

In the case of United States v. Banki, on June 5, 2010, a U.S. citizen was convicted of violating the Iran Trade Embargo for failing to request Iranian currency transfer licenses in advance from OFAC. On August 25, 2010, the Iranian American Bar Association announced that it would file an amicus curiae brief with the United States Court of Appeals for the Second Circuit on United States v. Banki.[16] It has also hired lawyers to request further guidance from OFAC on import of goods from Iran.[17] Since 2010, The O.F.A.C has been one of the most powerful regulatory agency in the world. Its Control had been applied to several entities, non American companies included. Various cases shown that companies were willing to pay fines in order to comply with O.F.A.C regulation not be charged by federal judges. In the early 2012, a case has led to empower the O.F.A.C to settle with foreign company following the political need to extend U.S jurisdiction through the Department of justice. A case has led to empower the O.F.A.C to settle with foreign company following the political need to extend U.S jurisdiction through the Department of justice. Indeed, the case Standart chartered, a British bank was charged by the D.O.J for infringing numerous American rules including the O.F.A.C guidelines. In 2014, the O.F.A.C was involved to its biggest case so far in the U.S.A v. B.N.P.P with the biggest fine (8.9 billion dollars) imposed to a foreign major financial institution for U.S economic sanctions’ violations.

After that case the department of treasury built a fund dedicated to compensate individuals. After the now so called BNP case, the congress passed a law also established the United States Victims of State Sponsored Terrorism Fund. This new fund may compensate eligible United States persons who hold federal court judgments against foreign states designated state sponsors of terrorism, as well as the Americans held hostage in the embassy in Iran from November 1979 to January 1981.

Ever since, the O.F.A.C assert an extra territorial jurisdiction on the U.S economic sanctions program.

Sanctions programs[edit]

As of November 10, 2015, OFAC was administering the following sanctions programs:[18]

Table note: The numbers of individuals, companies, vessels, and aircraft are taken from the SDN List. However, any single entry on that list may be a target of multiple sanctions programs, so summing lines of the table will inflate the true sum due to duplication.

Tag Last updated Sanctions program Individuals Companies Vessels Aircraft 31 CFR CFR date EO EO
[561LIST] Iran Financial - - - - 561[19]
[BALKANS] Balkans related[20] 229 - - - 588[21] 13304[22]
[BELARUS] Belarus 208 - - - 548 13405
[BPI-PA] Patriot Act[23] - - - -
[BPI-SDNTK] Narcotics related[24] - - - - 598
[BURMA] Myanmar related 219 - - - 537 13448 13464
[CAR] Central African Republic 39 - - - 553
[COTED] Côte d'Ivoire 9 - - - 543
[CUBA] Cuban Assets Control 220 - 5 - 515
[CYBER] Computer hacking related - - - - 13694[25]
[DARFUR] Darfur 28 3 - - 546
[DPRK] North Korea 7 44 20 - 510 13551
[DPRK2] North Korea related 10 16 - - 13687
[DRCONGO] Democratic Republic of the Congo 106 27 - - 547
[EO13622] Iran related 17 6 - - 13622[26]
[EO13645] Iran related 9 10 9 - 13645[27]
[FSE-IR] Iran sanctions evaders 3 2 - - 13608[28]
[FSE-SY] Syria sanctions evaders - - - - 13608[28]
[FSE-WMD] WMD related[29] - - - - 13608[28]
[FSE-SDGT] Terrorism related[30] - - - - 13608[28]
[FTO] Terrorism related[31] - 552 - - 597
[HRIT-IR] Iran human rights - 26 - - 13606[32]
[HRIT-SY] Syria human rights 2 6 - - 13606[32]
[IFCA] Iran related[33] - - - -
[IFSR] Iranian Financial 239 857 - 60 561
[IRAN] Iranian Transactions 19 416 175 - 560
[IRAN-HR] Iran related 54 37 - - 13553[34]
[IRAN-TRA] Iran related 16 45 - - 13628[35]
[IRAQ2] Iraq related 287 84 - - 13315 13350
[IRAQ3] Iraq related 102 48 - - 13438
[IRGC] Iranian Financial 112 120 - 38 561
[ISA] Iran Act 3 17 - - 13574
[JADE] Myannar Jade[36] - - - -
[LEBANON] Lebanon 13 - - - 549 13441
[LIBERIA] Former Liberian Regime of Charles Taylor 45 70 - - 593
[LIBYA2] Libya related 134 3 - - 570
[MAGNIT] Magnitsky Act[37] 54 - - -
[NPWMD] WMD related[38] 211 892 351 76 544
[NS-ISA] Iran related[39] - - - - 13574
[NS-PLC] Palestinian License[40] - - - - 594[41]
[SDGT] Terrorism related[42] 3015 1963 - 101 594
[SDNT] Narcotics related[43] 436 511 - - 536
[SDNTK] Narcotics related[44] 2102 1125 5 - 598
[SDT] Terrorism 63 143 - - 595
[SOMALIA] Somalia 199 20 - - 551
[SUDAN] Sudan related - 223 - - 538
[SOUTH SUDAN] South Sudan - - - - 558 13664
[SYRIA] Syria related 235 180 10 38 542 13399 13460
[TCO] Transnational Criminal Organizations 201 41 - - 590 13581[45]
[UKRAINE-EO13660] Ukraine related 193 31 - - 13660[46]
[UKRAINE-EO13661] Ukraine related 95 144 - - 13661[47]
[UKRAINE-EO13662] Ukraine related - - - - 13662[48]
[UKRAINE-EO13685] Ukraine related - 42 - - 13685[49]
[VENEZUELA] Venezuela related 7 - - - 13692[50]
[YEMEN] Yemen 23 - - - 552
[ZIMBABWE] Zimbabwe 121 119 - - 541[51] 13391 13469

Specially Designated Nationals List[edit]

OFAC publishes the Specially Designated Nationals (SDN) List, which lists people, organizations and vessels with whom United States citizens and permanent residents are prohibited from doing business.[8] This list differs from the list maintained pursuant to Section 314(a) of the USA PATRIOT Act.[52]

When an entity or individual is placed on the SDN list it can petition OFAC to reconsider. But, OFAC is not required to remove an individual or entity from the SDN list. Two federal court cases have found the current Treasury/OFAC process to be constitutionally deficient.

In August 2009, a federal court ruling in KindHearts v. Treasury found that Treasury's seizure of KindHearts’ assets without notice or means of appeal is a violation of the Fourth and Fifth Amendments.[53]

On September 23, 2011, the Ninth Circuit Court of Appeals upheld a lower court’s ruling that procedures used by Treasury to shut down the Al Haramain Islamic Foundation of Oregon in 2004 was unconstitutional. The court said the Fifth Amendment's guarantee of due process requires Treasury to give adequate notice of the reasons it puts a group on the terrorist list, as well as a meaningful opportunity to respond. In addition, the court ruled that freezing the group's assets amounts to a seizure under the Fourth Amendment, so that a court order is required.[54]

As of October 7, 2015, the SDN List had more than 15,200 entries from 155 countries. Of those, 178 entries were for aircraft and 575 entries were for ships ("vessels"). The remaining 14,467 entries were for designated individuals and organisations.[55] OFAC creates separate entries in the SDN list for each alias of a designee, so the number of entries does not reflect the number of designees.[4]

See also[edit]

References[edit]

  1. ^ Kasia Klimasinska, Dakin Campbell, Ian Katz. Banks Woo Treasury Sanctions Pros to Navigate Complex U.S. Rules, Bloomberg, August 13, 2014.
  2. ^ Treasury Announces Additional Sanctions Against Iranian Engineering and Shipping Firms. Press release by OFAC Director Adam J. Szubin. March 28, 2012. Retrieved April 3, 2012.
  3. ^ Financial Weapons of War, Minnesota Law Review (2016), available at: http://ssrn.com/abstract=2765010
  4. ^ a b c Zarate, Juan C. (2013). Treasury's War. New York: PublicAffairs. ISBN 9781610391153. 
  5. ^ a b Anna Yukhananov; Warren Strobel, After success on Iran, U.S. Treasury's sanctions team faces new challenges, Reuters, April 14, 2014.
  6. ^ Rubenfeld, Samuel. OFAC Rises as Sanctions Become A Major Policy Tool, Wall Street Journal, February 5, 2014
  7. ^ Treasury Reaches Largest Ever Sanctions-Related Settlement with BNP Paribas SA for $963 Million, Department of the Treasury, June 30, 2014
  8. ^ a b c d "Frequently Asked Questions". Office of Foreign Assets Control. Retrieved 2007-09-17. 
  9. ^ a b "Records of the Office of Foreign Assets Control". The National Archives. Retrieved 2007-09-17. 
  10. ^ For example Executive Order 12957, Executive Order 12938, etc.
  11. ^ CounterPunch, How the Patriot Act Perpetuates Official Robberies
  12. ^ "Voices in the Wilderness Ordered to Pay $20K for Bringing Aid to Iraq". Democracy Now!. 2005-08-16. Retrieved 2011-06-08. 
  13. ^ "Timeline". Fined For Helping Iraqi Kids. Retrieved 2011-06-08. 
  14. ^ a b Liptak, Adam (2008-03-04). "A Wave of the Watch List, and Speech Disappears". The New York Times. Retrieved 23 August 2012. 80 of his Web sites stopped working, thanks to the United States government ... eNom told him it did so after a call from the Treasury Department 
  15. ^ "SDN BY PROGRAMS". treasury.gov. 2006. Archived from the original on 2006-09-24. Retrieved 23 August 2012. GO CUBA PLUS (a.k.a. T&M INTERNATIONAL LTD.; a.k.a. TOUR & MARKETING INTERNATIONAL LTD. ... 
  16. ^ IABA to File Amicus Brief in Appeal Before Second Circuit
  17. ^ IABA Hires Lawyers to Request Further Guidance from OFAC
  18. ^ "Sanctions programs and country information". treasury.gov. US Department of Treasury. November 10, 2015. Retrieved November 12, 2015. 
  19. ^ "Part 561 — Iranian Financial Sanctions Regulations". Electronic Code of Federal Regulations. Washington, D.C.: Government Printing Office. Retrieved November 12, 2015. 
  20. ^ "Western Balkans Stabilization"
  21. ^ "Part 588 — Western Balkans Stabilization Regulations". Electronic Code of Federal Regulations. Washington, D.C.: Government Printing Office. Retrieved November 12, 2015. 
  22. ^ Bush, George W. (May 23, 2003). "Executive Order 13304 - Termination of Emergencies With Respect to Yugoslavia and Modification of Executive Order 13219 of June 26, 2001" (pdf). Federal register (Washington, D.C.: Government Printing Office, published May 29, 2003) 68 (103). Retrieved November 12, 2015. 
  23. ^ Blocked pending investigation
  24. ^ "Foreign Narcotics Kingpin", blocked pending investigation
  25. ^ Obama, Barack (April 1, 2015). "Executive Order 13694 - Blocking the Property of Certain Persons Engaging in Significant Malicious Cyber-Enabled Activities" (pdf). Federal register (Washington, D.C.: Government Printing Office) 80 (63). Retrieved November 13, 2015. 
  26. ^ Obama, Barack (July 30, 2012). "Executive Order 13622 - Authorizing Additional Sanctions With Respect to Iran" (pdf). Federal register (Washington, D.C.: Government Printing Office, published August 2, 2012) 77 (149). Retrieved November 12, 2015. 
  27. ^ Obama, Barack (June 3, 2013). "Executive Order 13645 - Authorizing the Implementation of Certain Sanctions Set Forth in the Iran Freedom and Counter-Proliferation Act of 2012 and Additional Sanctions With Respect To Iran" (pdf). Federal register (Washington, D.C.: Government Printing Office, published June 5, 2013) 78 (108). Retrieved November 12, 2015. 
  28. ^ a b c d Obama, Barack (May 1, 2012). "Executive Order 13608 - Prohibiting Certain Transactions With and Suspending Entry Into the United States of Foreign Sanctions Evaders With Respect to Iran and Syria" (pdf). Federal register (Washington, D.C.: Government Printing Office, published May 3, 2012) 77 (86). Retrieved November 12, 2015. 
  29. ^ "Non Proliferation sanctions evaders"
  30. ^ "Anti-terrorism sanctions evaders"
  31. ^ "Foreign Terrorist Organizations"
  32. ^ a b Obama, Barack (April 22, 2012). "Executive Order 13606 - Blocking the Property and Suspending Entry Into the United States of Certain Persons With Respect to Grave Human Rights Abuses by the Governments of Iran and Syria via Information Technology" (pdf). Federal register (Washington, D.C.: Government Printing Office, published April 24, 2012) 77 (79). Retrieved November 12, 2015. 
  33. ^ Iran Freedom and Counter-Proliferation Act of 2012, PL 112-239
  34. ^ Obama, Barack (September 28, 2010). "Executive Order 13553 - Blocking Property of Certain Persons With Respect to Serious Human Rights Abuses by the Government of Iran and Taking Certain Other Actions" (pdf). Federal register (Washington, D.C.: Government Printing Office, published October 10, 2010) 75 (190). Retrieved November 12, 2015. 
  35. ^ Obama, Barack (October 9, 2012). "Executive Order 13628 - Authorizing the Implementation of Certain Sanctions Set Forth in the Iran Threat Reduction and Syria Human Rights Act of 2012 and Additional Sanctions With Respect to Iran" (pdf). Federal register (Washington, D.C.: Government Printing Office, published October 12, 2012) 77 (198). Retrieved November 12, 2015. 
  36. ^ Lantos, Tom (July 29, 2008). "Block Burmese Jade (Junta’S Anti-Democratic Efforts) Act Of 2008" (pdf). Public Law (Washington, D.C.: Government Printing Office) 110 (286). Retrieved November 12, 2015. 
  37. ^ Sergei Magnitsky Rule of Law Accountability Act of 2012, PL 112-208
  38. ^ "Weapons of Mass Destruction Proliferators"
  39. ^ Non-SDN Iranian Act
  40. ^ Hammerle, Barbara (April 12, 2006). "General License No. 4 - Transactions with entities under the control of the Palestinian President and certain other entities." (PDF). Washington, D.C.: Office Of Foreign Assets Control. Retrieved November 12, 2015. 
  41. ^ "Part 594 — Global Terrorism Sanctions Regulations". Electronic Code of Federal Regulations. Washington, D.C.: Government Printing Office. Retrieved November 12, 2015. 
  42. ^ "Global Terrorism"
  43. ^ "Narcotics Trafficking"
  44. ^ "Foreign Narcotics Kingpin"
  45. ^ Obama, Barack (July 24, 2011). "Executive Order 13581 - Blocking Property of Transnational Criminal Organizations" (pdf). Federal register (Washington, D.C.: Government Printing Office, published July 27, 2011) 76 (144). Retrieved November 12, 2015. 
  46. ^ Obama, Barack (March 6, 2014). "Executive Order 13660 — Blocking Property of Certain Persons Contributing to the Situation in Ukraine" (pdf). Federal register (Washington, D.C.: Government Printing Office, published March 10, 2014) 79 (46). Retrieved November 12, 2015. 
  47. ^ Obama, Barack (March 16, 2014). "Executive Order 13661 — Blocking Property of Additional Persons Contributing to the Situation in Ukraine" (pdf). Federal register (Washington, D.C.: Government Printing Office, published March 19, 2014) 79 (53). Retrieved November 12, 2015. 
  48. ^ Obama, Barack (March 20, 2014). "Executive Order 13662 — Blocking Property of Additional Persons Contributing to the Situation in Ukraine" (pdf). Federal register (Washington, D.C.: Government Printing Office, published March 24, 2014) 79 (56). Retrieved November 12, 2015.  "Directive 1 (as amended) under executive order 13662" (pdf). Office of Foreign Assets Control. September 12, 2014. Retrieved November 12, 2015.  "Directive 2 (as amended) under executive order 13662" (pdf). Office of Foreign Assets Control. September 12, 2014. Retrieved November 12, 2015.  "Directive 3 under executive order 13662" (pdf). Office of Foreign Assets Control. September 12, 2014. Retrieved November 12, 2015.  "Directive 4 under executive order 13662" (pdf). Office of Foreign Assets Control. September 12, 2014. Retrieved November 12, 2015. 
  49. ^ Obama, Barack (December 19, 2014). "Executive Order 13685 — Blocking Property of Certain Persons and Prohibiting Certain Transactions With Respect to the Crimea Region of Ukraine" (pdf). Federal register (Washington, D.C.: Government Printing Office, published December 24, 2014) 79 (247). Retrieved November 12, 2015. 
  50. ^ Obama, Barack (March 8, 2015). "Executive Order 13692 — Blocking Property and Suspending Entry of Certain Persons Contributing to the Situation in Venezuela" (pdf). Federal register (Washington, D.C.: Government Printing Office, published March 11, 2015) 80 (47). Retrieved November 12, 2015. 
  51. ^ also 70 FR 71201 and 73 FR 43841
  52. ^ June 9, 2011OFAC SDN List vs. 314(a) List
  53. ^ "KindHearts for Charitable Humanitarian Development, Inc. v. Geithner et al.". ACLU. November 22, 2011. 
  54. ^ "Al Haramain v. Department of Treasury" (PDF). U.S. Court of Appeals for the Ninth Circuit. Retrieved 27 September 2011. 
  55. ^ "Specially Designated Nationals List (SDN) US Department of Treasury". US Department of Treasury. 

External links[edit]