An overview of U.S. economic sanctions and how companies can comply with the sanctions regimes and find business opportunities under OFAC's licensing schemes

1. Navigating Economic Sanctions …
Successfully
NACM 118th Credit Congress & Expo
Orlando, Florida
June 10, 2014
Law Offices of Jon P. Yormick Co. LPA
An International Law Practice
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2. Disclaimer
• The information provided is believed to be accurate
as of the date of the presentation, but is subject to
change without notice
• This presentation is designed for informational
purposes only and is not intended to be, nor should it
be deemed, specific legal advice. If such advice is
required, please consult with qualified legal counsel

3. U.S. Economic Sanctions
Office of Foreign Assets Control (OFAC)
- Administers, enforces economic/trade sanctions against
foreign governments, government officials,
persons/entities and placed on the SDN List
- Financial expertise – blocking/freezing assets; title
remains with sanctioned target
-Broad prohibitions on transfers/transactions

4. SDN List
• Specially Designated Nationals List – 30 May update
http://www.treasury.gov/ofac/downloads/t11sdn.pdf
• Individuals and companies owned/controlled by or
acting for/on behalf of targeted countries
• Individuals, groups, and entities, (terrorists and
narco- traffickers)
• Assets are blocked and U.S. persons are generally
prohibited from dealing with SDNs

5. SDN List Entrants
• CARIBBEAN EXPORT ENTERPRISE (a.k.a. CARIBEX; a.k.a. EMPRESA CUBANA
DE PESCADOS Y MARISCOS), Paris, France; Milan, Italy; Moscow, Russia;
Madrid, Spain; Cologne, Germany; Downsview, Ontario, Canada; Tokyo, Japan
[CUBA]
• ASH TRADING, INC., 14420 NW 16TH St., Pembroke Pines, FL 33028; US FEIN
65-1128351; Business Registration Document #P01000078571 (United
States) [SDNT]
• ASSA (a.k.a. ASSA CORP.), New York, NY; Additional Sanctions Information -
Subject to Secondary Sanctions; Tax ID No. 1368932 (United States) [NPWMD]
[IFSR]
• BEIJING ALITE TECHNOLOGIES CO., LTD. (a.k.a. ALCO; a.k.a. BEIJING HAILI
LIANHE KEJI YOUXIAN GONGSI), 12A Beisanhuan Zhong Road, P.O. Box 3042,
Beijing, China; Additional Sanctions Information - Subject to Secondary
Sanctions; and all other locations worldwide [NPWMD] [IFSR]
• AA ENERGY FZCO, United Arab Emirates; Additional Sanctions Information -
Subject to Secondary Sanctions [IRAN].

6. OFAC SDN Search Tool

7. NEW: Foreign Sanctions Evaders List (FSE List)
• Released – 6 February 2014 (no updates)
• Legal authority - Executive Order (E.O.) 13608,
“Prohibiting Certain Transactions With and
Suspending Entry Into the United States of
Foreign Sanctions Evaders With Respect to
Iran and Syria.”
• “Evaders” - foreign persons who have
facilitated deceptive transactions for or on
behalf of persons subject to U.S. sanctions

8. Foreign Sanctions Evaders List (FSE List)
• Prohibits: Transactions by U.S. persons or within the
U.S. involving FSEs
– Canadian , Mexican nationals working in U.S.
under TN visa
– German, Chinese, India nationals working in U.S.
under H-1B or L visas
• FSEs by Country – Cyprus, Georgia, Liechtenstein,
Turkey, Ukraine, UAE, Undetermined
• Caveat: Not part of SDN List

9. OFAC Licensing
• General v. Specific License – authorization to engage
in transactions otherwise prohibited
• General License (GL) - authorizes performance of
certain types of transactions
• Limitations on performance activities
• Documentation/recordkeeping

10. General License - Recent Examples
• Burma – G.L. 17 – Authorizing New Investment in
Burma
• Syria – G.L. 4a - Exports or Reexports to Syria of
Items Licensed or Otherwise Authorized by the
Department of Commerce
• South Sudan - General Licenses Authorizing Activities
Relating to Oil and Transshipment With Respect to
the Republic of South Sudan

14. • OFAC License Application Page – case-by-case
http://www.treasury.gov/resource-
center/sanctions/Pages/licensing.aspx
– Trade Sanctions Reform and Export Enhancement Act
of 2000 (TSRA) – agricultural commodities, medicine,
or medical devices
– Cuba travel
– Blocked funds release – U.S. financial institution
– “Catchall” (including guidance) - Transactional
Specific Licenses

15. License Checklist Highlights
• Copies of documents relating to transaction – technical specs,
CCATS from Commerce, purchase orders, invoices, bills of lading,
payment, passport or other government issued-ID
• Identify any and all Specially Designated Nationals associated with
the transaction
• Identify all sanctions programs involved
• Describe proposed transaction and why believe prohibited
– Is a G.L. available?
– Money flow
• Any prior license numbers
• Is everything in English?

16. Specific License Conditions
• Licensee shall provide and make records and reports
available for inspection, upon request
• License is a privilege – non-transferrable; limited to
specific facts and circumstances of transaction
described in application; can be revoked or modified
at any time
• Maintenance, replace/repair, installation,
training? Is it “incidental and necessary” to
transaction?

17. Sanctions Update Highlights:
Burma, Iran, Ukraine

18. Burma
• 1 April – updated FAQs
http://www.treasury.gov/resource-
center/faqs/Sanctions/Pages/ques_index.aspx#burma
• State Dept. “Reporting Requirements on Responsible
Investment in Burma”
• $500,000+ “in any period”
• 180 days after hitting threshold; July 1
• FAQs: 280 – 283

19. Iran
• 12 January - P5+1 (US, UK, Germany, France,
Russia, and China) and Iran reach tentative
agreement - Joint Plan of Action (JPOA),
implementation started January 20
• Limited sanctions relief – 6 months
• Petrochemical, auto, precious metals, civil
aviation
• Mainly benefits Iran and non-US parties

20. Iran
• JPOA Guidance -
http://www.treasury.gov/resource-
center/sanctions/Programs/Documents/jpoa
_guidance.pdf
• FAQs on JPOA -
http://www.treasury.gov/resource-
center/sanctions/Programs/Documents/jpoa
_faqs.pdf

21. Iran – Not Open for Business…or is it?
• The Telegraph, Feb. 4 - Top US negotiator: Iran is
“not open for business”
• Reuters, March 13 - U.S. has made clear Iran 'not
open for business,' Kerry tells senators
• NYT, April 17 - Iran Gets an Unlikely Visitor, an
American Plane, but No One Seems to Know Why
• NYT, April 18 - Paper Shows U.S.-Flagged Plane in
Iran Has Ties to Ghana

22. JPOA FAQ
2. Q: How does the JPOA impact U.S. sanctions on
Iran?
A: Except for the limited, temporary, and reversible
relief provided pursuant to the JPOA, all U.S.
sanctions with respect to Iran, including financial
sanctions, sanctions pertaining to the purchase of
Iranian crude oil, and sanctions on investment in
Iran’s energy and petrochemical sectors, remain in
effect with respect to U.S. and non-U.S. persons.

23. Iran
But we have a Canadian subsidiary…
Query: Is there a legally viable
“Canadian strategy” for Iran?
A. Yes – I like risk (or ignorance is bliss)
B. No – It sounds too good to be true
C. Not sure – the lawyer answer

24. Iran – A Canadian Strategy?
• Iran Threat Reduction and Syria Human Rights Act of
2012 (ITRA) – extends sanctions to non-US subs
• May 2013 – amendments to Canada Special
Economic Measures (Iran) Regulations. Persons in
Canada and Canadians outside of Canada:
-prohibited from exporting, selling, supplying, or
shipping goods … to Iran or to a person for the
purposes of carrying on business in or operated
from Iran

25. Ukraine-Related Sanctions
• March 6 – First Executive Order issued (E.O. 13660) –
blocked property
• March 17 - New Executive Order (E.O. 13661) – expanded
E.O. 13660; SDN Designations
- by extension entities majority owned or controlled
• March 20 – E.O. 13662 and additional SDN designations,
including Bank Rossiya
• April 11 – Additional SDN designations, including
Chernomoreneftegaz (Simferopol, Crimea only)

26. Ukraine-Related Sanctions
Related actions:
• BIS has suspended action on export/reexport license
applications “until further notice”
• BIS added Chernomoreneftegaz to Entity List –
- subsidiary of Naftogaz
- covers EAR99 (NLR) items
- Presumption of Denial
• DDTC suspended review and issuance of export licenses
and agreements “until further notice”

27. • Is it a potential violation?
– General license
– Specific license
– Applicable law/regulations at time
• Voluntary Self-Disclosure – credit on base penalty
– 50% of transaction value (non-egregious)
– $125,000 cap/violation ($32,500/TWEA)
Economic Sanctions Non-Compliance

28. OFAC Penalty Settlement – 6 March 2014
Ubiquiti Networks, Inc.
• $504,225 - Iranian Transactions and Sanctions Regulations (the “ITSR”).
• From 2008 - 2010, Ubiquiti appears to have violated ITSR by engaging in
transactions related to the exportation, reexportation, sale or supply,
directly or indirectly, of goods for broadband wireless connectivity to Iran,
and facilitating the reexportation, sale or supply of such goods to Iran
- entered exclusive distributorship agreement with UAE company to
distribute products in Iran, then sold and exported broadband
wireless equipment to distributor then reexported to Iran
• Dec. 2009 – Feb. 2011, Ubiquiti appears to have violated the ITSR by
engaging in 13 exports of broadband wireless equipment to Greek
distributor, with knowledge or reason to know that the goods were
intended specifically for supply, transshipment, or reexportation, directly or
indirectly, to Iran

29. Ubiquiti Networks, Inc. Penalty Settlement
• Not a voluntarily disclosure - base penalty: $560,250
• Factors considered:
– demonstrated reckless disregard for U.S. sanction
requirements;
– on notice that the conduct at issue constituted a violation
of U.S. law;
– members of senior management knew or had reason to
know that products were reexported to Iran;
– conduct resulted in the provision of goods related to
broadband wireless connectivity, worth nearly $600,000 to
entities located in Iran;

30. Ubiquiti Networks, Inc. Penalty Settlement
– had no OFAC compliance program in place at the time of
the apparent violations;
– has no prior sanctions history, including not being the
subject of a penalty notice or Finding of Violation;
– cooperated with OFAC during its investigation of the
apparent violations;
– took remedial action in response to the apparent
violations.

31. OFAC Contact Information
OFAC Licensing Division 1.202.622.2480
Email ofac_feedback@do.treas.gov
Office of Foreign Assets Control
U.S. Department of the Treasury
Treasury Annex
1500 Pennsylvania Avenue, NW
Washington, DC 20220

32. Final Words
As always, with economic sanctions…
Stay tuned…

33. Thank you
Jon P. Yormick
Attorney and Counsellor at Law
Law Offices of Jon P. Yormick Co. LPA
Email: jon@yormicklaw.com
Toll Free: +1.866.967.6425 (Canada & U.S.)
Mobile: +1.216.269.5138
Skype: jon.yormick
Twitter: @yormicklaw
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