OFAC’s New Restricted Party List Identifies Foreign Sanctions Evaders

Foreign individuals and entities flouting U.S. sanctions on Iran and Syria are now facing a roadblock.

Identified on the new Foreign Sanctions Evaders (FSE) List just released by the U.S. Treasury, these sanctions-rejecters now have sanctions placed upon them.  Transactions by U.S. persons are prohibited “if they involve the provision or procurement of goods or services, including financial services, or technology to or from a person on the FSE List without authorization from the Office of Foreign Assets Control (OFAC), unless the transaction is otherwise exempt from regulation under the International Emergency Economic Powers Act (e.g. certain travel-related transactions).”

In other words, don’t do business with anyone on the new FSE List. You could be supporting terrorist activities.

While OFAC’s Specially Designated Nationals and Blocked Persons (SDN) List is frequently updated, the appearance of an entirely brand new OFAC watch list is noteworthy and aims to significantly tighten existing U.S. sanctions on Iran and Syria . The new sanctions do not block any assets, so placement on the FSE is considered “identification” as opposed to “designation”. However, the public outing of these parties is still a giant step toward putting an end to some of the dubious businesses behind illicit financial transactions. Take for example three Iranians based in the country of Georgia who are at the helm of no less than eight international companies and financial institutions. After acquiring shares in a Georgian bank they expedited transactions worth tens of millions of U.S. dollars for numerous (blacklisted) Iranian banks. Then there’s Tehran-based Mahan Air, which was placed under U.S. sanctions back in 2011 but has continued to transport weapons into Syria via passenger aircraft thanks to the help of several “front” companies  assisting with procurement.

Now appearing on the FSE, the luck of these criminal entrepreneurs seems to be running dry. With a name that makes them sound like a team of comic book Super Villains (and conjuring images of capes with FSE emblazoned on them), these Foreign Sanctions Evaders and others like them will now appear in OFAC screenings everywhere.  While one Treasury official called the Caped Evaders “active and ingenious”, he went on to express considerable confidence that the new sanctions and list publication will effectively put these perpetrators out of business.

 What To Do Now:

  • Continue to screen against the Specially Designated Nationals and Blocked Persons (SDNs) List.  Although it is also maintained by OFAC it is separate from the FSE
  • Update your screening procedures to include the FSE – it’s a mandatory list. OFAC will make the FSE available electronically, enabling simple integration for software solutions
  • Check to see if you may already be doing business with any of the parties on the list