FREQUENTLY ASKED QUESTIONS REGARDING the Foreign Sanctions Evaders (FSE) Executive Order
U.S. DEPARTMENT OF THE TREASURY
May 1, 2012
191. What does the Executive Order “Prohibiting Certain Transactions with and Suspending Entry into the United States of Foreign Sanctions Evaders with Respect to Iran and Syria” (“FSE E.O.”) do?
This Executive Order gives Treasury new authorities. First, it strengthens Treasury’s ability to address behavior by foreign individuals and entities determined to have violated, attempted to violate, conspired to violate, or caused a violation of U.S. sanctions on Syria or Iran. This E.O. also gives Treasury the authority to impose sanctions on foreign persons who have facilitated deceptive transactions for or on behalf of persons subject to U.S. sanctions.
Transactions by U.S. persons or within the United States involving persons sanctioned under this authority are prohibited, effectively cutting the listed persons off from the U.S. marketplace and financial system. By cutting off access to the U.S. marketplace and financial system to such sanctions evaders, the FSE E.O. provides Treasury with a powerful tool to prevent and deter such behavior and to hold such persons accountable and to convince them to change their behavior. Publicly identifying such persons will also allow U.S. persons to avoid unwittingly engaging in transactions with identified foreign persons that may expose U.S. persons to the risk of sanctions violations. [05-01-2012]
192. Why was this authority needed?
The FSE E.O. expands Treasury’s ability to address the behavior of foreign persons determined to have violated or attempted to violate U.S. sanctions on Syria or Iran, or to have facilitated deceptive transactions on behalf of persons subject to those sanctions, where the foreign person had no physical, financial, or other presence in the United States and did not submit to U.S. administrative proceedings. Treasury may use this authority where it appears that a foreign person violated U.S. sanctions on Iran or Syria but may not meet criteria for designation under existing Executive Orders. The FSE E.O. will provide a means through which Treasury can limit the risk to U.S. commercial and financial systems posed by foreign persons determined to have violated U.S. sanctions on Iran or Syria, or to have engaged in deceptive transactions for or on behalf of persons subject to U.S. sanctions on Iran or Syria.
Such a listing under the FSE E.O. also provides Treasury with the capability to put the world on notice as to such foreign persons’ activity and the risk of similar future activity. Such identification will help prevent U.S. persons from unwittingly engaging in transactions with foreign persons that may pose a risk of sanctions violations. [05-01-2012]
193. What are the repercussions of an individual or entity being identified under the FSE E.O.?
If an individual or entity is made subject to sanctions under this authority, U.S. persons generally may no longer provide to or procure from such individual or entity any goods, services, or technology. From a practical standpoint, it means that the sanctioned individual or entity will be cut off from the U.S. commercial and financial systems. [05-01-2012]
194. Are U.S. persons required to block the property of individuals and entities identified under the FSE E.O.?
No. Identifications or listings under the FSE E.O. do not block any assets. However, a U.S. person may not provide or procure goods or services, including financial services, or technology to or from a listed person without authorization from OFAC, unless the transaction is otherwise exempt from regulation under the International Emergency Economic Powers Act (e.g., certain travel-related transactions). [05-01-2012]
195. I am a financial institution. What do I do if I receive a wire transfer involving a listed party?
A U.S. financial institution must reject any wire transfer involving a listed person and file a report with OFAC within 10 days. [05-01-2012]
196. I am a financial institution and I hold an account for a listed person. What do I do with the funds?
The account is not blocked; however, it is restricted and you cannot allow it to be operated without authorization from OFAC. [05-01-2012]
197. What are U.S. persons obligated to do with property of a person listed under the FSE E.O.?
Property of a listed person is not blocked, but U.S. persons must have authorization from OFAC to provide or procure such property to or from a listed person, or to provide or procure services to or from a listed person in connection with such property. Additionally, wire transfers involving the assets of an FSE E.O.-listed person must be rejected. [05-01-2012]
198. May a U.S. person deal with an FSE E.O.-listed person so long as the dealing does not involve Iran or Syria?
No. U.S. persons are prohibited from all transactions or dealings described in the FSE E.O. with persons listed under the FSE E.O., unless authorized by OFAC or where the transaction is otherwise exempt from regulation under the International Emergency Economic Powers Act. [05-01-2012]
199. How is an identification or listing under the FSE E.O. different from a designation?
Like a designation, a U.S. person is prohibited, unless authorized by OFAC or if the underlying transaction is exempt from regulation under the International Emergency Economic Powers Act, from dealing with an identified or listed person. Unlike a blocking designation, the property and the interests in property of a person listed under the FSE E.O. are not blocked. [05-01-2012]
200. How is this different from lists maintained by the Department of Commerce?
Treasury’s authority under the FSE E.O. has some similarities to Commerce’s authority under the Export Administration Regulations (“EAR”). Commerce may impose denial orders on persons (both foreign and U.S.) who have committed violations of the EAR or present an imminent risk of committing a violation. These individuals or organizations are listed on Commerce’s Denied Persons List. It is prohibited to deal with Denied Persons in any export transaction involving items (commodities, software, and technology) subject to the EAR. Treasury’s authority under the FSE E.O. complements Commerce’s authority by addressing at least two types of sanctions violations that are outside the scope of the EAR. Specifically, Treasury may prohibit the provision of services (in addition to goods and technology) to or from identified or listed persons and Treasury may prohibit transactions or dealings involving goods and technology that are not subject to the EAR. However, unlike Commerce’s authority, Treasury’s authority to sanction or list an individual or entity under the FSE E.O. may be implemented only with respect to foreign individuals or entities. [05-01-2012]
201. May a U.S. person deal with a person listed under the FSE E.O. in a transaction that was previously licensed by OFAC?
No. U.S. persons cannot have any dealings with a person identified or listed under this Executive Order absent specific authorization from OFAC pursuant to the FSE E.O., unless the transaction is exempt from regulation under the International Emergency Economic Powers Act. [05-01-2012]
202. What if the transaction is already underway?
If a transaction is underway at the time of a listing, a U.S. person must cease dealing with the listed person and the U.S. person is prohibited from engaging in transactions or dealings in or related to any goods, services, or technology to or from the listed person, unless the transaction is exempt under the International Emergency Economic Powers Act, or until such time that OFAC authorizes the transactions pursuant to the FSE E.O. Additionally, if the transaction underway involves a wire transfer, a U.S. financial institution must reject it and file a report with OFAC within 10 days.
Like all of its programs, OFAC has the authority under the FSE E.O. to license transactions that are consistent with U.S. foreign policy. [05-01-2012]
203. Can a U.S. person use a listed person to facilitate personal remittances to or from Iran or Syria?
No. Without specific authorization from OFAC, U.S. persons cannot use a listed person to process personal remittances. [05-01-2012]
204. Will Treasury pursue an enforcement action before identifying or listing a person pursuant to the FSE E.O.?
The authorities granted under this Executive Order are in addition to current authorities that Treasury has to pursue an enforcement action for violations of U.S. law, and Treasury is not required to pursue a civil enforcement action prior to identifying or listing a person pursuant to the FSE E.O. [05-01-2012]