USA LAW AND PRACTICE Contributed by: Seward & Kissel LLP
the United States or US persons, or using US-origin goods or services, are impacted by US sanctions laws and regulations. Organisations would therefore be well advised to con- duct a routine risk assessment, and if appropriate, an ongoing or periodic evaluation, to identify potential OFAC issues they may encounter, including by refer- encing OFAC’s current or emerging enforcement and compliance priorities. These risks could arise from an organisation’s clients and customers, products, ser - vices, supply chain, intermediaries, counterparties, transactions or geographic locations, depending on the nature of the organisation. That said, and as a general matter, sectors that are particularly affected by sanctions regulations and enforcement activity include banking and financial services, including venture capital or private equity firms and investment advisers, energy, technology, shipping and transportation (particularly with respect to the transportation of oil or other petroleum prod- ucts) and the virtual currency sector. 1.4 Overview 1.4.1 Types of Sanctions Numerous forms of sanctions are implemented under US law, including asset and property blocking sanc - tions, investment restrictions, export or import restric- tions, visa or travel restrictions, foreign exchange pro- hibitions and prohibitions relating to the activities of financial institutions. 1.4.2 Scope of Sanctions US sanctions apply primarily to “US persons”, which is typically defined as including US citizens, perma - nent resident aliens, entities organised under the laws of the US or any jurisdiction within the US (including foreign branches), or any person located in the US. Each US sanctions programme defines the scope of its application, and therefore, there is a degree of variation in their scope. For example, some sanctions regimes, such as the Cuba and Iran programmes, also apply to foreign entities that are “owned or controlled” by US persons.
Non-US persons must comply with US sanctions with respect to transactions with a US nexus, namely: • the involvement of a US person; • the involvement of US-origin products, software or technology; or • involving or causing activity within the US, such as conducting a transaction in US dollars or that otherwise transits the US financial system. Non-US persons can be held liable for “causing” a US person to violate sanctions. The US also has “secondary sanctions” that seek to deter certain activities by non-US persons regardless of whether there is a US nexus. Non-US persons risk being subject to sanctions if they engage in these activities. As just one example, Executive Order 14024 authorises OFAC to impose secondary sanctions on foreign financial institutions that conduct or facilitate any significant transactions or transactions for or on behalf of persons connected to Russia’s military- industrial base. Thus, although many US sanctions regimes are directed at US persons, certain sanctions laws and regulations, as well as related expansive enforcement activities, can apply to non-US persons or have extra- territorial effects. 1.4.3 Domestic and/or Supranational Measures Although US sanctions are primarily implemented uni- laterally at the domestic level, the US has enacted legislation – namely the United Nations Participation Act of 1945 (UNPA) – that permits the US to implement and enforce sanctions adopted by the United Nations Security Council.
2. Overview of Regulatory Field 2.1 Primary Regulators
OFAC is the primary agency responsible for admin- istering and enforcing US sanctions. The DOJ has the authority to investigate and prosecute criminal violations of certain US sanctions programmes. BIS administers and enforces the Export Administration
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