Criminal Consequences of Violating Sanctions Regulations

Yesterday, the Assistant Attorney General for National Security, Lisa Monaco, offered a statement before the Senate Judiciary Subcommittee on Crime and Terrorism. The statement discussed the combating of terrorist financing and indirectly offered insight into a side of U.S. sanctions that is not regularly discussed: criminal liability. Below I have outlined some of the more relevant comments and what it means from an OFAC sanctions perspective.

1. “DOJ currently has State Department funded Resident Legal Advisers in Bangladesh, Kenya, Turkey, and the United Arab Emirates who are focused primarily on terrorist financing. In addition, DOJ’s network of 55 RLA’s in countries around the world regularly provide technical assistance to the host government on terrorist financing laws and prosecutions.”

This is only half the story. I also have seen evidence that U.S. government officials are very active in investigating criminal and terrorist financing in foreign countries. This has been particularly true in Africa where a number of recent Specially Designated Nationals (SDN) designations involved quite a bit of direct investigation and participation by U.S. Ambassadors. From what I have seen in these SDN cases, not only are legal advisers in these countries, but the embassies themselves are very active in investigating terrorist and criminal financing in those countries.

2. “Department of Justice attorneys closely review the administrative record compiled for purposes of designating an entity as an FTO, or an individual or an entity as an SDT or SDGT, to ensure that the record adequately supports the factual findings required by the applicable authority and to assess litigation risk in the event that a designation is subsequently challenged by the designated individual or entity.”

In other words, the executive branch will compile the information necessary for the SDN designation and then their own lawyers will review it to make sure it’s ok. In essence, what this means there is no neutral judicial authority which will review the evidence used in the designation. Moreover, the question of litigation risk is often negligible as most SDNs do not have substantial connections in the U.S to have standing in a U.S. court.

3. “Persons and entities designated under those Executive Orders can challenge their designations under the Administrative Procedure Act in district courts.”

Not always. Sure, there have been high profile cases related to designations, however, those plaintiffs were U.S. based entities. The majority of parties on the SDN List are not U.S. based individuals and entities nor do they have substantial connections with the United States. As such, they do not have recourse under the Administrative Procedure Act to challenge their designation in U.S. district courts since they do not have standing.

Other than the aforementioned, Ms. Monaco discussed a number of ongoing criminal investigations and prosecutions related to providing material support to designated terrorists and terrorist organizations. It certainly seems to be an area that DOJ is taking very seriously and one that can impact anyone dealing with sanctions related issues. Those concerned about U.S. sanctions should pay attention to these prosecutions to ensure that they have not engaged in any activity for which other parties are being prosecuted.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.

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