Posts Tagged OFAC

Could Iran-Indonesia Connection Lead to More OFAC Sanctions?

A number of news reports have come out recently indicating that bilateral trade between Indonesia and Iran reached more than $1 billion USD in 2010; an increase of more than 20% over the previous year. There is some speculation by members of the Indonesian Government that this could increase further if energy was included. Currently the numbers only reflect foreign commodity trade.

There have discussions between the two countries related to increasing trade and overcoming problems arising with bank transactions which to this point have been mostly carried out in an informal matter. The commodities being traded include exports to Iran of rubber and rubber products, steel products, food, palm oil, footwear, textile and textile products. On the other hand, Iran exports to Indonesia asphalt, minerals, pipes, construction materials, carpets and building material.

There have been rumors from inside the Indonesian Government that the trade has been implemented by way of third party countries, such as Turkey, U.A.E., and Malaysia. The reason for this indirect trade is because of the U.S. trade sanctions administered by the United States Department of the Treasury Office of Foreign Assets Control (OFAC). OFAC currently administers the Iran sanctions program, which virtually prohibits all trade between the U.S. and Iran without an OFAC license. The fear from the Indonesian side is that if there ties to Iran become too strong, then they may also endure the wrath of OFAC sanctions.

So does the Indonesian Government truly have cause for concern? Maybe, but probably not. There is no specific sanctions program or regulation which calls for imposition of sanctions against those foreign nations or parties trading with an OFAC blocked country, such as Iran. However, it would not be out of the realm of possibility for OFAC to target certain Indonesian exporters or government officials, if they deem those parties to be involved in activity which could potentially be deemed as the provision of material assistance to Iran’s military, support of terrorist organizations, human rights abuses, or nuclear weapons program. For example, if Indonesian exporters begin exporting articles critical to Iran’s proliferation of weapons of mass destruction, I could easily see those exporters being designated as Specially Designated Nationals (SDNs) on the OFAC SDN List.

In the end, however, I do not believe OFAC will impose sanctions over all of Indonesia. The U.S. government and OFAC have moved away from country based sanctions programs recently and they seem to be more interested in using target based programs which target for SDN designation specific individuals and entities. As such, I think an Indonesian OFAC sanctions program is unlikely.

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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Answering an OFAC Administrative Subpoena

The United States Department of Treasury Office of Foreign Assets Control (“OFAC”) has just sent you an Administrative Subpoena requesting information pertaining to certain activities they suspect you to have been engaged in. What do you do??????

One of OFAC’s prime intelligence gathering tools is the Administrative Subpoena. Here they ask you to provide a description of all your dealings with a specific country, person, or entity. In addition, they will ask you for documentation related to those dealings. What you say here may lead to further investigation or to you being penalized.

So what you do at this phase is incredibly important. You need a lawyer. You need one for a number of reasons: 1. you need someone to interpret the sanctions regulations for you; 2. uou need one to determine whether a transaction really took place; 3. you need one to put forth your statements in a manner that directly answers OFAC and gives them what they are specifically looking for; and 4. you need one to ensure that you don’t look as if you are hiding anything or concealing a material fact from OFAC.

OFAC is generally looking for general information about what has occurred around a specific incident. However, there is other important information OFAC looks for including:

1. The extent of the transactions;

2. Over what time period the transactions occurred;

3. The role you played in the transaction.

Typically you have 30 days to respond to the Administrative Subpoena. If you are close to the due date of the response and you are still unsure what to do, then you should hire an attorney and have them request an extension for you. OFAC has in the past allowed for extensions when good cause can be shown.

It is important that you keep in mind that your response to an OFAC Administrative Subpoena is given pursuant to 18 U.S.C. 1001, which is criminal statute covering the falsification or concealment of material facts in statements made in a matter under the jurisdiction of the U.S. federal government. Punishment for violating 18 U.S.C. 1001 includes fines, and/or imprisonment for up to five years, or both. Therefore, you have to take your response to an OFAC Administrative Subpoena very seriously.

The most important thing to do with OFAC is also the most simple: answer them. While it can be a very intimidating process, it is just best to give OFAC what they want so they can continue their investigation. Just make sure you go about it the right way and retain an attorney to help you.

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