Sanctions Considerations for Companies and NGOs Exporting Supplies to Iran

In an earlier post, here, we scrutinized the form and content of the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC)’s March 6, 2020 guidance pertaining to the provision of humanitarian goods and assistance to the people of Iran consistent with U.S. sanctions.

In this concluding post, we discuss the factors the international community should consider before exporting medicine and medical devices to Iran.

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OFAC Responds to COVID-19 in Iran

On March 6, 2020 and in response to an outbreak of coronavirus in Iran, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued guidance pertaining to the manner in which humanitarian goods and assistance may be provided to the people of Iran consistent with U.S. sanctions against Iran.

This two-part post examines, first, the form and content of OFAC’s March guidance and, second, the related considerations any company or non-governmental organization (NGO) wishing to export medicine and medical devices to Iran still needs to bear in mind.  Those considerations include ensuring the relevant items qualify under an existing medical general license and assessing whether their financial institutions will process related payments.

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IBK Settlements with US Authorities Regarding BSA/AML Violations

bank buildingOn April 20, 2020, the Industrial Bank of Korea (IBK) and its New York branch (IBKNY) (collectively, “the Bank”) entered into a Deferred Prosecution Agreement (DPA) with the U.S. Attorney’s Office for the Southern District of New York (SDNY), a non-prosecution agreement (NPA) with the New York Attorney General, and a Consent Order (the “Consent Order”) with the New York State Department of Financial Services (NYDFS), to resolve  violations of the Bank Secrecy Act (BSA), the International Emergency Economic Powers Act (IEEPA), the Iranian Transactions and Sanctions Regulations (ITSR), and various provisions of New York law.  The transactions at issue exceeded $1 billion, and the Bank agreed to an overall penalty of $86 million.

SDNY imposed a $51 million forfeiture for the Bank’s willful failure to establish and maintain an anti-money laundering (AML) compliance program, finding that the Bank’s compliance failures were so extraordinarily egregious and sustained that the Bank specifically intended to violate its obligations under the BSA.  NYDFS imposed a separate $35 million penalty for the Bank’s failure to maintain appropriate books, accounts, and records of all transactions as well as its failure to maintain an effective and compliant AML program.  Notably, the settlement with NYDFS follows a 2016 Written Agreement between the Bank, NYDFS, and the Federal Reserve Bank of New York (FRBNY) (the “Written Agreement”), reached after regulatory examinations identified serious and protracted deficiencies in IBKNY’s BSA/AML compliance program and its efforts to comply with regulations of the Department of the Treasury’s Office of Foreign Assets Control (OFAC) and New York State and federal laws.

Our new client alert covers the IBK settlements and their implications in more detail.  We summarize the conduct that led to these settlements, which began nearly ten years ago.  We discuss the extreme compliance deficiencies identified by the regulators and consider how the Bank’s repeated and protracted failures to address those critical deficiencies resulted not only in additional regulatory scrutiny but ultimately in criminal liability.  We review the DPA and the Consent Order, and highlight the facts on which SDNY and NYDFS relied to find the Bank culpable.  We then examine the lessons for US financial institutions and domestic branches of foreign banks.

Supreme Court Trims Wire Fraud Theory of Public Corruption in Bridgegate Decision

trafficIn Kelly v. United States, 590 U.S. — (May 7, 2020), the Supreme Court recently reversed the federal fraud convictions of former public officials Bridget Kelly and William Baroni arising out of the Bridgegate scandal.  The decision limits the applicability of the federal wire fraud statute to public corruption, and it will affect how such cases are investigated and tried in the future.

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Provider Tips For Telehealth Compliance

Although the rapid shift to telehealth is a boon to providers and patients, the federal government has issued specific guidance that providers need to follow.  See tips for compliance provided by David Maria, a former federal prosecutor and member of the Department of Justice Medicare Fraud Strike Force, and Trevor Garmey, a Senior Associate with the Government Investigations and White Collar group.  The tips are here on the Triage Health Law blog.

OFSI Russian Sanctions Penalty; Foreshadows Increasing UK Enforcement?

London skylineOn March 31, 2020, the United Kingdom’s Office of Financial Sanctions Implementation (OFSI) levied its largest monetary penalty to date of GBP 20.47 million. OFSI penalized Standard Chartered for loans to Denizbank, a Turkish bank that was majority owned by Sberbank, a state-owned Russian bank.  Accordingly, those loans violated European Union restrictions on making certain new loans or credit available to sanctioned Russian financial institutions. This enforcement activity may indicate that the United Kingdom regulator is prepared to ramp up its scrutiny of sanctions compliance and to impose increasingly severe penalties in response to violations.

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Regulations for Hand Sanitizer Manufacturing

Manufacturing hand sanitizer to help meet the global demand presents a great opportunity for companies looking to find new markets.  However, successful marketing  requires compliance with regulatory oversight.  See our discussion by Marisa Darden and Marques Richeson on our Global Supply Chain Law blog

DOJ and SEC – Aggressive Measures on Coronavirus Fraud

The Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) have taken legal actions to combat fraud arising out of the COVID-19 health emergency.

DOJ Restraining Order

On March 23, 2020, the U.S. District Court for the Western Division of Texas issued a temporary restraining order to halt a predatory wire fraud scheme related to coronavirus treatment sales. The DOJ brought charges, pursuant to 18 U.S.C. § 1345, which permits the government to enjoin an ongoing fraud to prevent irreparable harm to the public.

In the case, United States of America v. John Doe a/k/a “,” the government alleges that persons operating the website published statements fraudulently claiming that the World Health Organization is giving free away vaccination kits to immunize people from the COVID-19 outbreak.  The website required visitors to enter credit card information and pay a $4.95 shipping fee to receive the free vaccine. The government alleged, “[t]he purpose of the website is to induce victims to pay Doe and those working in concert with him or her $4.95 for such non-existent kits, and/or to obtain credit card and other personal information from victims for purposes of engaging in fraudulent purchases and identity.”

Attorney General William Barr has signaled that coronavirus fraud is a top priority of the Justice Department.  Federal prosecutors in United States v. Doe echoed this statement, warning

the Department of Justice will not tolerate criminal exploitation of this national emergency for personal gain.  We will use every resource at the government’s disposal to act quickly to shut down these most despicable of scammers, whether they are defrauding consumers, committing identity theft, or delivering malware.

 Deputy Attorney General Jeffrey A. Rosen recently sent a memo to all U.S. Attorneys directing them to appoint a COVID-19 Fraud Coordinator to “serve as the legal counsel for the federal judicial district on matters relating to the COVID-19, direct the prosecution of COVID-19 related crimes, and to conduct outreach and awareness activities.” The national Fraud Coordinator is establishing a web portal for all U.S. Attorneys to coordinate COVID-19 fraud litigation with 16 other federal agencies.

SEC Action

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