U.S. Regulators Emphasize Pursuit of Enforcement Actions Against Non-U.S. Persons and Entities
The guidance mirrors the recent, broader impulse among U.S. prosecutors and regulatory agencies to extend application of U.S. law to foreign persons and entities, even when those persons and entities have only threadbare connections to the U.S.
May 13, 2024 at 11:07 AM
11 minute read
Regulation
What You Need to Know
- U.S. regulators recently issued a Tri-Seal Compliance Note emphasizing that non-U.S. persons and entities must comply with U.S. sanctions and export controls law, and cautioning that they could be subject to civil and criminal liability for a failure to do so.
- The Tri-Seal Compliance Note makes clear that OFAC's sanctions enforcement dovetails with the country's broader national security and foreign policy interests.
- The trend of global enforcement of OFAC sanctions seems unlikely to slow or reverse, making it essential that non-U.S. companies take steps outlined in the Compliance Note and in this article.
On March 6, 2024, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC), the U.S. Department of Commerce's Bureau of Industry and Security (BIS), and the U.S. Department of Justice (DOJ) collectively issued a Tri-Seal Compliance Note emphasizing that non-U.S. persons and entities must comply with U.S. sanctions and export controls law, and cautioning that they could be subject to civil and criminal liability for a failure to do so. See, U.S. Dep't of Com., U.S. Dep't of the Treasury & U.S. Dep't of Justice, Tri-Seal Compliance Note: Obligations of Foreign-based Persons to Comply with US Sanctions and Export Control Laws (Mar. 6, 2024) (Compliance Note). Tri-Seal Compliance Notes are not frequently issued, and practitioners should take note when all three sanctions regulators speak on an issue with a single voice.
The guidance mirrors the recent, broader impulse among U.S. prosecutors and regulatory agencies to extend application of U.S. law to foreign persons and entities, even when those persons and entities have only threadbare connections to the U.S. As discussed below, almost 40% of OFAC's publicly announced settlements over the past three years have been against non-U.S. actors, including some settlements that involved the payments of hundreds of millions of dollars in penalties.
The Tri-Seal Compliance Note makes clear that OFAC's sanctions enforcement dovetails with the country's broader national security and foreign policy interests, including the U.S.'s interest in preventing "malign regimes and other bad actors" from "misus[ing] the commercial and financial channels that facilitate foreign trade." (See, Compliance Note at 1). Foreign companies should brace themselves for legal exposure on multiple fronts, with DOJ, BIS, and OFAC likely to coordinate their efforts against non-U.S. persons. In this article, we discuss the increased trend of global enforcement, examine some of the high-profile cases, and consider what non-U.S. companies and individuals can do to prevent becoming the next target of OFAC or DOJ enforcement of U.S. sanctions programs.
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