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Comply With the U.S. Treasury’s OFAC Regulations and Avoid Possible Enforcement Action

For a variety of reasons, the United States government prohibits foreign and domestic individuals, groups, companies and other entities from enjoying the benefits of participating in the U.S. economy.  One of the main reasons for being barred from enjoying the benefits of the United States economy is the failure to comply with our laws or acting contrary to our national interests.  The primary enforcement tool that the government utilizes against those who fail to comply with our national interests, federal laws and/or regulations is the United States Treasury.

Generally, the U.S. Treasury maintains a list of foreign governments that are prohibited from participating in the U.S. economy.  However, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) publishes and maintains a list of individuals and companies owned or controlled by, or acting on behalf of, targeted countries.  The list also identifies individuals, groups, and entities, such as terrorists and narcotics traffickers designated under programs that are not country-specific.  These individuals and companies are called “Specially Designated Nationals” or “SDNs.”  Their assets are blocked and U.S. persons are generally barred from dealing with them.

OFAC publishes a monthly list of enforcement actions.  The most recent notice of enforcement actions by OFAC was published on September 26, 2017 regarding Richemont North America, Inc. d/b/a Cartier.  In the notice, OFAC said that “Richemont North America, Inc. d/b/a Cartier (“Richemont”), Settles a Potential Civil Liability for Apparent Violations of the Foreign Narcotics Kingpen Sanctions Regulations.”  According to OFAC, Richemont, a luxury goods company headquartered in New York, New York, has agreed to pay $334,800 to settle its potential civil liability for four apparent violations of The Foreign Narcotics Kingpen Sanctions Regulations, 31 CFR part 598 (FNKSR).  Between October, 5, 2010 and April 21, 2011, an individual purchased jewelry from one of Richemont’s Cartier boutiques located in California or Nevada and provided the name of Shuen Wai Holding Limited in Hong Kong as the ship-to party.  Shuen Wai had been previously added to the Specially Designated Nationals (the “SDN List”) on November 13, 2008.

High Net Worth (HNW) individuals, banks, financial institutions, insurance companies, manufacturers and any organization that may inadvertently find themselves dealing with SDNs should consider retaining counsel to help them prepare internal controls which will enable them to avoid violating OFAC’s regulations and related rules governing SDNs.  Otherwise, violating OFAC’s regulations governing SDN’s can be a very expensive mistake resulting in substantial penalties.

Authored by Charles E. Griffin

Charles Griffin