The US Treasury Department, in its capacity to enforce trade sanctions, bars residents from certain countries from the banking system.
The Office of Foreign Asset Control (“OFAC”) US financial institutions from making transactions to individuals or companies operating from countries on the OFAC list. No individual or business residing in one of these countries can access the US banking system. OFAC can block assets and restrict trade.
U.S. persons must comply with OFAC regulations. OFAC can impose penalties of up to $1,000,000 and imprisonment for up to twenty years.
· Bosnia and Herzegovina
· Central African Republic
· Democratic Republic of the Congo
· North Korea
· South Sudan
In World War II, the predecessor of OFAC protected the assets holdings inside countries that had been taken over by the German government, specifically to prevent the Nazi party from using the holdings of occupied countries.
An inter-governmental organization keeps a separate list of jurisdictions with weak enforcement regimes. The Financial Action Task Force, also known as the Groupe d’action financiere, serves to combat money laundering, the financing of terrorism, and financing of the proliferation of weapons of mass destruction. The work of the FATF consists of shedding light on some of the most nefarious and dangerous organizations on the planet.
The following countries are currently on the FATF blacklist:
• Democratic People’s Republic of Korea (North Korea)
• Sri Lanka
• Trinidad and Tobago
The FATF is an initiative of the G7. A notable aspect of the FATF is that it does not have enforcement powers. Instead, the FATF acts as a policy and standards-setting body. It updated its Forty Recommendations in 1996, in 2003, in 2012, and most recently in June 2019. By setting standards, the FATF allows countries to align their own internal enforcement activities more efficiently. Doing so acts as a means to save time and eliminate costs associated with trilateral agreements. The group maintains a financial intelligence unit, giving its 48 member nations the ability to share information about emerging risks.
Separately, the OFAC can block individuals or countries from access to the US banking system. OFAC will prohibit individuals or companies whom it suspects of being owned or acting on behalf of targeted countries. Similarly, it can place a block on groups (individuals or organizations) it suspects of terrorism, narcotics trafficking, or other transnational crimes. The assets of these “Specially Designated Nationals” (“SDNs”) can be frozen. U.S. persons may not transact with them.
The SDN list runs 1,371 pages – much too long to publish in this blog entry. I have attached a link to the Treasury Department’s current SDN list (Spring 2020)
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