Arent Fox's Kay Georgi and Valentin Povarchuk have prepared a Legal Alert examining the new Somalia Sanctions Regulations from the U.S. Treasury Department's Office of Foreign Assets Controls. The regulations implement an earlier executive order (Executive Order 13536) blocking the property of certain Somali individuals contributing to the conflict in Somalia.
On May 5, 2010, the Office of Foreign Assets Controls (OFAC) in the Department of the Treasury published a new set of regulations called Somalia Sanctions Regulations. These regulations implement an earlier executive order (Executive Order 13536) blocking the property of certain Somali individuals contributing to the conflict in Somalia. It will be codified as Part 551 of Title 31 of the Code of Federal Regulations. Executive Order 13536 was issued by President Obama on April 12, 2010, in response to the “deterioration of violence in Somalia, and acts of piracy and armed robbery at sea off the coast of Somalia” and violations of the United Nations arms embargo as well as multiple UN Security Council Resolutions.
The new Somalia Sanctions Regulations are published in abbreviated form to provide immediate guidance to the public. OFAC states that it intends to supplement the regulations with a more comprehensive set of regulations, including interpretive guidance, definitions, general licenses, and statements of licensing policy. The most important operative provision of the regulations (section 551.201), which contains the prohibition of certain transactions, currently refers to the prohibition in the Executive Order. Other provisions follow the standard OFAC template for sanctions regulations. As sanctions regulations typically do, the Somalia Sanctions Regulations and the Executive Order block all property and interests in property of the listed individuals in the United States or within the possession or control of U.S. persons, and prohibit transfers of such property. OFAC’s definitions of the terms “property,” “interests in property,” and “U.S. person” are very broad, and as a result the regulations prohibit virtually any transaction by U.S. persons or involving property interests in the United States of listed individuals or the entities they own.
The list of twelve individuals designated for blocking of property is contained in Annex A to Executive Order 13536. Currently, it contains eleven natural persons and one entity, but it is likely that OFAC will continue adding (designating) entities and individuals until the U.S. government decides that the problem of violence and piracy in Somalia is resolved. All such entities and individuals are listed in OFAC’s comprehensive Specially Designated Nationals (SDN) list, which is available here, and contains lists of persons designated under all OFAC sanction programs. Those who engage in international business transactions should check the names of all foreign parties with which they deal, either using OFAC’s Web site or special third-party compliance software. Violations of the Somalia Sanctions and other OFAC regulations may be subject to administrative penalties of up to $250,000 per violation or twice the value of the transaction, as well as criminal penalties including jail time for willful violations.