OFAC has issued an Advisory on the circumvention of US sanctions against Crimea pursuant to Executive Order 13685 (the “Order”). The Order prohibits all transactions and trade with Crimea involving a US person or the United States. The Advisory highlights some of the practices that have been used to circumvent the US Sanctions and sets out guidance in relation to the implementation of controls to ensure compliance.
The usual evasive practices have been specifically listed by OFAC as circumvention practices, including the removal of references to Crimean individuals or entities in SWIFT messages and documentation etc. Where international trade is concerned, Crimean counterparties on financial and trade documents have also been listed as being located in Russia rather than in Ukraine.
OFAC provides guidance in relation to mitigating the risks, including:
- caution when processing payments lacking complete address information;
- monitoring for search terms corresponding to major geographic locations within Crimea, for example, cities and ports, and not only references to “Crimea”;
- requesting additional information from parties that have previously violated or attempted to violate US sanctions; and
- clearly communicating US sanctions obligations to international partners.
It should be noted that these are only examples and OFAC expects financial institutions to tailor its specific compliance measures to their own risk profile.