Mr. Sanctions

Category: Regulatory

  • The OFAC Enforcement road less traveled

    Many of us, if not most of us, skip the part of the Federal Register that explains why the Enforcement Guidelines (the eCFR version is much easier on the eyes) came to be, and the comment period prior to its publication. Here’s a simplified version of those sections from the Federal Register version:

    1. Background

    Why was this document written?

    The Office of Foreign Assets Control (OFAC) enforces economic sanctions (punishments) against foreign countries, terrorists, and drug traffickers to protect U.S. national security.

    • The Catalyst: In 2007, the President signed a new law (the IEEPA Enhancement Act) that drastically increased the maximum fines for breaking sanctions rules. Because the potential fines became so much higher, OFAC needed to create a clear, written set of rules explaining exactly how they decide whether to fine someone and how much that fine should be.
    • The History: OFAC had tried to create these guidelines before (proposing versions in 2003 and 2006). In 2008, they published a temporary (“interim”) version of these rules. This document is the final version, incorporating feedback they received from the public and industry groups.

    2. Comments and Responses

    After publishing the temporary rules in 2008, OFAC received feedback from banks, trade groups, and lawyers. Here is a summary of what those groups asked for (“Comments”) and how OFAC answered (“Responses”).

    A. Voluntary Self-Disclosure (Confessing)

    • Comment: Industry groups wanted OFAC to clearly define what counts as “voluntarily” telling on yourself. They also wanted to know exactly how much “credit” they would get for it.
    • Response: OFAC clarified the definition. Most importantly, they confirmed that if you genuinely confess a violation before the government finds out, your base penalty will be reduced by 50%. They view this as a major incentive for honesty.

    B. Risk-Based Compliance (Internal Rules)

    • Comment: Companies asked OFAC to clarify what a “good” compliance program looks like. They were worried they would be punished for not having a perfect system, even if they were a small business.
    • Response: OFAC agreed that “one size does not fit all.” A small charity doesn’t need the same complex software as a global bank. OFAC said they will judge a company’s compliance program based on its specific size and risk profile.

    C. Cooperation

    • Comment: Commenters wanted to know if they would get credit for cooperating with an investigation even if they didn’t turn themselves in (voluntary self-disclosure).
    • Response: Yes. OFAC added a specific point stating that substantial cooperation—like quickly providing documents or signing agreements to extend deadlines—can lower your fine, even if you didn’t confess first.

    D. Determining the Fine (Penalty Calculation)

    • Comment: Many people were confused about how OFAC calculates the “value” of a transaction to set the fine (e.g., if a bank processes a $100 illegal check, is the value $100?).
    • Response: OFAC kept its method but provided more clarity. Generally, the fine is based on the dollar value of the illegal transaction. They also clarified that they distinguish between “egregious” (reckless/bad) cases and simple mistakes. Egregious cases get much higher fines.

    E. Sanctions History (Your Permanent Record)

    • Comment: Companies were worried that a mistake they made 20 years ago would count against them today.
    • Response: OFAC agreed to a limit. They stated that, generally, they will only look at your “Sanctions History” for the last 5 years. If you haven’t had a violation in 5 years, a new mistake is treated as a “first offense” (which gets a lower penalty).

    F. Foreign Laws and Secrecy

    • Comment: Global companies pointed out that some foreign countries have laws that make it illegal to share customer data with the U.S. government. They feared being fined by OFAC for failing to provide information that was legally blocked abroad.
    • Response: OFAC said they will consider this on a case-by-case basis. However, they expect companies to try their hardest to get the information to OFAC legally. You can’t just use foreign laws as an easy excuse to hide information.

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  • Burning Question: Could President Trump undo all the OFAC Russian sanctions?

    The prompt:

    if President Trump revoked all the Executive Orders for all of the Russia-related sanctions programs (including Russia Harmful Foreign Activities, Ukraine/Russia-related sanctions and Magnitsky sanctions), what would be left of them due to any legislation passed by Congress, if anything?

    The result from Gemini:

    If President Trump were to revoke all Executive Orders (EOs) related to Russia, Ukraine, and Human Rights (Magnitsky), a significant portion of the sanctions regime would remain in force.

    This is because Congress has aggressively “codified” (written into permanent law) many of these sanctions over the last decade to prevent exactly this scenario. The President cannot overturn a statute with an Executive Order.

    Here is a breakdown of what would legally remain standing:

    1. The “2014-Era” Sanctions (Codified by CAATSA)

    The most durable layer of sanctions comes from the Countering America’s Adversaries Through Sanctions Act (CAATSA) of 2017.

    • What stays: CAATSA Section 222 explicitly codified the Obama-era Executive Orders related to the invasion of Crimea (EOs 13660, 13661, 13662, and 13685).1
    • The Result: Even if the President signs a paper revoking these EOs, the sanctions exist as federal law. The “Sectoral Sanctions” (restrictions on Russian energy and banking debt/equity) and the blocking of major oligarchs designated under these authorities would remain legal obligations.
    • The Lock: To remove these, the President must prove to Congress that Russia has met specific hardline criteria (e.g., implementing the Minsk agreements), which is currently politically impossible.

    2. The Magnitsky Act (Human Rights)

    The prompt mentions “Magnitsky sanctions.” It is crucial to distinguish between the two types, as one is much harder to kill.

    • The Sergei Magnitsky Rule of Law Accountability Act of 2012: This is a statute, not an EO. It targets Russians involved in the death of Sergei Magnitsky and other gross human rights violations.2 The President cannot revoke this program. He must enforce it by law.
    • The Global Magnitsky Act (GloMag): This is also a statute, though it is implemented via EO 13818.3 If the President revoked EO 13818, the mechanism for enforcing GloMag would pause, but the underlying law requiring the President to impose sanctions on human rights abusers would remain, creating a legal conflict until a new mechanism was created.

    3. The Sovereign Assets Freeze (REPO Act)

    Passed in April 2024 (as part of the foreign aid package), the REPO for Ukrainians Act creates a statutory lock on the frozen assets of the Russian Central Bank.

    • What stays: The Act explicitly prohibits the President from unblocking Russian sovereign assets (worth billions) until Russia withdraws from Ukraine and pays compensation.
    • The Result: Even if the President revokes EO 14024 (which originally blocked the Central Bank), the REPO Act overrides that revocation. The money stays frozen by statute.

    4. Trade and Energy Bans (2022 Laws)

    Congress passed two specific laws in 2022 that operate independently of Executive Orders:

    • The Oil Ban: The Ending Importation of Russian Oil Act makes it illegal to import Russian energy products (oil, gas, coal) into the U.S. A President cannot waive this without a new law.
    • The Tariff Hike: The Suspending Normal Trade Relations with Russia and Belarus Act stripped Russia of “Most Favored Nation” trade status. This keeps tariffs on Russian goods incredibly high.

    5. Chemical Weapons Sanctions (CBW Act)

    Because the U.S. formally determined Russia used chemical weapons (Navalny/Skripal cases), the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 mandates specific sanctions.

    • What stays: Restrictions on arms sales, bank loans, and technology exports.
    • The Lock: These can only be removed if the President certifies to Congress that Russia has admitted inspectors and renounced chemical weapons.

    6. The “Gap”: What Would Actually Disappear?

    While the “floor” provided by Congress is high, revoking the EOs would still break the “ceiling” of the current maximum-pressure campaign.

    • The “New” Designations: While the REPO Act freezes the Central Bank, thousands of individual Russian elites, smaller banks, and defense companies were designated solely under EO 14024 (the 2021 “Harmful Foreign Activities” order). Because EO 14024 was issued after CAATSA (2017), it was not codified by that specific law.
    • Secondary Sanctions: The threat of secondary sanctions on foreign banks (China, Turkey, UAE) for aiding Russia’s military-industrial base relies heavily on recent amendments to EO 14024.4 Revoking the EO would eliminate this specific tool.

    Summary: The Congressional Veto

    Finally, CAATSA Section 216 acts as a safety valve for all of the above. It created a “Congressional Review” process.

    • If the President tries to “terminate” or “waive” sanctions on Russia, he must notify Congress.
    • Congress has 30 days to pass a Joint Resolution of Disapproval.
    • If passed (and capable of overriding a veto), this Resolution legally stops the President from removing the sanctions.

    Bottom Line: If the Executive Orders were revoked, the energy ban, tariffs, central bank asset freeze, and 2014-era sanctions would legally remain. The primary loss would be the specific blocking of individuals and companies designated only under the post-2021 authorities (EO 14024), though Congress would likely move to block that revocation immediately.

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  • Daily Digest for Thursday, December 4, 2025

    Daily Digests are simple lists of hyperlinks to new content released by sanctions and export control regulators. When appropriate, additional posts of analysis and commentary, as well as summarizations and rephrasing of the contents will be posted separately.

    Mr. Sanctions does not attempt to comprehensively cover the worlds of sanctions and export control. Opinions expressed here are my own and do not represent that of my past current or future employers.

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  • Burning Question about Executive Order 14024

    When Executive Order 14024 was issued by President Biden after the invasion of Ukraine by Russia, I noticed that more than a few authorities seemed very much like thiose in “activity-based’ or “conduct-based” sanctions programs – like the Election Interference and Cyber programs. I had always assumed it was a way of creating a “universe” of malign Russian government actions (although, to be fair, those programs’ designations are usually populated by state actors, whether from Iran, North Korea or otherwise), rather than a universe of actors performing the same bad acts, regardless of affiliation.

    So, I asked Gemini what it could find in online chatter:

    Online sources, legal analyses, and government statements indicate the Biden administration issued Executive Order (E.O.) 14024 (“Blocking Property with Respect to Specified Harmful Foreign Activities of the Government of the Russian Federation”) instead of modifying existing activity-based programs for several strategic, legal, and administrative reasons.1

    The core distinction is that E.O. 14024 creates a status-based authority (targeting actors based on who they are or where they operate), whereas the Election Interference (E.O. 13848) and Cyber (E.O. 13694/13757) programs are conduct-based (targeting actors based on what they did).

    Here is a breakdown of the specific reasons for this choice:

    1. Lower Burden of Proof (Status vs. Conduct)

    • Activity-Based Programs: To sanction someone under the Cyber or Election Interference E.O.s, the U.S. government must typically prove that a specific individual or entity engaged in, was complicit in, or materially supported a specific “bad act” (e.g., a specific hack or election influence campaign). Attribution in these areas can be technically difficult, slow, and classified.2
    • E.O. 14024: This order authorizes sanctions against persons simply for “operating in” specific sectors of the Russian economy (e.g., technology, defense, financial services).3 This allows the government to designate targets based on their presence in a high-risk sector without needing to publicly prove their direct involvement in a specific cyberattack or election scheme. This creates a much faster and more flexible designation process.

    2. Targeting the “Ecosystem” and Supply Chain

    • Broader Reach: Existing activity-based sanctions often target the “tip of the spear”—the hackers or operatives directly carrying out attacks. E.O. 14024 was designed to target the broader ecosystem that supports them.
    • Sectoral Authority: By authorizing sanctions on the Russian technology and defense sectors, the administration could target the companies that build the tools, provide the infrastructure, and fund the intelligence services that conduct these malign activities, even if those companies didn’t launch the attacks themselves.4

    3. Consolidation and Modernization

    • Unified Framework: Prior to E.O. 14024, responding to Russian aggression required a patchwork of authorities (some for Ukraine, some for Cyber, some for Election Interference, etc.). E.O. 14024 consolidated these into a single “Russian Harmful Foreign Activities” program.
    • Comprehensive “National Emergency”: The order declares a distinct national emergency focused specifically on the totality of the Russian government’s malign behavior.5 This allows for a more holistic response where a single designation can cite multiple types of bad conduct (e.g., a target involved in both cyber espionage and election interference) under one legal roof.6

    4. “Sword of Damocles” (Flexibility for Future Escalation)7

    • Scalability: E.O. 14024 was written with built-in flexibility. It allows the Secretary of the Treasury (in consultation with the Secretary of State) to identify new sectors of the Russian economy for sanctions at any time without the President needing to sign a new Executive Order.8
    • Deterrence: This structure serves as a standing threat that the U.S. can rapidly expand sanctions to other parts of the Russian economy (e.g., energy, mining, financial services) if Russian behavior continues or escalates.9

    5. Attribution to the State

    • Political Messaging: Activity-based sanctions like E.O. 13694 are global and country-agnostic—they apply to hackers in China, Iran, or North Korea equally. By issuing a Russia-specific order, the administration sent a diplomatic signal attributing these activities directly to the Government of the Russian Federation, framing them not as isolated crimes but as state-directed policy.10

    Footnotes for Executive Order 14024 Analysis

    1. Lower Burden of Proof (Status vs. Conduct)

    • Status-Based Authority: E.O. 14024 allows for the imposition of sanctions on individuals and entities determined to “operate or have operated in the technology sector or the defense and related materiel sector of the Russian Federation economy” (Section 1(a)(i)).1 This is a “status-based” authority, meaning designation is based on the target’s position within a sector rather than specific evidence of a malicious act.^1
    • Conduct-Based Limitations: In contrast, the Cyber Sanctions program (E.O. 13694, as amended) requires the government to determine that a person is “responsible for or complicit in” specific cyber-enabled activities that harm national security.^2 Similarly, the Election Interference program (E.O. 13848) requires a determination that a person has “directly or indirectly engaged in, sponsored, concealed, or otherwise been complicit in” foreign interference in a U.S. election.^3

    2. Targeting the “Ecosystem” and Supply Chain

    • Sectoral Targeting: The Biden administration stated that E.O. 14024 was designed to target the “ecosystem” supporting Russia’s malign activities. By designating the technology and defense sectors, the order enables the Treasury to sanction companies that procure technology or manufacture components for the Russian intelligence services, even if those companies do not execute the attacks themselves.^4
    • Supply Chain Disruption: Legal analysts note that this approach moves beyond the “tip of the spear” (the hackers) to the supply chain, allowing the U.S. to degrade the Russian government’s capabilities by cutting off access to western financial markets and technology for broad swaths of the Russian economy.^5

    3. Consolidation and Modernization

    • Unified Framework: Prior to E.O. 14024, sanctions authorities were fragmented across multiple emergency declarations (e.g., Ukraine-specific E.O. 13660, Cyber E.O. 13694, Election E.O. 13848). E.O. 14024 declares a new, comprehensive national emergency with respect to “specified harmful foreign activities of the Government of the Russian Federation,” creating a single legal chassis to address election interference, cyberattacks, transnational corruption, and extraterritorial activities.^6
    • Holistic Response: This consolidation allows OFAC to cite multiple bases for a single designation, simplifying the administrative record and strengthening the legal defense of the designation if challenged in court.^7

    4. “Sword of Damocles” (Flexibility for Future Escalation)2

    • Scalability: The order grants the Secretary of the Treasury, in consultation with the Secretary of State, the authority to expand sanctions to any sector of the Russian economy without a new presidential order.^8 This was explicitly designed to provide “flexibility” and leverage, allowing the administration to ratchet up pressure by targeting additional sectors (as it later did with financial services, energy, and others following the 2022 invasion of Ukraine).^93

    5. Attribution to the State

    • State-Directed Policy: The title of the order itself—”Blocking Property with Respect to Specified Harmful Foreign Activities of the Government of the Russian Federation“—is a deliberate diplomatic signal. Unlike the country-agnostic Cyber or Election orders, this order formally attributes these behaviors (SolarWinds, 2020 election interference) to the Russian state as a matter of U.S. policy.^10

    Source References:

    ^1 Executive Order 14024, Federal Register, Vol. 86, No. 73 (April 19, 2021).

    ^2 Executive Order 13694, “Blocking the Property of Certain Persons Engaging in Significant Malicious Cyber-Enabled Activities” (April 1, 2015).4

    ^3 Executive Order 13848, “Imposing Certain Sanctions in the Event of Foreign Interference in a United States Election” (September 12, 2018).5

    ^4 White House Fact Sheet, “Imposing Costs for Harmful Foreign Activities by the Russian Government” (April 15, 2021).

    ^5 See, e.g., Miller & Chevalier, “Trade Compliance Flash: New Executive Order Expands Sanctions Risk in Russia” (April 21, 2021).6

    ^6 Id.

    ^7 Congressional Research Service, “U.S. Sanctions on Russia: Legal Authorities and Related Actions” (Updated 2024).

    ^8 Executive Order 14024, Section 1(a)(i).7

    ^9 Skadden, Arps, Slate, Meagher & Flom LLP, “US Imposes Additional Round of Sanctions on Russia” (April 22, 2021).8

    ^10 Id.

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  • FCDO’s Syria guidance for businesses and NGOs, simplified

    Go read the guidance document for all the links and detail if you want to know more…

    Background

    Interest from UK businesses in operating within Syria has grown recently, prompting the UK government to clarify the legal and policy landscape. The government supports UK businesses investing and trading in Syria, provided they follow UK laws and the activity is actually destined for Syria. However, businesses must assess their own risks, particularly regarding bad actors who might try to exploit the situation or use deceptive tactics to bypass rules.

    The political situation in Syria has shifted significantly. Following the fall of the Assad regime in December 2024, the UK government removed many sanctions in April 2025 to aid recovery. Further steps toward normalization occurred in late 2025: the UK removed Hay’at Tahrir Al-Sham (HTS) from its list of banned terrorist organizations in October, and in November, the UK removed the Syrian President and Interior Minister from the specific ISIL/Al-Qaida sanctions list. While Syria remains a high-risk environment, the new government is working toward stability, and there are potential commercial opportunities in this lower middle-income market.

    What has (and hasn’t) changed

    Significant changes to the UK’s Syria sanctions rules took effect on April 24, 2025. To help the Syrian people rebuild, the UK lifted bans on trade, finance, aviation, and energy production. Financial freezes were also removed from entities previously controlled by the Assad regime, such as the Central Bank of Syria, government ministries, and energy or media companies. The current Government of Syria itself is not subject to sanctions.

    Despite these relaxations, strict prohibitions remain in place to hold specific individuals accountable. You still cannot do business with people or entities subject to asset freezes. There are also continued bans on exporting chemical and biological weapons technology, goods used for internal repression or spying, and military equipment. Specific trade restrictions apply to the “Governing Authority of Syria”—which includes the transitional authorities and the Central Bank—regarding gold, precious metals, and diamonds. Luxury goods also cannot be sent to Syria. If you are a specific type of regulated firm, you have a legal duty to report suspected sanctions breaches.

    UN counter-terrorism sanctions

    Separate from the UK’s own rules, the United Nations maintains a counter-terrorism sanctions list (the ISIL/Al-Qaida regime) that still affects business in Syria. While the UK has removed the Syrian President and Interior Minister from its version of this list, other individuals and groups remain designated. Notably, while the UK has de-listed HTS domestically, HTS remains on the UN sanctions list.

    The Government of Syria is not on this UN list, meaning interactions with the government generally do not violate these sanctions. However, strict asset freezes and bans on military goods apply to anyone who is on the UN list. This prohibits providing funds or economic resources to them directly or indirectly. Limited exceptions exist, primarily to allow for the payment of basic expenses, but these usually require a licence.

    Relevant UK counter-terrorism laws

    Under UK law, the Terrorism Act 2000 defines which organizations are “proscribed” (banned). As of October 2025, HTS is no longer a proscribed organization, meaning membership or support for it is no longer a criminal offense in the UK. However, the group Da’esh (ISIL/ISIS) remains banned and poses a threat.

    The government aims to ensure that counter-terrorism laws do not stop legitimate humanitarian work. The Crown Prosecution Service (CPS) has guidance stating that prosecuting genuine aid organizations is generally not in the public interest. Additionally, the law offers specific protections: there is a legal defense for “genuinely benign” meetings with banned groups (such as for delivering aid), and organizations can apply to the National Crime Agency for a defense against potential terrorist financing charges for specific transactions.

    Humanitarian exceptions and exemptions

    Petroleum exceptions

    The regulations include a specific rule allowing the use of funds to purchase or supply petroleum products for humanitarian purposes. Since the general ban on petroleum trade was lifted in April 2025, this rule now primarily protects aid organizations if they need to deal with frozen assets to get fuel. If an organization relied on this rule for activities before April 2025, they must notify the government by the end of the year. For activities after April 2025, notification is only needed if the activity would otherwise breach an asset freeze.

    General licence

    In February 2025, a “General Licence” was issued to facilitate aid. This allows eligible aid organizations (and the banks that serve them) to carry out activities necessary for humanitarian assistance and basic human needs without violating asset freezes. This licence applies to the UK’s independent sanctions but not to the UN sanctions, which have their own separate humanitarian exemption.

    Related guidance documents

    Businesses and organizations should consult the specific statutory guidance for both the Syria and ISIL/Al-Qaida sanctions regimes to understand the full technical details of prohibitions and licences. A “sanctions hub” on the government website creates a central place to search for all relevant policies.

    In addition to sanctions and terrorism laws, other legal frameworks still apply. You must comply with export controls for military and dual-use goods, anti-money laundering regulations, and laws against bribery and corruption. If you are unsure whether your planned activities might break the law—especially given the complexity of the different legal regimes—you should seek independent legal advice.

    So, what do you think of this summary? Is it “enough” for you, or are you better served by the guidance document, for a first read?

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  • Backgrounder: UK removes Syria sanctions in April 2025

    The following is a summarized version of the original press release from the Foreign, Commonwealth & Development Office (FCDO):

    The UK government changed Syria sanctions to help the country rebuild following the fall of the Assad regime.

    Here is a simple breakdown of what happened and why:

    What changed?

    • Easing Restrictions: The UK removed bans on key industries like bankingand energy production. This was done to encourage investment and help get Syria’s infrastructure working again.
    • Lifting Sanctions: Specific sanctions have been dropped against 12 major entities, including the Syrian Ministry of Defence, the Ministry of Interior, and various media companies. This followed the earlier unfreezing of assets for the Central Bank of Syria and the national airline.

    Why did they do this?

    • To Help Rebuild: The main goal is to let money flow back into the country so the Syrian people can repair their economy and infrastructure after years of conflict.
    • To Support Stability: The UK believes a stable Syria is safer for the region and for the UK itself.

    What is staying the same?

    • Punishing the Old Regime: Sanctions remain in place against individuals from the former Assad regime and those involved in the illegal drug trade (specifically the synthetic stimulant captagon).
    • Accountability: The new rules still allow the UK to punish human rights violations committed by Assad and his associates.

    Additional Support

    • The UK pledged £160 million in 2025 to help with Syria’s recovery and humanitarian needs.

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