September 7, 2016
By: Anna Sayre, Legal Content Writer SanctionsAlert.com
The US has one of the most complex national systems of sanctions enforcement in the world. This system derives from the number of agencies that are empowered to initiate actions against violators of US sanctions. Because each US agency maintains a different “Do Not Touch” list, organizations and individuals on the various lists may overlap. It is not uncommon for three or four US agencies to take action jointly, thus exposing a business to multiple investigations and varying penalties.
This article is the third in a series of articles on the role US agencies play in sanctions enforcement. The series focuses on the role departments and agencies have in the enforcement, administration and investigation of sanctions violations.
Article three of the series deals with the State Department, which arguably has the greatest influence of any US department over the implementation of US sanctions policy.
TFS
The Counter Threat Finance and Sanctions (TFS) bureau coordinates the creation, modification, and termination of sanctions regimes, including most recently, in countries such as Iran, Syria, and Burma (Myanmar). It also develops strategies for implementing specific sanctions regimes and provides foreign policy guidance on specific commercial business, export, import, and general licensing issues to OFAC and the Department of Commerce’s Bureau of Industry and Security (BIS).
TFS has two offices:
The Office of Economic Sanctions Policy and Implementation (EB/TFS/SPI) develops and implements foreign policy-related sanctions that counter threats to particular activities and countries. SPI builds international support for economic sanctions, provides foreign policy guidance to the Treasury and Commerce Departments on sanctions implementation, and works with Congress to draft laws that advance US foreign policy goals. SPI also removes economic sanctions, when appropriate, and conducts outreach on sanctions.
The Office of Threat Finance Countermeasures (EB/TFS/TFC) seeks to minimize funding to groups that pose a threat to domestic, international and regional security, such as terrorists, pirates, and conflict diamonds groups. TCF works with domestic agencies and international partners to pursue US foreign policy and security objectives.
DDTC
The Directorate of Defense Trade Controls (DDTC), like its cousin BIS in the Department of Commerce, monitors and regulates US exports, specifically exports of defense trade and those exports that may violate global sanctions policy. The DDTC administers the International Traffic in Arms Regulations (ITAR), which is authorized by legislation that governs US trade in military items called the Arms Export Control Act. ITAR applies specifically to defense articles, which include hardware and software technology, as well as services that may be used militarily, such as certain space-related items and technology.
The ITAR contains the US Munitions List, which is a comprehensive list of all defense articles and services subject to ITAR and controlled by the DDTC. For the full list, click here.
FTOs and SDGTs
In addition to the DDTC’s “Do Not Touch” list, the State Department, under Executive Order 13224, may designate foreign individuals or entities found to have committed, or which pose a significant risk of committing, acts of terrorism that threaten US national security, foreign policy, or its economy. Such individuals and entities can be designated as Foreign Terrorist Organizations (FTOs) under the Immigration and Nationality Act and under Executive Order 13224. As of December 2015, 58 organizations or groups had been designated as FTOs by the Department of State.
A wider range of entities, including terrorist groups, individuals who are part of a terrorist organization, and others such as financiers and front companies, may be labeled as Specially Designated Global Terrorists (SDGTs). As of December 2015, total of approximately 976 individuals and entities have been listed as SDGTs. A recent example of an SDGT designation by Department of State is Mr. Santoso, an Indonesian citizen, and leader of the Mujahidin Indonesia Timur (MIT), also an SDGT entity. MIT, under Santoso’s leadership, has been responsible for numerous killings and kidnappings in Indonesia over the past few years.
Once an individual or entity is designated as either an FTO or SDGT, all property subject to US jurisdiction in which the designated individual or entity has any interest is blocked and, generally speaking, US persons are prohibited from engaging in any transactions with them.
Close ties with other agencies
The Department of State is authorized to designate FTOs and SDGTs, while the Department of Treasury designates only SDGTs. Both departments pursue these designations in cooperation with the Department of Justice.
FTOs and SDGTs are placed on OFAC’s “Specially Designated Nationals” (SDN) list. The SDN list is a compilation of persons and entities that are blocked or designated under a variety of sanctions programs. FTOs and SDGTs are identified on the SDN list with program code or tag “FTO” or “SDGT”. Click here to see the full SDN list.
The State Department also has the power under Title 8 U.S.C. Sec. 1182, in consultation with the Justice Department, to designate terrorist organizations for immigration purposes, an authority called the “Terrorist Exclusion List (TEL)”. Individual aliens providing support to or associated with TEL-designated organizations may be prevented from entering the US or, if already in the US, may in certain circumstances be deported. TEL-designated organizations are not included on OFAC’s SDN list, unless they are also SDGTs or FTOs. A full list of the State Department’s designations can be found here.
OFAC releases an annual Terrorist Assets Report (TAR) to Congress detailing the amounts of assets in relation to international terrorist organizations or state sponsors of terrorism that have been frozen as a result of these designations. For an earlier SanctionsAlert.com article on this report, click here.
The US Congress can issue a law that mandates the State Department to issue a report that can lead to sanctions designations issued by OFAC. For example, the North Korea Sanctions and Policy Enhancement Act of 2016, Public Law 114-122, requires the Secretary of State to provide a report to Congress that identifies persons responsible for human rights abuses or censorship in North Korea. The persons identified in the State Department’s report, including top officials of the North Korean government, were subsequently placed on OFAC’s SDN list.
Human Rights Sanctions
The State Department also plays a role in sanctions designations that are not related to terrorism, such as human rights abuses. The recent designations by OFAC of top officials within the North Korean regime, including North Korean leader Kim Jong Un and 15 other individuals and entities, was a direct result of their ties to human rights violations. OFAC took this action in conjunction with the State Department’s issuance of a “Report on Serious Human Rights Abuses or Censorship in North Korea,” in accordance with the North Korea Sanctions and Policy Enhancement Act of 2016. Though having previously designated four individuals and three entities highlighted in the State Department report, all of the individuals and entities named were designated by OFAC after the Report was released by the State Department.