International Trade Enforcement Roundup | March 2023

The OFAC press release can be found here. The Federal Reserve Board press release can be found here.

Notably. These violations underscore the importance of transactional due diligence and integration of compliance measures and processes post-closing. Even when robust pre-deal diligence is not possible, a post- close audit or diligence can help identify and appropriately respond to compliance issues.

OFAC Settles with Uphold HQ Inc. Related to Apparent Violations of Multiple Sanctions Programs

Those involved. Uphold HQ Inc., a California-based digital money platform and digital services company.

Charges with penalties. 152 apparent violations of multiple OFAC sanctions regimes. Uphold agreed to pay $72,230 in penalties. The maximum applicable civil penalty was over $44 million. What happened? Uphold apparently processed over 150 transactions totaling over $180,000 for customers who self-identified as being located in Cuba or Iran or employees of the Venezuelan government. OFAC considered the General Factors under the Enforcement Guidelines to determine the settlement amount. While OFAC alleged that Uphold failed to exercise due caution during the onboarding process and had reason to know it was processing payments for individuals in sanctioned countries, Uphold voluntarily self-disclosed the conduct, has not been issued a Penalty Notice or Finding of Violation in the last five years, and undertook numerous remedial measures. The mitigating factors helped to substantially reduce Uphold’s penalty.

The OFAC press release can be found here.

Notably. The action shows the importance of effective review and screening to identify sanctions compliance risks. Likewise, the relatively small penalty imposed – as opposed to the maximum that could have been imposed – serves as a reminder of the potential benefits of disclosing and remediating violations that do occur.

Enforcement Policy Updates

Export Controls and Human Rights Initiative Code of Conduct Released at the Summit for Democracy Human Rights Code of Conduct. On March 30, the Department of State released a Code of Conduct as part of the U.S.-led Export Controls and Human Rights Initiative. The Initiative – launched at last year’s Summit for Democracy by the United States, Canada, France, the Netherlands, and the United Kingdom – intends “to counter state and non-state actors’ misuse of goods and technology that violate human rights.” In the year following the Summit, the United States led an effort to get countries to endorse a nonbinding, voluntary Code of Conduct which calls for “subscribing states” to consult with human rights stakeholders when implementing export controls, share information among subscribing states about threats associated with the trade that poses human rights issues, share best practices in implementing effective controls, and more. The governments of Albania, Australia, Bulgaria, Canada, Croatia, Ecuador, Estonia, Germany, Kosovo, Latvia, New Zealand, North Macedonia, Spain, and many more have signed on. Following the second Democracy Summit, the Department of State will continue to engage with subscribing states to implement portions of the Code and with non-subscribing states to seek additional endorsements.

The full announcement can be found here. The Code of Conduct can be found here.

Notably. International support for the protection of human rights means that human rights will increasingly be a basis for implementing more stringent multinational export controls. While non-binding, the Code should prompt compliance departments to ensure that human rights considerations are a part of export compliance.

6 International Trade Enforcement Roundup |

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