International Trade Enforcement Roundup | April 2023 Update

services to Specially Designated Nationals (SDNs), blocked persons, and end users in Cuba, Iran, Russia, and the Crimea region of Ukraine. Third-party distributors were used to sell the software. The corresponding settlement with OFAC resulted in $2,980,265.86 in additional penalties. But this was well below the statutory maximum of $404,646,121.89, as OFAC acknowledged Microsoft’s voluntary disclosure and Microsoft’s “significant remedial measures” as mitigating factors. In addition, on seven different occasions between 2016 and 2017, employees of Microsoft’s subsidiary Microsoft Rus LLC (Microsoft Russia) caused another Microsoft subsidiary, Microsoft Ireland Operations Limited (Microsoft Ireland), “to enter into or sell software agreements” with or to United Shipbuilding Corporation Joint Stock Company and FAU Glavgosekspertiza Rossii without the required license. Both companies are on the Entity List and thus a license is required to ship nearly any U.S.-origin item to either of the companies. BIS imposed a $624,013 administrative penalty but issued a $276,382 credit conditioned on Microsoft meeting all requirements imposed under the OFAC settlement agreement. (Microsoft also voluntarily disclosed this matter to BIS.)

The OFAC web notice can be found here. The BIS press release can be found here.

Notably. The OFAC web notice mentions “shortcomings in Microsoft’s restricted-party screening.” In part, the “screening architecture did not aggregate information known to Microsoft, such as an address, name, and tax-identification number, across its databases to identify SDNs or blocked persons.” The enforcement action highlights the importance of implementing an effective screening process, including periodically monitoring the screening process to identify gaps. Treasury Targets Russian Financial Facilitators and Sanctions Evaders Around the World (OFAC Action) On April 12, OFAC, the Department of State, and BIS took action to “[curb] Russia’s access to the international financial system” by targeting Russian sanctions evasion schemes. OFAC, in coordination with the United Kingdom, designated 25 individuals and 29 entities across 20 jurisdictions, including those belonging to a network orchestrated by Alisher Usmanov, a Russian oligarch originally designated on March 3, 2022. The State Department took concurrent action to designate more than 120 entities and individuals. The newly designated entities and individuals operate in the Russian defense sector, are associated with Russia’s State Atomic Energy Corporation (Rosatom), or otherwise support Russia’s war against Ukraine. BIS also took action to add 28 entities to the Entity List. The OFAC press release can be found here. The State Department press release can be found here. The BIS final rule can be found here.


OFAC-Designated Hizballah Financier and Eight Associates Charged with Multiple Crimes Arising From Scheme to Evade Terrorism-Related Sanctions (DOJ Action) Those involved. Nazem Ahmad, a Lebanese resident and dual Belgian-Lebanese citizen sanctioned in 2019 for financing Hizballah, a terrorist organization, and eight co-defendants. Charges with penalties. One Count of Conspiracy to Defraud the United States (maximum of five years in prison); Two Counts of Conspiracy to Violate IEEPA (maximum of 20 years per count); Two Counts of Smuggling Goods from the United States (maximum of 20 years in prison); One Count of Unlawful Importation (maximum of one year in prison); Two Counts of Wire Fraud Conspiracy (maximum of 20 years per count); Once Count of Money Laundering Conspiracy (maximum of five years).

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