Sanctions Evasion

Back To  MONEY LAUNDERING AND SANCTIONS EVASION

In addition to violations of the Bank Secrecy Act, the FinCEN Whistleblower Reward Program covers violations of three sanctions laws: the International Emergency Economic Powers Act (known as IEEPA), the Foreign Narcotics Kingpin Designation Act (the Kingpin Act), and certain provisions of the Trading With the Enemy Act. These statutes all authorize the executive branch to impose financial sanctions on foreign entities or individuals regarded as a threat to national security. Whistleblowers with information related to violations of these laws can bring this information to the government for a potential reward.

Who must comply with sanctions rules?

U.S. sanctions rules generally apply to U.S. persons. That means that not only U.S. citizens and residents, but also anyone within the territory of the U.S. must comply. It also means that companies registered in the U.S. are liable under the rules. For some sanctions, foreign subsidiaries of U.S. companies must also comply. Sanctions are a strict liability regime. That means that any violation of the rules can result in a penalty, regardless of intent.

What conduct is prohibited by these sanctions laws?

Individuals, countries, or entities are designated as “sanctioned” by the executive branch under the authority of different laws, including the three listed above. There are different forms of sanctions, including total sanctions (“blocking”) and partial sanctions (“non-blocking”). Regardless of the form, economic sanctions programs are administered by the Office of Foreign Assets Control (or OFAC). OFAC maintains lists of sanctioned countries and persons and ensures that U.S. persons comply with the appropriate restrictions.

Depending on the type of sanction, different conduct may be prohibited. Some possible examples include:

  • A company doing business with a sanctioned entity or entities;

  • A company allowing sanctioned entities to transact business using that company’s tools or systems;

  • A bank or financial institution allowing money from a sanctioned entity to flow through its systems, including correspondent accounts;

  • A company doing business within a sanctioned country; or

  • A business failing to implement an effective compliance program to prevent violations of sanctions.

Who can blow the whistle on sanctions fraud?

Anyone with non-public information related to a violation of the relevant sanctions law can bring that information to FinCEN. You do not need to be an employee of the company that may have violated the law to blow the whistle. Whistleblowers are allowed to report anonymously as long as they are represented by an attorney.

These descriptions of sanctions fraud are general in nature and do not constitute legal advice. Sanctions fraud schemes are complex and ever-evolving. The attorneys at Whistleblower Partners understand the complicated, constantly changing legal landscape and are happy to discuss any potential matter further.

If you would like more information or would like to speak to an attorney at Whistleblower Partners, please contact us for a confidential consultation.