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Random thought on what’s next for OFAC

So, if you take the CSE Global/CSE Transtel enforcement action, and put it together with this year’s round of foreign subsidiary-focused enforcements (most notably the one against Kollmorgen Corporation), and give it a quick spin in a blender, what might it taste like?

Mr. Watchlist thinks that dollar-denominated assets overseas are no longer safe from scrutiny – and that the client attestation that CSE’s bank relied in for that case, but which was clearly deemed insufficient in Kollmorgen’s case, will no longer shield the holder or processor of such assets, going forward.

How would that manifest itself, if the assets are held outside the US by a foreign financial institution (FFI, for us banking geeks) with no US presence? I think it would depend on the program being violated, but it would not be a stretch to see a CAPTA (Correspondent Account or Pay-Through Account) designation. Depending on the amounts involved and the amount of time the violations occurred, it would be in the realm of possibility to see Foreign Sanctions Evaders (FSE) designations or even an SDN designation in the case of willful blindness.

I suspect it’s just a matter of time….

Categories: Enforcement Actions


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