On May 13, 2021, the New York ACAMS Chapter hosted a virtual event titled “US Sanctions Policy – What's happened, and what can we expect from the Biden Administration?” sponsored by Thomson Reuters. The event was moderated by Howard Spieler, (ACAMS Chapter Co-Chair), and included the following panelists: Angelena Bradfield (Senior Vice President, AML/BSA, Sanctions & Privacy, Bank Policy Institute); Nicole Sayegh Succar (former OFAC Sanctions Officer, currently Economic Sanctions and Anti-Money Laundering (AML) Specialist, Counsel, Crowell & Moring LLP); and Brett Wolf (Senior AML Correspondent, Thomson Reuters).
Event Materials can be found here.
The discussion kicked off with the sanctions policy approach that the Biden Administration is currently undertaking, including a review that is underway of current policy effectiveness, which will take multiple months to complete. The administration is still formulating an approach to use against specific adversaries, while maintaining the policy goal to target bad actors while avoiding harm to ordinary citizens. In addition, consideration is being given to whether overuse of sanctions risks undermining their effectiveness and drives global commerce away from the dollar.
It was noted later in the event that while (particularly with regard to China) current policies were implemented quickly by the previous administration, it seems unlikely that the policies will be repealed.
There was also a discussion on the BPI report “Reforming the U.S. Sanctions Regulatory Regime: How a Smarter, Risk-Based Approach Can Make Sanctions More Effective”. In summary, the report noted that the nuance and complexity of U.S. sanctions programs has grown - particularly over the last decade. While financial institutions have developed compliance frameworks to address evolving sanctions regimes, regulatory expectations have remained almost stagnant. As a result, FIs are compelled to focus on less productive compliance tasks rather than on innovation and more advanced analytical activities. A modernized risk-based sanctions regime would allow FIs to more effectively allocate resources to higher value activities.
The panel also covered several aspects of how the rise in popularity of virtual currencies (articles provided below) might impact sanctions and also discussed the recent OFAC enforcement actions (provided below) against virtual asset companies. While the monetary penalties imposed in these actions were not significant in comparison to other recent actions (in part because the companies had already begun to implement relevant controls), the actions were likely intended to send a message so that newer companies will fully appreciate sanctions regulatory risks. In lieu of formal guidance on how virtual asset service providers should be implementing sanctions, companies should look to enforcement actions such as these to apply lessons learned.
The panel also discussed Communist Chinese Military Company related sanctions and recent successful legal challenges against those designations, which may have a long term weakening impact on the effectiveness of future sanctions programs.
In addition, the group discussed the Colonial Pipeline ransomware attack perpetrators (DarkSide) and their potential links to Russia, the panelists noted that the Biden Administration has stated that there is no known linkage to Russia. At this point, it seems unlikely for the implementation of sanctions against Russia as a result of the attack.
Lastly, the discussion also included speculation over any potential changes in US sanctions policy towards Iran, Syria, North Korea, Cuba and Venezuela. While there is a possibility that the U.S. will rejoin the JCPOA, it is unlikely to happen quickly (and only with cooperation from Iran). While it is possible that Cuba sanctions may eventually roll back to those in line with the Obama administration, it does not appear to be a priority for the administration right now. Sanctions with respect to Syria, North Korea and Venezuela are unlikely to change at this time.
Virtual currency articles:
OFAC enforcement actions: