KeyCorp, Correspondence with SEC Office of Global Security Risk (2009, 2012)

Ed. Note: if you’re new to TURBOFAC, please take note that the text string filtration function generally shouldn’t be used for terms such as “ordinarily resident,” “causing” or “new debt”. For research on the meaning of words and phrases such as those, i.e. terms central to the key legal issues in sanctions law that appear on a cross-programmatic basis, you’re typically better off locating and checking the appropriate box in the “Key Legal Issues” search category, which will limit the results to those that have been manually assessed as being relevant for the interpretation of the terms at issue.

Try typing your search term (“ordinarily resident,” “new debt,” or something else) in the “Find a Search Filter” box at the top of the page, and the corresponding “Key Legal Issues” check box will pop up instantly, if one exists. Once you check the box (e.g. “new debt,” with ~55 results), you can always use the text string filtration function to further refine your search (e.g. by typing “invoice” and narrowing the ~55 results to ~10).

Note in addition that the same applies to text string searches such as “14071” (if you’re looking for items related to EO 14071). By typing “14071” in the “Find a Search Filter” field up top, you will be able to instantly narrow the results down to items manually assessed as relating to EO 14071. Ditto terms such as “515.204” or “Iran General License G” (try the “Discrete Legal Provision” search category). Please contact [email protected] or [email protected] with any questions on search results and efficiency.

Please click "Apply Text String Filters" again after clicking the "Close" button immediately below.

TURBOFAC Commentary (476 words)

Notes:

1) Compare 31 § 585.405 Acquisition of instruments including bankers acceptances (1995, FRY(S&M)); § 545.410 Acquisition of instruments including bankers acceptances (2001, Taliban). Those interpretive provisions (found in now-repealed sanctions regulations) state that "[n]o U.S. person may acquire or deal in any obligation, including bankers acceptances...in cases in which the documents evidencing the obligation indicate, or the U.S. person has actual knowledge, that the underlying transaction is in violation of [sanctions prohibitions]..." Compare 31 CFR § 550.419 Acquisition of instruments, including bankers' acceptances (1986, Libya), which states that U.S. persons are prohibited from acquiring bankers' acceptances "in which the documents evidencing the obligation indicate, or the U.S. person has actual knowledge, that the transaction being financed covers property in which...the [blocked] Government of Libya ha[d] an interest of any nature whatsoever" as of the time at which the Government of Libya became blocked.

Neither the nor the have a similar interpretive provision pertaining to bankers' acceptances, but here Keybank recounts OFAC taking a position that is not inconsistent with the interpretive provisions cited above. The bankers' acceptance at issue pertains to goods that were shipped aboard vessels that were placed on the list subsequent to delivery of the goods at issue, but prior to the expiry of the bankers' acceptance. All vessels placed on the SDN list on Sept. 8, 2008, were associated with the Islamic Republic of Iran Shipping Lines, an entity that was also designated pursuant to the WMDPSR on the same day [1], [2].

In all likelihood, OFAC required a license for payment on the matured bankers’ acceptances because the underlying shipping transaction was prohibited by the ITSR on the date on which it took place, even though it was not yet prohibited by the WMDPSR. Prior to the designation of the pursuant to the WMDPSR, OFAC had frequently penalized U.S. persons for engaging in trade-related transactions involving Iran by shipping goods aboard IRISL vessels. See e.g. Oxbow Carbon and Minerals LLC (violations of, among other provisions, 560.206).

One thing notable about what was reported by Keybank is that the License number (NPW-356) suggests that the IRISL and/or the blocked vessels were deemed to have had an “interest” in the payment of the bankers’ acceptances, notwithstanding that the goods were delivered to the U.S. (albeit in violation of the ITSR) prior to the vessels becoming blocked pursuant to the WMSPSR. Query whether that determination is necessarily inconsistent with 550.419, or whether the basis for the determination was that the underlying shipping transaction constituted a violation of an OFAC-administered sanctions prohibition other than the WMDPSR’s blocking prohibition (e.g. 560.206 of the ITSR).

[1] https://www.treasury.gov/ofac/downloads/sdnew08.pdf
[2] https://www.treasury.gov/press-center/press-releases/pages/hp1130.aspx

3) See General Note on Correspondence of Publicly traded Companies with the SEC Concerning Sanctions (System Ed. Note)

Welcome!

Welcome!

KeyCorp, Correspondence with SEC Office of Global Security Risk (2009, 2012)

TURBOFAC Commentary (476 words)