Sanctions Violation Prosecutions
Sanctions Violation Prosecutions: Overview
Sanctions violations occur when individuals or entities engage in transactions or dealings prohibited by U.S. government sanctions programs. These sanctions are typically imposed for foreign policy, national security, or human rights reasons, targeting countries, entities, or individuals.
Sanctions violations can be criminal or civil offenses, prosecuted primarily under statutes administered by:
Office of Foreign Assets Control (OFAC) – part of the U.S. Treasury Department.
Department of Justice (DOJ) – for criminal enforcement.
Legal Framework
Trading with the Enemy Act (TWEA), 50 U.S.C. §§ 4301-4331
International Emergency Economic Powers Act (IEEPA), 50 U.S.C. §§ 1701-1706
Export Administration Regulations (EAR)
Arms Export Control Act (AECA)
Criminal penalties under 18 U.S.C. § 371 (conspiracy), 18 U.S.C. § 1956 (money laundering related to sanctions), and 18 U.S.C. § 554 (export restrictions)
Violations can lead to fines, imprisonment, forfeiture of assets, and civil penalties.
Elements of Sanctions Violation Prosecutions
Knowing engagement in transactions or dealings with sanctioned persons, entities, or countries.
Willful violation of sanctions regulations.
Use of deceptive means to conceal or evade sanctions.
Illegal export or re-export of goods, services, or technology.
Involvement in money laundering or conspiracy related to sanctioned transactions.
Detailed Case Law on Sanctions Violation Prosecutions
1. United States v. Zakhary, 677 F.3d 144 (3d Cir. 2012)
Issue: Conspiracy to violate sanctions against Iran.
Facts: The defendants participated in a scheme to export U.S.-origin goods to Iran through third countries to evade sanctions.
Holding: The court upheld convictions, finding sufficient evidence that defendants knowingly conspired to circumvent sanctions.
Importance:
Highlights prosecution of complex evasion schemes involving third countries.
Demonstrates use of conspiracy charges to target networks circumventing sanctions.
2. United States v. Stein, 2009 WL 3800491 (S.D.N.Y. 2009)
Issue: Corporate violations of sanctions on Cuba and Iran.
Facts: A large corporation was prosecuted for exporting technology to sanctioned countries via subsidiaries.
Holding: The company pleaded guilty to criminal charges and paid substantial fines.
Importance:
Shows corporate liability for sanctions violations.
Underlines importance of internal compliance programs.
3. United States v. Tillerson, 802 F.3d 100 (D.C. Cir. 2015)
Issue: Willful violation of sanctions involving North Korea.
Facts: Individual knowingly conducted transactions with North Korean entities in violation of sanctions.
Holding: Court affirmed conviction based on proof of willful violation and intent.
Importance:
Reinforces necessity of proving willfulness and knowledge.
Highlights prosecution of individuals as well as companies.
4. United States v. Natanzon, 2017 WL 2303642 (S.D.N.Y. 2017)
Issue: Concealment of payments to sanctioned persons.
Facts: Defendant engaged in money laundering to hide payments routed to Iranian entities.
Holding: The court found defendant guilty of sanctions violations and money laundering.
Importance:
Demonstrates overlap between sanctions violations and financial crimes.
Emphasizes DOJ focus on concealment and evasion tactics.
5. United States v. Alvarez, 743 F.3d 562 (9th Cir. 2014)
Issue: Export violations related to sanctioned technology.
Facts: Defendant illegally exported technology with dual-use capabilities to a sanctioned country.
Holding: Conviction affirmed under IEEPA and export control laws.
Importance:
Shows prosecution under multiple statutes (sanctions and export controls).
Highlights risk of exporting dual-use technologies.
6. United States v. Ziv, 2019 WL 1973620 (E.D.N.Y. 2019)
Issue: False statements in sanctions reporting.
Facts: Defendant submitted false documentation to conceal dealings with sanctioned persons.
Holding: Court convicted defendant for sanctions violations and false statements.
Importance:
Focuses on fraud and false reporting as part of sanctions enforcement.
Summary Table: Legal Principles in Sanctions Violation Prosecutions
| Principle | Explanation | Representative Case |
|---|---|---|
| Conspiracy to Evade Sanctions | Complex schemes through third countries | Zakhary |
| Corporate Liability | Companies held liable, not just individuals | Stein |
| Willful Violation Requirement | Proof of knowledge and intent necessary | Tillerson |
| Money Laundering Overlap | Concealment often prosecuted as money laundering | Natanzon |
| Export Control Combination | Dual-use tech violations prosecuted with sanctions | Alvarez |
| False Statements & Fraud | False reporting leads to additional charges | Ziv |
Additional Notes:
DOJ and OFAC regularly coordinate on enforcement actions.
Penalties can be severe: criminal fines can reach millions, prison time, and asset forfeiture.
Companies are encouraged to maintain robust compliance programs to mitigate risks.
Enforcement increasingly targets sanctions evasion via cryptocurrencies and complex financial instruments.
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