As of recent, OFAC has decided to name an individual as a “Foreign Sanctions Evader” in an effort to enforce OFAC sanctions on U.S. soil. This decision to designate a Turkish national as a foreign sanctions evader is unprecedented and highlights the lengths OFAC will undergo to pursue violators.
The Turkish-based individual named as the foreign sanctions evader is Evren Kayakiran, who directed a foreign subsidiary of a U.S. company. This individual used this subsidiary in an attempt to conceal his company's transactions and dealings with entities that violated U.S. sanctions against Iran.
The U.S. sanctions that Kayakiran violated pertain to the economic and financial leverage that the United States has against Iran and Syria. More importantly, the “Foreign Sanctions Evaders” list (FSE List) is a more comprehensive list that is different from OFAC's Specially Designated Nationals (SDN List).
Individuals that are identified on the FSE list subsequently prohibit all transactions or dealings (direct or indirect) involving the listed person(s) regardless of the transactions' location. This means that all actions that help or indirectly supports Kayakiran's direct or indirect dealings are strictly prohibited. Lastly, U.S. financial institutions are now expected to reject any and all payments involving Kayakiran.
Reasons for OFAC's unprecedented actions against an individual who violated sanctions most likely stems from Kayakiran's clear intent to commit and conceal his illegal acts. More importantly, this instance reminds all businessmen the elaborate and punitive measures OFAC is prepared to use when enforcing U.S. sanctions.
When Kayakiran was notified that OFAC was conducting an internal investigation of his U.S. subsidiary, Kayakiran attempted to obstruct the investigation. He instructed the companies of the Turkish company to delete all references to Iran in the company's internal record system. Additionally, Kayakiran himself tried to delete all emails and messages related to Iran.
In that sense, Kayakiran's violation has become a clear warning to all businessmen who exercise supervisory or managerial discretion at their companies. In other words, individuals who direct staff services, attempt to falsify records, commit fraud, or other types of obstructions are putting themselves at serious risk.
The Kayakiran settlement is in connection with a U.S. subsidiary that conducted business with U.S. sanctioned entities. Many employees of the U.S. companies are now being affected by this settlement because of the remedial actions these companies now take.
For other U.S. companies and businesses, this settlement is a stark reminder of the importance of performing due diligence when U.S. persons may be directly or indirectly involved with companies that may have an existing or preexisting relationship with U.S. sanctioned persons or jurisdictions.
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