Refer to Related Case Documents: E.O. 13662, Countering America’s Adversaries Through Sanctions Act (CAATSA), PL 115-44; Ukraine Freedom Support Act of 2014 (UFSA); Support for the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act of 2014 (SSIDES); International Emergency Economic Powers Act (IEEPA), 50 U.S.C. §§ 1701-1706; National Emergencies Act (NEA), 50 U.S.C. §§ 1601-1651
Case Background
The client is Company [Confidential], registered in Kazakhstan and engaged in the export of oil and petroleum products. The company’s funds were frozen at JPMorgan Chase Bank, N.A. in New York, USA, which acted as the intermediary bank for international transactions. The primary accounts of the company are with Halyk Bank (Kazakhstan), as well as HSBC Bank PLC (UK) and Deutsche Bank AG (Germany), where settlements for contracts with European clients are carried out. The funds were frozen in accordance with E.O. 13662, issued on March 20, 2014, based on the International Emergency Economic Powers Act, IEEPA, and the National Emergencies Act, NEA. Company [Confidential] was also added to the Specially Designated Nationals and Blocked Persons List (SDN) in May 2023 on suspicion of engaging in transactions supporting Russia’s energy sector (high-risk jurisdictions).
The identification of a suspicious transaction conducted through Deutsche Bank AG involving our client occurred in April 2023. This was done in accordance with 31 C.F.R. Part 501 and 31 C.F.R. Part 1020.320. The financial institution, in this case, JPMorgan Chase Bank, N.A., acting as the intermediary bank, identified and reported the suspicious transactions. Transactions involving Company [Confidential] were flagged as potentially violating the sanctions established by E.O. 13662. These transactions passed through Deutsche Bank AG in Germany, using JPMorgan Chase Bank, N.A. as the intermediary bank (Pursuant to 31 C.F.R. Part 501.603, financial institutions are required to immediately notify OFAC of all transactions involving persons or entities on the sanctions lists). JPMorgan Chase Bank, N.A. reported the suspicious transactions involving our client, Company [Confidential], to OFAC. Subsequently, a preliminary blocking of funds occurred (Pursuant to 31 C.F.R. Part 501.801, the financial institution has the right to temporarily block funds pending a final decision from OFAC). Deutsche Bank AG temporarily blocked the company’s funds based on preliminary data and notified our client of the account freeze in accordance with U.S. law. Later, in May 2023, OFAC conducted an analysis of the transactions and activities of Company [Confidential]. Based on E.O. 13662 and other regulatory acts, OFAC decided to include the company in the SDN list, resulting in the final freezing of funds.
Legal Assistance Provided
- Sanctions lawyers conducted an initial consultation with representatives of Company [Confidential] to gather all necessary information about the company and the nature of the frozen funds.
- We developed a detailed action plan, taking into account all possible legal risks and advantages.
- All financial documents, contracts, invoices, and transactions of the client were collected and analyzed.
- Our lawyers conducted an internal audit of the company to identify any potential sanctions violations.
- A document package was prepared for submission to OFAC, including legal justification, evidence, and financial reports. Documents proved that Company [Confidential] was not involved in transactions supporting Russia’s energy sector. The financial audit showed that the transactions were legitimate and did not violate sanctions regimes. Contracts and invoices for the export of oil and petroleum products to countries not subject to U.S. sanctions were presented, along with documents proving that Company [Confidential] had no ties to sanctioned persons or entities. These included results of due diligence on the company’s counterparts, ensuring compliance with sanctions requirements, and other documents not disclosed to prevent competitive advantage.
- Sanctions lawyers prepared a request to OFAC with a detailed description of the company’s activities and justification for unblocking the funds. We also submitted a request for an OFAC Special License.
- On behalf of Company [Confidential], Sanctions Lawyers demonstrated full cooperation with OFAC, providing all requested documents and information.
As a result, a Special License from OFAC was obtained, and the procedure for unblocking funds at HSBC Bank plc and Deutsche Bank AG, as well as through accounts passing through JPMorgan Chase Bank, N.A., was carried out. The client was provided with recommendations for future activities, taking into account sanctions risks.
