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U.S. Treasury and Delaware - boosting sanctions enforcement 

A new agreement between the U.S. Treasury Department and officials in Delaware could lead to more aggressive enforcement of economic sanctions on nonfinancial companies, particularly those that may seek to hide transactions behind anonymous entities.

The Treasury’s Office of Foreign Assets Control, which enforces U.S. sanctions, and the Delaware Department of Justice signed a memorandum of understanding Wednesday to encourage information-sharing and coordination on investigations and to promote compliance with U.S. trade and economic sanctions laws.

The agreement is intended to improve transparency in corporate structures that may be used to obscure illicit business and to prevent the use of U.S. companies by blacklisted individuals or entities, the Treasury Department said.

“Enhanced collaboration with the Delaware Department of Justice will help OFAC to enforce its sanctions programs by more quickly identifying parties with an interest in blocked property,” OFAC Director Andrea Gacki said in a statement.

Delaware’s corporate formation requirements have historically allowed for a degree of anonymity, which can limit the ability of authorities to quickly collect beneficial ownership information, lawyers and former Treasury officials said. That can be attractive to blacklisted parties that may try to use anonymous entities as vehicles for illicit finance or sanctions evasion.


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“Authorities in Delaware have such significant access to information about companies that are formed in Delaware, which can sometimes be difficult for OFAC to get,” said Eric Lorber, a vice president at advisory firm K2 Intelligence Financial Integrity Network. “So this is going to ease that process.”

The access could help OFAC cross-reference information with other investigators, including those in the U.S. intelligence community, said Mr. Lorber, a former senior adviser to the Treasury’s undersecretary for terrorism and financial intelligence.

Delaware in 2019 introduced requirements that new business entities formed in the state be screened against the U.S.’s sanctions blacklist.

By Jack Hagel, 7 September 2020, published on KYC360 (The Wall Street Journal)

Image by skeeze from Pixabay


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