Sanctions Evasion Prosecutions
Meaning of Sanctions Evasion
Sanctions evasion refers to the deliberate attempt to avoid, bypass, or conceal transactions that are prohibited under international economic or trade sanctions, such as those imposed by the United Nations (UN), the United States (OFAC), the European Union (EU), or the UK.
Such prosecutions typically involve:
Concealing the identity of sanctioned entities or countries (e.g., Iran, North Korea, Russia).
Using front companies or shell firms to continue business.
Routing transactions through third countries or banks to hide the origin.
Falsifying documents or trade records.
These acts violate national laws such as:
International Emergency Economic Powers Act (IEEPA) in the U.S.
Sanctions and Anti-Money Laundering Act 2018 (UK).
EU Council Regulations on restrictive measures.
Case 1: United States v. BNP Paribas S.A. (2014)
Court: U.S. District Court, Southern District of New York
Facts:
BNP Paribas, one of France’s largest banks, was accused of processing billions of dollars in transactions for countries under U.S. sanctions—namely Sudan, Iran, and Cuba.
The bank routed transactions through U.S. financial systems using non-transparent payment methods and deliberately removed information identifying sanctioned countries.
Judgment:
BNP Paribas pleaded guilty to conspiracy to violate the IEEPA and the Trading with the Enemy Act.
The bank was fined $8.9 billion, one of the largest penalties in history for sanctions evasion.
Significance:
This case showed that even non-U.S. banks can face prosecution if they use the U.S. financial system to conduct illegal transactions.
Case 2: United States v. ZTE Corporation (2017)
Court: U.S. District Court, Northern District of Texas
Facts:
Chinese telecommunications company ZTE illegally shipped U.S.-origin goods to Iran and North Korea, both under U.S. trade sanctions.
ZTE used shell companies to hide the shipments and falsified export documentation to deceive U.S. authorities.
Judgment:
ZTE pleaded guilty to violating U.S. export controls and sanctions laws.
It was fined $1.19 billion and placed under corporate probation with independent monitoring.
Significance:
Highlighted how corporate networks and shell entities are used to evade export sanctions and the strong stance of U.S. authorities in imposing compliance obligations.
Case 3: United States v. Halkbank (Turkey) (2020)
Court: U.S. District Court, Southern District of New York
Facts:
Halkbank, a Turkish state-owned bank, was accused of helping Iran evade U.S. sanctions by disguising oil revenue as humanitarian trade (such as food and medicine).
Funds were transferred through front companies and gold-for-oil schemes, concealing the Iranian government’s role.
Judgment:
The U.S. government prosecuted Halkbank under the IEEPA and bank fraud laws.
Executives were also charged with money laundering and conspiracy.
Significance:
This case demonstrated the use of national banks as intermediaries in sanctions evasion and expanded accountability to state-owned institutions.
Case 4: R v. Standard Chartered Bank (UK, 2019)
Court: UK Financial Conduct Authority & U.S. Department of Justice (Joint Action)
Facts:
Standard Chartered Bank processed transactions for Iranian clients between 2007 and 2011 in breach of UK and U.S. sanctions.
The bank failed to maintain adequate systems to prevent violations and allowed staff to alter transaction information.
Judgment:
The bank agreed to pay $1.1 billion to U.S. and UK authorities in settlements.
Regulators emphasized “wilful blindness” and “deficient internal controls.”
Significance:
Marked one of the largest cross-border enforcement actions and showed that regulators coordinate globally in sanctions enforcement.
Case 5: United States v. Deutsche Forfait AG (2016)
Court: U.S. District Court, District of Columbia
Facts:
German trading finance company Deutsche Forfait AG and its executives were charged for facilitating transactions with Iran by discounting bills of exchange related to Iranian petrochemical exports.
The company concealed the true origin of goods and used middlemen in Europe and Asia to disguise Iranian involvement.
Judgment:
The company pleaded guilty to violating the IEEPA.
Paid fines and entered into a deferred prosecution agreement.
Significance:
Showed the seriousness of financial intermediaries in global sanctions evasion networks.
Case 6: United States v. Huawei Technologies Co. Ltd. (Ongoing since 2019)
Court: U.S. District Court, Eastern District of New York
Facts:
Huawei and its CFO Meng Wanzhou were accused of defrauding banks to conceal business with Iran.
Huawei used an affiliate company named Skycom Tech to conduct Iranian trade while claiming it was independent.
Judgment:
Meng Wanzhou was detained in Canada and later released under a deferred agreement.
Huawei still faces charges for wire fraud, sanctions violations, and obstruction of justice.
Significance:
The case reveals how multinational corporations can use complex corporate structures to disguise sanctioned dealings.
Case 7: United States v. Toll Holdings Ltd. (Australia) (2021)
Court: U.S. Department of Commerce and OFAC Action
Facts:
Australian logistics company Toll Holdings was found to have shipped U.S.-origin goods to North Korea and Iran indirectly via third-party freight partners.
The company failed to monitor re-export compliance and allowed agents to bypass screening systems.
Judgment:
Toll agreed to a civil penalty and implemented a global sanctions compliance program.
Significance:
Illustrates the increasing focus on supply chain responsibility and compliance even for third-country exporters.
Key Legal Principles from These Cases
Extraterritorial Jurisdiction:
Sanctions laws (like the U.S. IEEPA) can apply to foreign companies if they use U.S. financial systems or goods.
Corporate Liability:
Companies can be held liable for actions of subsidiaries, agents, or employees.
Due Diligence Obligation:
Firms must conduct screening of customers, counterparties, and shipment routes to ensure compliance.
Mens Rea (Intention):
Even willful blindness or negligence in compliance may amount to an offence.
Cooperation and Leniency:
Self-reporting and cooperation often result in reduced penalties (as seen in deferred prosecution agreements).
Conclusion
Sanctions evasion prosecutions are among the most complex areas of international financial law, involving multiple jurisdictions, corporate networks, and cross-border evidence.
These cases collectively show how governments target both state and private actors who undermine sanctions regimes, emphasizing transparency, accountability, and compliance systems.
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