• April 18, 2024

The Only Comprehensive Resource on U.S. Economic Sanctions

99 Problems But OFAC Ain’t One

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In April 2013, the words “Office of Foreign Assets Control” appeared on the E! News website. While initially this strange clashing of worlds was feared to be a sign of the apocalypse, further investigation revealed it to be the result of a honeymoon trip to Cuba by one Sean “Jay-Z” Carter and his wife Beyoncé Knowles-Carter. While the trip itself prompted only cursory notice by the gossip rags, the outrage from certain corners of Congress catapulted OFAC into the national spotlight to a degree that had never been, nor likely will ever be again, matched.

It quickly became clear that, despite the protestations of Ileana Ros-Lehtinen (R-FL), Mario Dias-Balart (R-FL) and Marco Rubio (R-FL), no violation had occurred. While Mr. Carter claimed in his track “Open Letter” that he is a “boy from the hood but got White House clearance,” the reality is the trip was organized by a registered Travel Service Provider pursuant to a specific license granted by the Office of Foreign Assets Control (“OFAC”) license.

Specifically, the trip fell under the provision for “educational exchanges not involving academic study pursuant to a degree program and that take place under the auspices of an organization that promotes people-to-people contact” located at 31 CFR § 515.565(b)(2).  Attempting to explain the discrepancy between Jay’s lyrics and normal licensing procedures, then-White House Press Secretary Jay Carneysuggested that “nothing rhymes with Treasury.”

This explanation did not satisfy the offended members of Congress, who demanded that Treasury investigate whether any sanctions violations occurred.  After receiving an answer not to their liking, they apparently demanded that Treasury’s Office of the Inspector General conduct an investigation into OFAC’s investigation. What we are left with is “OIG-CA-14-014: Review of Travel to Cuba by Shawn Carter and Beyoncé Knowles-Carter.”  Unsurprisingly, OIG found that OFAC’s reasoning was correct and that the Carters’ Cuba travel was entirely legal.

On the surface the entire saga seems an entertaining confluence between pop-culture and U.S. administrative law, a nice distraction from the sometimes mind-numbing task of interpreting sanctions regulations.  Unfortunately, it also reveals some darker truths.

That Treasury had to spend even one second investigating what was clearly authorized Cuba travel is utterly mind-blowing, given OFAC’s budgetary restraints, personnel issues, and struggles in providing timely guidance on new regulations. By some measures, Treasury has now put out more public information on investigating HOVA than on most other topics. To put it in perspective, there are currently three categories of information contained on OFAC’s FOIA page:  1) 2005-2013 North Korea license applications, 2) 2008-2011 lists of licenses granted, and 3) information related to Jay-Z and Beyoncé’s Cuba jaunt.

Moreover, that OIG was forced to spend time confirming what we already knew, that no violations had occurred, is even more astounding. Before last week, OIG has not put out an OFAC-focused report since 2007.

OIG could have used that time to engage in inquiries of far more substance, for example, they could have investigated why OFAC has been deficient in implementing numerous recommendations from 2001’s Final Report of the Judicial Review Commission on Foreign Assets Control.

None of which is to say that it is OFAC or OIG’s fault that they were forced to squander time and resources on a pointless witch hunt. Blame for this sad state of affairs lies squarely on the shoulders of Ros Lehtinen, Dias-Balart, and Rubio. Next time a member of Congress decides to get involved in OFAC licensing matters, they might want to sit down, take a deep breath, and instead move On to the Next One. Or better yet, consider tossing OFAC a few more Nickels and Dimes.

Samuel Cutler

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