On Wednesday, President Obama imposed sanctions against certain parties contributing to the instability in Yemen. Although, no parties were designated pursuant to this new executive order, it gives the Department of Treasury the authority to block those parties presenting a threat to Yemen’s peace, security and stability. In particular, the executive order points to those involved in preventing the implementation of the November 23, 2011 agreement for the transition of power in Yemen as being eligible for designation. In addition to those parties designated under this sanction program, political or military leaders of those designated parties will also be targeted for designation. Moreover, those providing material support and assistance to designated parties are also at risk for designation.

As with most all U.S. economic sanctions administered by the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC), parties designated under this new sanctions program will have their assets under U.S. jurisdiction blocked and be prevented from transacting with U.S. persons. However, unlike some other sanctions programs, President Obama has indicated that the humanitarian donation exemption contained in the International Emergency Economic Powers Act (IEEPA)–the underlying legal authority for these sanctions–would impair his ability to protect the national security of the United States and therefore, the exemption does not apply under these new sanctions.

These new sanctions do not impose upon any contracts entered into prior to the issuance of this executive order, nor do they impair the ability of the United States Government, its employees, grantees, and contractors from carrying out the official business of the United States.

As noted above, these new Yemeni sanctions are designed as a warning to those who would derail the peace process in Yemen. While no parties have been designated under this program, OFAC compliance officers should start looking at potential areas of risk arising out of transactions they are involved in or facilitating in Yemen. As those in the OFAC compliance community know, designations can occur overnight and when dealing in a strict liability environment not moving quickly could lead to administrative subpoenas and possibly penalties.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.