US, China ‘agree on’ DPRK sanctions

The United States and China have agreed on a proposed UN resolution on the Democratic People’s Republic of Korea and will not accept Pyongyang as a nuclear weapons state, the White House and United Nations diplomats said on Wednesday.

US National Security Advisor Susan Rice and Chinese Foreign Minister Wang Yi agreed during a meeting “on the importance of a strong and united international response to North Korea’s provocations, including through a UN Security Council resolution that goes beyond previous resolutions,” the White House said in a statement.

The statement came as diplomats at United Nations headquarters in New York said that Washington and Beijing had agreed on a draft resolution imposing fresh sanctions on the DPRK and that the Security Council could vote on the measure in the coming days.

The US circulated the draft of the sanctions on Wednesday to the other permanent members of the Security Council — Britain, France and Russia — and was set to formally present it to the full 15-member council soon, said the diplomats, who asked not to be identified.

“There is good progress on the resolution, and we are hopeful that there will be adoption in the coming days,” one diplomat said.

Another diplomat described the draft resolution as a “significantly substantive text”, while yet another said it contained “a large number of very tough measures”, as well as names to be added to the sanctions blacklist.

Beijing offered no direct comment on Thursday about the White House statement.

However, Foreign Ministry spokeswoman Hua Chunying cited Foreign Minister Wang’s remarks during Wednesday’s joint news conference with US Secretary of State John Kerry. Wang had said that Beijing and Washington made important progress in the new resolution against the DPRK and are “looking at the possibility of reaching agreement in the near future”.

But Beijing reiterated that the sanctions will not solve the DPRK nuclear issue, and that related parties should return to negotiations.

The agreement was reached as Wang was in Washington for a three-day visit. It was the third meeting between Wang and Kerry within a month after the DPRK conducted a nuclear test in January.

Wang also met with US President Barack Obama on Wednesday.

Obama underscored his interest in building a durable, constructive and productive US-China relationship. The US leader also said he looked forward to welcoming President Xi Jinping to a March 31-April 1 nuclear security summit in Washington and “working together toward its success”, according to news statements from both China and the US.

Zuo Xiying, an international studies specialist at the National Academy of Development and Strategy of Renmin University of China, said the agreements reached between the two countries are conducive to the buildup of strategic trust between the two.

Shi Yinhong, a professor of US studies at Renmin University of China in Beijing, said the frequent mutual visits by Wang and Kerry are apparently driven by unexpected changes on the Korean Peninsula and recent rising tensions in the South China Sea.

Meanwhile, a senior US diplomat will make a two-day visit to South Korea this week for talks about the DPRK nuclear and missile programs, Seoul’s Foreign Ministry said on Thursday.

Treasury Sanctions Key ISIL Leaders and Facilitators Including a Senior Oil Official

WASHINGTON – The U.S. Department of the Treasury today announced the designations of senior ISIL oil official Faysal al-Zahrani, foreign fighter facilitator Husayn Juaythini, and senior ISIL official Turki al-Binali pursuant to Executive Order (E.O.) 13224, which targets terrorists and those providing support to terrorists or acts of terrorism.  These designations support President Obama’s strategy to degrade and destroy ISIL.  These designations also further Treasury’s efforts to attack ISIL’s finances and disrupt its ability to profit from illicit oil sales within its territory in Iraq and Syria by inhibiting these individuals from accessing the international financial system.  They also support work by the broader counter-ISIL Coalition, including Operation Tidal Wave II, which consists of deliberate targeting and precision airstrikes in Iraq and Syria to disrupt ISIL’s control of oil-related resources.  As a result of today’s actions, any property or interest in property of the individuals designated by Treasury within U.S. jurisdiction is frozen.  Additionally, transactions by U.S. persons involving the designated individuals are generally prohibited.

“Treasury and our partners worldwide are aggressively targeting ISIL’s ability to earn and make use of its money, and we are making progress on many fronts,” said Adam J. Szubin, Acting Under Secretary for Terrorism and Financial Intelligence.  “Today’s action targets key ISIL leadership figures responsible for oil and gas production, foreign terrorist fighter recruitment and facilitation, and other financial facilitation.”
In a speech on Monday at Chatham House in London, Assistant Secretary for Terrorist Financing Daniel Glaser highlighted the recent progress that the U.S. government has made in weakening ISIL’s ability to generate wealth and disrupt its ability to make use of the money it raises.
The Treasury Department announces this action in advance of the first-ever joint session of the Financial Action Task Force (FATF) and the Global Coalition to Counter ISIL’s Counter ISIL Finance Group (CIFG), which is taking place on February 14 in Paris.  The CIFG is co-chaired by Italy, Saudi Arabia, and the United States and has 37 participating member states and organizations.  The group focuses on enhancing international collaboration to disrupt the financial and economic activities of ISIL.  The FATF is the international standard-setting body for combating money laundering and terrorist financing.  It develops recommendations and promotes effective implementation of key anti-money laundering and countering the financing of terrorism measures that deprive terrorist groups, like ISIL, of access to the international financial system.  The purpose of the FATF-CIFG joint session is to bring together the leading international bodies focused on ISIL financing to more effectively share information and coordinate efforts.  The session will focus on recent ISIL financial activity, ongoing efforts to deny ISIL access to the international financial system, strategies to prevent ISIL from financing its branches or foreign fighters, and recent United Nations Security Council Resolutions that facilitate efforts to disrupt ISIL’s finances.
Use the following link for the full press release:

Settlement Agreement between the U.S. Department of the Treasury’s Office of Foreign Assets Control and Barclays Bank Plc

ENFORCEMENT INFORMATION FOR February 8, 2016 Information concerning the civil penalties process is discussed in OFAC regulations governing the various sanctions programs and in 31 C.F.R. part 501. On November 9, 2009, OFAC published as Appendix A to part 501 Economic Sanctions Enforcement Guidelines. See 74 Fed. Reg. 57,593 (Nov. 9, 2009). The Economic Sanctions Enforcement Guidelines, as well as recent final civil penalties and enforcement information, can be found on OFAC’s Web site at ENTITIES – 31 C.F.R. 501.805(d)(1)(i) Barclays Bank Plc Settles Potential Civil Liability for Apparent Violations of the Zimbabwe Sanctions Regulations: Barclays Bank Plc (“Barclays”), a financial institution headquartered in London, United Kingdom, has agreed to remit $2,485,890 to settle its potential civil liability for 159 apparent violations of § 541.201 of the Zimbabwe Sanctions Regulations, 31 C.F.R. part 541 (ZSR). From July 2008 to September 2013, Barclays processed 159 transactions totaling approximately $3,375,617 to or through financial institutions located in the United States – including Barclays’ New York branch (“Barclays NY”) – for or on behalf of corporate customers of Barclays Bank of Zimbabwe Limited (“BBZ”) that were owned 50 percent or more, directly or indirectly, by a person identified on the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) List of Specially Designated Nationals and Blocked Persons (the “SDN List”). OFAC has determined that Barclays did not voluntarily self-disclose the apparent violations to OFAC, and that the apparent violations constitute a non-egregious case. The total base penalty amount for the apparent violations was $5,029,000. Beginning in or around 2005, local restrictions precluded Barclays from implementing measures for complying with economic sanctions, including sanctions screening, in Zimbabwe. Consequently, beginning in 2006, the bank’s operations in the United Kingdom (“Barclays UK”) began screening cross-border transactions involving BBZ and/or BBZ’s customers. Under the new procedure, Barclays UK relied on BBZ’s electronic customer records and documentation to perform sanctions-related customer screening and transaction screening involving BBZ.

In 2006, BBZ implemented an electronic customer system that allowed the bank to input and maintain customer information in an electronic format. The system had several limitations, however, that prevented BBZ from accurately capturing and/or screening beneficial ownership information for its corporate customers. For example, when BBZ introduced the system, it was capable of capturing information related to a single primary account party (i.e., BBZ’s customer) but was initially unable to include data for a related party – such as the ultimate beneficial owner of the customer – in the electronic system even if the information appeared in the paper file for a customer. Barclays identified this shortcoming in 2007 and attempted to address the issue, but the changes did not allow BBZ to effectively capture or otherwise identify all of its customers’ beneficial owners in the bank’s electronic system. In 2009, Barclays again attempted to correct the shortcoming by building a “work-around” that the bank stated was ultimately cumbersome to implement and little used.

Barclays’ Group Anti-Money Laundering (AML) policies in place during the period in which the apparent violations occurred required the bank’s operations – including BBZ – to identify the ultimate beneficial owners of corporate customers. BBZ’s Know Your Customer (KYC) procedures were ambiguous and difficult to follow with respect to the requirement to identify related parties and/or beneficial owners of corporate customers. As a result, the bank failed to obtain information on ultimate beneficial owners for a portion of BBZ’s corporate customers in its paper files and/or failed to upload this information into BBZ’s electronic customer system. Due to BBZ’s failure to include updated beneficial ownership information in its electronic customer files (which, as noted above, was utilized by Barclays UK for OFAC sanctions compliance screening), Barclays UK was unaware of, and incapable of screening, this information for certain BBZ customers. On July 25, 2008, OFAC designated Industrial Development Corporation of Zimbabwe (IDCZ) pursuant to Executive Order 13469 of July 25, 2008, “Blocking Property of Additional Persons Undermining Democratic Processes or Institutions in Zimbabwe.” At the time of OFAC’s designation, BBZ maintained U.S. Dollar (“USD”)-denominated customer relationships for three corporate customers that were owned, 50 percent or more, directly or indirectly, by IDCZ and were also therefore blocked persons pursuant to OFAC’s Guidance on Entities Owned by Persons Whose Property and Interests in Property are Blocked. Neither BBZ nor Barclays UK identified these customers as blocked persons at that time due to the aforementioned issues, however, and continued to process USD transactions for or on their behalf to or through the United States in apparent violation of the ZSR. By no later than 2011, Barclays became aware of weaknesses and shortcomings in relation to certain of BBZ’s KYC practices, including the bank’s inability to capture data for related parties (i.e., beneficial owners) in its customer files. As part of a remediation effort in 2011, Barclays targeted a number of bank operation centers in Africa, including BBZ, in order to determine whether those locations were fully implementing the bank’s Group AML policies. As part of these efforts, BBZ updated the paper files for one of the customer accounts to reflect IDCZ’s beneficial ownership of the company, but the bank failed to include this information in the electronic customer system (which Barclays UK utilized and relied upon to conduct sanctions related screening). Beginning in October 2012, U.S. financial institutions blocked four funds transfers that Barclays NY processed on behalf of one of the three corporate entities beneficially owned by IDCZ located in Harare, Zimbabwe. Three of the funds transfers were originated by the aforementioned company’s account with BBZ, whereas the fourth was destined for an account maintained by the company at a third-country financial institution unaffiliated with Barclays. Upon receiving notification that a transaction it processed had been blocked by another U.S. financial institution, Barclays NY conducted an internal investigation and determined that BBZ’s customer was owned, indirectly, 50 percent or more by IDCZ, an entity on OFAC’s SDN List. Although Barclays NY conducted an investigation that confirmed this information, the bank failed to properly upload identifying information for the blocked person into its sanctions screening filter in a timely or accurate manner and subsequently processed three additional transactions involving the same party between November 2012 and September 2013 – all of which were blocked by other U.S. financial institutions.

The settlement amount reflects OFAC’s consideration of the following facts and circumstances, pursuant to the General Factors Affecting Administrative Action under OFAC’s Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A. OFAC found the following to be aggravating factors in this case: although Barclays attempted to comply with OFAC sanctions despite various constraints imposed by the local Zimbabwean authorities, Barclays failed to implement adequate controls to prevent the apparent violations from occurring despite numerous warning signs that its conduct could lead to a violation of U.S. sanctions laws; multiple business lines and personnel within Barclays, including supervisory and management staff in the bank’s Compliance and Audit functions, had actual knowledge or reason to know of the conduct that led to the apparent violations (including the bank’s awareness of the limitations of the systems used by BBZ with respect to capturing full information concerning the beneficial ownership of certain of its corporate customers); Barclays processed 159 funds transfers totaling approximately $3,375,617 that conferred economic benefit to, and provided indirect access to the U.S. financial system for, blocked persons, causing harm to the Zimbabwe sanctions program and its associated policy objectives; Barclays is a large and commercially sophisticated international financial institution; and Barclays’ compliance program was inadequate to identify BBZ’s customers as blocked persons and/or prevent the apparent violations from occurring.

OFAC considered the following to be mitigating factors: Barclays has not received a penalty notice or Finding of Violation in the five years preceding the earliest date of the transactions giving rise to the apparent violations; Barclays took remedial action in response to the apparent violations; and Barclays substantially cooperated with OFAC’s investigation by submitting detailed and organized information, and by executing a statute of limitations tolling agreement and an extension to the agreement. OFAC also considered the fact that the prohibited entities were not publicly identified or designated and included on the SDN List at the time that Barclays processed transactions for or on their behalf. This settlement demonstrates that an enforcement response may be particularly appropriate, even when an individual or entity is not included on the SDN List, in response to apparent violations in which: (a) the apparent violator is an institution that maintains direct customer relationships for entities that are beneficially owned, directly or indirectly, 50 percent or more by one or more SDNs, and is processing or routing transactions to or through the United States on behalf of such customers; (b) the institution’s own records clearly demonstrate or otherwise clarify the SDN ownership of the customer, but the institution failed to act on the information; and/or (c) information concerning the SDN ownership of the customer is publicly available and allows intermediary banks to identify and block such transactions.

This enforcement action highlights the importance for institutions with operations in countries with a significant presence of persons (individuals and entities) on the SDN List to take appropriate measures to ensure compliance with U.S. economic sanctions when processing transactions for or on behalf of their customers to, through, or within the United States. For more information regarding OFAC regulations, please visit:

See full OFAC web notice here:

Addison-Clifton carves niche in China’s growing industries

This article appeared in the USA-Midwest Report in the South China Morning Post on February 26, 2016 (prepared by Discovery Reports).

Ulice Payne has an uncanny ability to understand the market and foresee its demands. In the same year that he founded Addison-Clifton in Chicago, Illinois, the company president set up a Shanghai representative office to help companies in China comply with global trade regulations. That was over one decade ago. The mainland had just joined the WTO, and Payne foresaw that many companies would need its expertise in meeting trade regulations on products related to aerospace, defence, vehicles and power generation.
“We have designed our business to serve society,” Payne says. “We blend our understanding of the global regulatory framework with the scientific and engineering know-how of products to meet market demands.”
The company anticipates big opportunities in the aviation maintenance, repair and overhaul (MRO) space. Addison-Clifton would likely capture the market for aspiring China MRO companies that are working on airworthiness certificates for jet engines and avionics manufactured by existing Addison-Clifton clients. The company is also cooperating with the Shanghai Foreign Investment Development Board to encourage foreign capital into the industrial zones with a special emphasis promoting aviation.
Furthermore, Addison-Clifton expects to play a significant role in the mainland’s burgeoning electric vehicles industry. For example, the firm was the official business consultant for the Ningbo Foreign Trade and Economic Cooperation Bureau in connection with securing the participation of foreign electric car manufacturers for its clean energy vehicle summit. The firm continues to implement its plans to facilitate further support in this area due to China’s need for greener technologies.

Ultimately, Payne was right. He later expanded Addison-Clifton’s presence in China by opening a wholly foreign-owned enterprise subsidiary in Ningbo, thereby supporting two major port cities on the mainland. With his associations in the East, including India, Payne further increased Addison-Clifton’s capabilities in the region with its Asia Market Services practice. In addition to trade compliance services, Addison-Clifton provides multinational companies with quality assurance guidance along with supply chain support that includes actual product inspections and identifying and qualifying China suppliers.

“We have spent years in China building genuine relationships with customers and local governments,” Payne says. “By understanding the market and the role of the government, we can serve as a bridge between the private and public sectors.”



China to accelerate free-trade negotiations

The Ministry of Commerce plans to step up the pace of its free trade arrangements with partner countries that offer what it called a high degree of transparency, openness and inclusiveness to the world economy.

Noting the signing of the Trans-Pacific Partnership on Thursday, which does not include China, a ministry statement said: “China is studying it, and evaluation work is under way.”

Twelve nations including the United States and Japan signed the TPP in New Zealand on Thursday.

The deal, agreed in October after five years of talks, is aimed at promoting trade and investment among countries which hold 40 percent of the world economy.

Zhang Jianping, director of the International Economic Cooperation Institute at the National Development and Reform Commission, said the TPP is still in its early stage, and will now go through a two-year ratification period, in which “at least six countries, including Canada, Australia and Japan, must approve the final text, for a deal to be implemented via legislative procedures”.

Zhang said because the TPP members are at different stages of economic development, all the major economies would need to accept the deal, which will set common standards on issues ranging from labor rights to intellectual property protection.

China hopes to complete negotiations on the Regional Comprehensive Economic Partnership by the end of this year, which would link the Association of Southeast Asian Nations with China, Australia, India, Japan, New Zealand and South Korea, accounting for one-third of the global gross domestic product.

Beijing will also launch FTA negotiations with Israel and initiate FTA feasibility studies with Colombia, India, Nepal, Maldives and South Pacific island nations including Fiji and Papua New Guinea this year, as well as reinstate free trade negotiations with the Cooperation Council for the Arab States of the Gulf.

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