Rapaport Magazine

US sanctions: FAQ on OFAC and customs regulations

In this FAQ, Rapaport explains the role of the US Treasury’s Office of Foreign assets control (OFAC) and customs regulations

By Rapaport
This FAQ does not include the February 24, 2022, US sanctions on Russia. Please see the article from the Jewelers Vigilance Committee (JVC) on Page 12 for more information.

What is OFAC and what does it do?

The US Treasury’s Office of Foreign Assets Control (OFAC) applies asset-freezing and other sanctions programs pursuant to congressional statutes and presidential executive orders. Programs related to diamonds include OFAC’s Rough Diamond Trade Controls and its Zimbabwe-Related Sanctions. Another OFAC program that has recently implicated the Zimbabwe diamond trade is the Global Magnitsky Sanctions (GlobMag)1, which target perpetrators of corruption and serious human rights abuse.

As part of its enforcement efforts, OFAC publishes a list of individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries. It also lists individuals, groups and entities — such as terrorists and narcotics traffickers — designated under programs that are not country-specific. Collectively, such individuals and companies are called Specially Designated Nationals, or SDNs. Their assets are blocked, and US persons are prohibited from dealing with them.

Who in Zimbabwe is currently sanctioned by the OFAC?

Under the Zimbabwe Sanctions Program, there are currently 120 named entities and individuals on the OFAC list. Going by location, there are currently 64 named entities and individuals located in Zimbabwe on the list. The president and vice president of Zimbabwe are on the OFAC list as SDNs. Several diamond-related companies that were on the list have changed their names.

Who must comply with OFAC?

All US persons must comply with OFAC regulations, including US citizens and permanent resident aliens, regardless of where they are located; all persons and entities within the United States; and all US incorporated entities and their foreign branches. In the cases of certain programs, foreign subsidiaries owned or controlled by US companies must also comply.2 Additionally, certain programs require foreign persons in possession of US-origin goods to comply.

Can US customs enforce import restrictions based on human rights abuse?

US Customs and Border Protection (CBP) has enforced import restrictions due to human rights abuse in the form of forced labor. Section 307 of the US Tariff Act of 19304 prohibits importing products of forced labor into the United States. CBP administers Section 307 through withhold release orders (WROs)5 and through other means that prevent suspect goods from entering the US.

Criminal violations of the Tariff Act (e.g., evading a WRO) are investigated and prosecuted by the US Department of Justice (DOJ). Any person can submit complaints to CBP or to the DOJ concerning alleged violations of the Section 307 forced-labor ban. Submissions to CBP for WRO review can be filed, with attribution or anonymously, using the agency’s online Trade Violations Reporting Form.

Can I import rough diamonds that were mined in Marange into the US?

No. In September 2019, CBP issued a WRO that bans importation into the US of any rough diamonds from the Marange diamond fields in Zimbabwe.

What are the OECD guidelines?

Observance of OECD guidelines is voluntary and not legally enforceable.7 The OECD recommends guidelines for best practices and supply-chain due diligence to ensure that these respect human rights and do not contribute to conflict. It offers a five-step framework for doing so, and provides a Model Supply Chain Policy:
  1. Establish strong company management systems.

  2. Identify and assess risk in the supply chain.

  3. Design and implement a strategy to respond to identified risks.

  4. Carry out an independent third-party audit of supply-chain due diligence at identified points in the supply chain.

  5. Report on supply-chain due diligence.
For more information about OFAC sanctions, please visit https://home.treasury.gov/system/files/126/diamond.pdf

  1. https://home.treasury.gov/policy-issues/financial-sanctions/sanctions-programs-and-country-information/global-magnitsky-sanctions

  2. https://home.treasury.gov/policy-issues/financial-sanctions/faqs/11

  3. https://www.cbp.gov/trade/forced-labor

  4. https://crsreports.congress.gov/product/pdf/IF/IF11360

  5. https://www.cbp.gov/trade/forced-labor/withhold-release-orders-and-findings

  6. https://www.cbp.gov/newsroom/national-media-release/cbp-issues-detention-orders-against-companies-suspected-using-forced

  7. https://www.oecd.org/daf/inv/mne/OECD-Due-Diligence-Guidance-Minerals-Edition3.pdf, Page 16

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