WASHINGTON: As Congress considers a controversial nuclear deal with Iran, the US Treasury agency charged with implementing related financial sanctions is at risk of being overwhelmed by its expanding mission, former employees and lawyers who deal with the office say.
The agency, the Office of Foreign Assets Control, is responsible for enforcing a broad array of sanctions and for licensing American companies wishing to do business with sanctioned countries. Both roles will be especially critical if some restrictions are relaxed under the proposed nuclear agreement with Iran.
But a growing reliance on sanctions to address situations as varied as Russia’s incursions into Ukraine, cyberttacks on US businesses, and jihadist financing has increased pressure on the agency, which is being asked to police a bigger beat while staffing and budgets have not kept up.
Dozens of OFAC officials have left the agency in the past four years for better-paying jobs at law offices, consulting firms and banks, which have aggressively built up their compliance departments in response to big fines for sanctions violations.
“OFAC is left in a position where they can only deal with what’s five inches in front of their faces,” said Erich Ferrari, a Washington-based sanctions lawyer.
The agency has prided itself on the firepower of its small and highly specialized staff of about 200, who collectively oversee more than 35 sanctions programs. But the size of the agency has also meant that each departure has an outsized impact, former officials say.
“OFAC is a small organization that is among the leanest, most productive I’ve seen anywhere in government,” said Elizabeth Rosenberg, a former senior adviser at the Treasury Department who left in 2013. “There’s little redundancy.”
The most high-profile recent departures have included Lorraine Lawlor, OFAC’S former chief of compliance programs who left in 2012 for Wells Fargo ; Sean Thornton, former chief counsel who joined French bank BNP Paribas in 2014; Eytan Fisch, former assistant director for policy who left this year for law firm Skadden; and Adam Smith, former senior adviser to the director who left in July for law firm Gibson Dunn.
At least 25 other sanctions compliance officers, lawyers, and others have left OFAC since 2011 for companies including HSBC, Bank of America, Western Union, PayPal, and Credit Suisse, according to a review of LinkedIn profiles.
To be sure, the recruitment of regulators by business is a constant in Washington, and there is no indication that the rate of departures at OFAC is greater than at other agencies. But the impact is particularly acute given that the agency’s staff and budget has grown little in recent years, while its workload has increased.
At one point, OFAC staff were holding up to five happy hours each month for departing colleagues, said David Brummond, a former sanctions adviser who left OFAC in 2014 and is now with law firm DLA Piper.
“It just became funny,” Brummond said. “You had to schedule it into your social calendar.”
Treasury did not provide details on the agency’s staffing levels or comment on whether the agency is short-staffed for the work it does.
“OFAC is comprised of a staff of talented individuals, and our sanctions have become an increasingly effective national security and foreign policy instrument thanks in large measure to the careful work of our staff,” the Treasury said in a statement. BIGGER PAYDAY In some ways the problems faced by OFAC are born of the US government’s success, in winning high-profile penalties against banks for prohibited transactions with Iran, Sudan and other sanctioned countries.
Banks have responded by beefing up compliance departments and tapping senior OFAC officials to lead them. For example, shortly after BNP Paribas agreed to pay US authorities $8.9 billion in 2014 to resolve claims it violated sanctions, it hired Thornton.
Some of the departed officials had served for decades and took with them considerable institutional knowledge of how sanctions have evolved.
OFAC employees, whose salaries top out at around $160,000 per year, can easily double or triple their pay in the private sector. Senior OFAC officials can command up to $1.2 million per year, said a senior compliance official at a large US bank.
Since 2011, the United States has implemented 29 sanctions-related executive orders, according to a Reuters tally, almost double the number from 2006 to 2010 when there were 16 such orders.
OFAC staff have numbered about 170 to 200 for at least the last five years, former officials say. In fiscal 2013, the last year for which information is public, OFAC had a budget of about $31 million, compared to $29 million in 2009, documents show.
Sanctions have also become increasingly complex. The measures imposed on Russia in 2014, sanctions experts say, are especially intricate and target specific activities rather than broad categories of business. And while sanctions ban most US trade with Iran, they include exceptions that allow humanitarian, medical and other business dealings. Such business often relies on the granting of licenses, which lawyers said can take up to a year or more to acquire.
Ferrari said a license he requested for an Iranian animal shelter to raise funds in the United States took 18 months and three separate applications before being granted.
Businesses sometimes give up in frustration after long waits for OFAC’s go-ahead or guidance, lawyers say.
That could present a risk for implementation of the Iran deal, experts say. Without clear and quick guidance, businesses and banks will likely pull back from trade with Iran, even in areas permitted if sanctions are eased. In turn, if Iran did not get the relief it expected from eased sanctions, it would have less incentive to abide by the terms of the deal.
Brummond said it is already a challenge to get agency staff on the phone to give guidance on new sanctions language and what direction regulations might take.
“Clients want the answer whether or not OFAC answers the phone. I try to explain to the client that I’ve left my fourth voice mail,” Brummond said. “I know who I’m calling on the other side, and I know how buried they are.”
US agency overseeing sanctions faces brain drain, added work
US agency overseeing sanctions faces brain drain, added work
France’s prison population reaches all-time high
- Justice Minister Gerald Darmanin, who has called the overcrowding crisis “unacceptable,” has suggested building new facilities to accommodate the growing prison population
PARIS: France’s prison population hit a record high on May 1, with 83,681 inmates held in facilities that have a capacity of just 62,570, justice ministry data showed on Saturday.
Over the past year, France’s prison population grew by 6,000 inmates, taking the occupancy rate to 133.7 percent.
The record overcrowding has even seen 23 out of France’s 186 detention facilities operating at more than twice their capacity.
Justice Minister Gerald Darmanin, who has called the overcrowding crisis “unacceptable,” has suggested building new facilities to accommodate the growing prison population.
The hard-line minister announced in mid-May a plan to build a high-security prison in French Guiana — an overseas territory situated north of Brazil — for the most “dangerous” criminals, including drug kingpins.
Prison overcrowding is “bad for absolutely everyone,” said Darmanin in late April, citing the “appalling conditions” for prisoners and “the insecurity and violence” faced by prison officers.
A series of coordinated attacks on French prisons in April saw assailants torching cars, spraying the entrance of one prison with automatic gunfire, and leaving mysterious inscriptions.
The assaults embarrassed the right-leaning government, whose tough-talking ministers — Darmanin and Interior Minister Bruno Retailleau — have vowed to step up the fight against narcotics.
And in late April, lawmakers approved a major new bill to combat drug-related crime, with some of France’s most dangerous drug traffickers facing detention in high-security prison units in the coming months.
France ranks among the worst countries in Europe for prison overcrowding, placing third behind Cyprus and Romania, according to a Council of Europe study published in June 2024.
Evacuation order for 11 villages on Ukraine border with Russia
- Russia’s defense ministry on Saturday said its forces had taken another Sumy village, Vodolagy, known as Vodolahy in Ukrainian
KYIV: Authorities in Ukraine’s Sumy region bordering Russia on Saturday ordered the mandatory evacuation of 11 villages because of bombardments, as Kyiv feared a Russian offensive there.
“This decision takes into account the constant threat to civilian lives because of the bombardments of border communities,” Sumy’s administration said.
Russia’s defense ministry on Saturday said its forces had taken another Sumy village, Vodolagy, known as Vodolahy in Ukrainian.
Russia in recent weeks has claimed to have taken several villages in the northeastern region, and Ukrainian President Volodymyr Zelensky said this week that Moscow was massing more than 50,000 soldiers nearby in a sign of a possible offensive.
A spokesman for Ukraine’s border guard service, Andriy Demchenko, on Thursday said that Russia was poised to “attempt an attack” on Sumy.
He said the Russian troop build-up began when Moscow’s forces fought Ukrainian soldiers who last year had entered the Russian side of the border, in the Kursk region.
Russia has recently retaken control of virtually all of Kursk.
Currently, Russia — which launched its all-out invasion in February 2022 — controls around 20 percent of Ukrainian territory. The ongoing conflict has killed tens of thousands of soldiers and civilians on both sides.
Washington has been leading diplomatic efforts to try to bring about a ceasefire, but Kyiv and Moscow accuse each other of not wanting peace.
The Kremlin has proposed further negotiations in Istanbul on Monday, after a May 16 round of talks that yielded little beyond a large prisoner-of-war exchange.
Kyiv has not yet said whether it will attend the Istanbul meeting, and is demanding that Moscow drop its opposition to an immediate truce.
Afghanistan welcomes upgraded diplomatic ties with Pakistan
- The move signals easing tensions between the neighboring countries have cooled in recent months
- Tensions fueled by security concerns and a campaign by Islamabad to expel tens of thousands of Afghans
KABUL: Afghanistan has welcomed the decision to upgrade diplomatic relations with Pakistan, where the Taliban government’s foreign minister is due to travel in the coming days, his office said on Saturday.
The move signals easing tensions between the neighboring countries, as relations between the Taliban authorities and Pakistan – already rocky – have cooled in recent months, fueled by security concerns and a campaign by Islamabad to expel tens of thousands of Afghans.
Pakistan’s top diplomat on Friday said the charge d’affaires stationed in Kabul would be elevated to the rank of ambassador, with Kabul later announcing its representative in Islamabad would also be upgraded.
“This elevation in diplomatic representation between Afghanistan & Pakistan paves the way for enhanced bilateral cooperation in multiple domains,” the Aghan foreign ministry said on X.
Kabul’s Foreign Minister Amir Khan Muttaqi is due to visit Pakistan “in the coming days,” ministry spokesman Zia Ahmad Takal said.
Muttaqi met with Pakistani Foreign Minister Ishaq Dar in May in Beijing as part of a trilateral meeting with their Chinese counterpart Wang Yi.
Wang afterwards announced Kabul and Islamabad’s intention to exchange ambassadors and expressed Beijing’s willingness “to continue to assist with improving Afghanistan-Pakistan ties.”
Dar hailed the “positive trajectory” of Pakistan-Afghanistan relations on Friday, saying the upgrading of their representatives would “promote further exchanges between two fraternal countries.”
Only a handful of countries – including China – have agreed to host Taliban government ambassadors since their return to power in 2021, with no country yet formally recognizing the administration.
Russia last month said it would also accredit a Taliban government ambassador, days after removing the group’s “terrorist” designation.
China rebukes Macron's comparison of Ukraine and Taiwan
- China's embassy fired back that the "Taiwan question is entirely China's internal affair
SINGAPORE: China hit back at French President Emmanuel Macron on Saturday for drawing a connection between the Ukraine conflict and the fate of Taiwan, saying the two issues are "different in nature, and not comparable at all".
"Comparing the Taiwan question with the Ukraine issue is unacceptable," China's embassy in Singapore said on social media, a day after Macron warned Asian defence officials in Singapore not to view Russia's invasion of Ukraine as a far-away problem.
"If we consider that Russia could be allowed to take a part of the territory of Ukraine without any restriction, without any constraint, without any reaction of the global order, how would you phrase what could happen in Taiwan?" Macron told the Shangri-La Dialogue, Asia's premier annual security forum.
"What would you do the day something happens in the Philippines?"
China's embassy fired back that the "Taiwan question is entirely China's internal affair. There is but one China in the world, and Taiwan is an inalienable part of China's territory."
While Taiwan considers itself a sovereign nation, China has said it will not rule out using force to bring it under its control.
US Secretary of Defense Pete Hegseth warned Saturday at the same forum in Singapore that China was "credibly preparing" to use military force to upend the balance of power in Asia, adding the Chinese military was building the capabilities to invade Taiwan and "rehearsing for the real deal".
South Koreans rally for presidential hopefuls days before vote
- All major polls have placed liberal Lee Jae-myung well ahead in the presidential race
SEOUL: Thousands of supporters of South Korea’s two leading presidential candidates rallied on Saturday in Seoul, days before a vote triggered by the ex-leader’s disastrous declaration of martial law.
Tuesday’s election caps months of political turmoil sparked by Yoon Suk Yeol’s brief suspension of civilian rule in December, for which he was impeached and removed from office.
All major polls have placed liberal Lee Jae-myung well ahead in the presidential race, with a recent Gallup survey showing 49 percent of respondents viewed him as the best candidate.
Kim Moon-soo, from the conservative People Power Party (PPP) that Yoon left this month, trailed behind at 35 percent.
Organizers from both camps told police they expected tens of thousands of supporters to rally in Seoul on Saturday.
In Seocho, in the south of the capital, Lee supporters gathered holding signs condemning Yoon’s “insurrection.”
“I believe the outcome of the presidential election is already decided,” Lee Kyung-joon, a Lee supporter, told AFP.
“I came to today’s rally to help condemn the forces involved in the martial law attempt,” he added, referring to ex-president Yoon’s political allies.
Yoon is currently on trial for insurrection, and Kwon Oh-hyeok, one of the organizers of Saturday’s rally, said a Lee victory in the June 3 vote was crucial to holding him accountable.
“Isn’t the People Power Party’s decision to run in the snap election — triggered by Yoon’s removal from office — an insult and a betrayal of the people?” Kwon told rally participants.
“Fellow citizens, we must win by a landslide to deliver the justice this moment demands.”
On the other side of town, in Gwanghwamun Square, conservatives — including supporters of disgraced ex-leader Yoon — filled the streets holding signs that read “Yoon Again” and “Early voting is invalid!“
Yoon’s martial law attempt, which he claimed was necessary to “root out” pro-North Korean, “anti-state” forces, emboldened a wave of extreme supporters including far-right YouTubers and radical religious figures.
Many have spread unverified content online, including allegations of Chinese espionage and fraud within South Korea’s electoral system.
That sentiment was on full display at Saturday’s rally, where protesters called for the dissolution of the National Election Commission over a series of mishaps during the two-day early voting period this week.
“People believe the root of all these problems lies with the National Election Commission, and that it should be held accountable,” conservative protester Rhee Kang-san told AFP.
Both frontrunner Lee of the liberal Democratic Party and conservative challenger Kim have cast the race as a battle for the soul of the country.
More than a third of those eligible cast their ballots in early voting on Thursday and Friday, according to the election commission.
Overseas voting reached a record high, with nearly four-fifths of the 1.97 million eligible voters casting their ballots last week.
Experts say that regardless of who wins, South Korea’s polarization is likely to deepen.
If Lee wins, the conservatives “will do whatever it takes to undermine him and his government, whether their logic makes sense or not,” political analyst Park Sang-byung told AFP.
“Unless the PPP distances itself from Yoon’s extremist base, it could turn to misinformation — such as unfounded claims of election fraud — to mobilize the right against Lee. That’s a troubling prospect,” he said.
Whoever succeeds Yoon will also have to grapple with a worsening economic downturn, one of the world’s lowest birth rates, the soaring cost of living and bellicose neighbor North Korea.
He will also have to navigate a mounting superpower standoff between the United States, South Korea’s traditional security guarantor, and China, its largest trade partner.
