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1.0 APPLICABILITY OF U.S. SANCTIONS POLICY
1.1 FIELD OF APPLICATION
1.2 PURPOSE OF THE SANCTIONS POLICY
1.3 WHO IS COVERED BY THE SANCTIONS POLICY
1.4 REPORTING VIOLATIONS
2.0 INTRODUCTION
3.0 U.S. SANCTIONS FRAMEWORK
3.1 PERSONS GOVERNED BY U.S. SANCTIONS
3.2 COUNTRIES TARGETED BY U.S. SANCTIONS
3.3 INDIVIDUALS, ENTITIES, AND ORGANIZATIONS TARGETED BY U.S. SANCTIONS
3.4 PROHIBITIONS
3.5 SECTORAL AND NON-SDN SANCTIONS
3.6 LICENSES AND INTERPRETATIVE RULINGS
3.7 PENALTIES
3.7.1 PERSONAL LIABILITY
3.7.2 CAPTURIANT’S LIABILITY AND DAMAGE TO PUBLIC REPUTATION
3.8 SECONDARY SANCTIONS
3.9 OFAC GUIDANCE FRAMEWORK
4.0 PROGRAM REQUIREMENTS
4.1 RISK ASSESSMENT
4.2 INTERNAL CONTROLS
4.3 POLICIES, PROCEDURES AND INTERNAL CONTROLS
4.4 CONFLICTS OF LAWS
4.5 TRAINING
4.6 MONITORING AND AUDITING
This Capturiant Sanctions Policy (the “Sanctions Policy”) applies to Capturiant, Capturiant Analytics, Capturiant Marketing, all Cayman Island entities, Capturiant Ltd. (Bahamas), and Capturiant, LLC (Delaware) and Capturiant Services, LLC (Wyoming) (collectively referred to as "Capturiant").
Capturiant is committed to operating in accordance with the highest ethical standards and applicable laws, rules and regulations. Senior management is fully committed to compliance with all applicable laws and regulations, including United States (“U.S.”) economic sanctions and has appropriately allocated resources for such compliance.
Economic sanctions are tools of foreign policy used by governments to meet national security and foreign policy objectives. It is Capturiant’s policy to comply with all applicable economic and trade sanctions laws and regulations. This Sanctions Policy is an introduction to U.S. economic sanctions. Covered Persons (defined below) are to familiarize themselves with this Sanctions Policy and seek guidance from the Chief Compliance Officer about any Capturiant activities that may have a U.S. economic sanction implication as outlined herein.
As such, for questions regarding this Sanctions Policy or economic sanctions, please contact the Chief Compliance Officer.
This Sanctions Policy applies to all employees including officers, board of managers or directors, agents, contractors (collectively, “Employees”) [and business partners or any other party acting on behalf of Capturiant (referred to herein as “Agents”] and sometimes, collectively with Capturiant, Employees and Agents, “Covered Persons”). All Covered Persons are responsible for complying with this Sanctions Policy and making sure that those that are under their supervision also comply with this Sanctions Policy.
Capturiant has a system for raising concerns that involve ethics, legal issues, or violations of Capturiant’s Supervisory Procedures and any other Capturiant policies. All Covered Persons must report suspected violations. The reporting framework is described in the Capturiant Escalation and Investigation Policy. The Capturiant Escalation and Investigation Policy provides multiple reporting channels and handles reports confidentially. Capturiant has a strict policy against retaliation and does not tolerate retaliation against or the victimization of any Covered Person who, in good faith, reports concerns or raises questions regarding potential violation of the law, the Supervisory Procedures, or any other Capturiant policies.
Economic sanctions are a tool of foreign policy used by the U.S. Government and other governments. Sanctions laws and regulations vary widely in their scope to meet foreign policy needs—which change from circumstance to circumstance and from time to time. Some sanctions are comprehensive or nearly comprehensive, while others are more limited. This Sanctions Policy focuses on economic sanctions imposed by the U.S.
The U.S. maintains sanctions against or related to: (1) certain countries; and (2) persons or entities engaged in certain activities. Capturiant must comply with both types of sanctions. As discussed below, country sanctions preclude a complying entity like Capturiant from transacting business in those countries or with the target country’s entities or persons. In addition, agencies of the U.S. government have designated persons, entities and other identifiable subjects on a prohibited parties list known as the “List of Specially Designated Nationals and Blocked Persons” (the “SDN List”). Persons or entities on the SDN List are targeted for their conduct or activity (for example, terrorism). The Office of Foreign Assets Control (“OFAC”) may also place persons or entities on the SDN List.
To minimize potential legal risks, Covered Persons are instructed to consult with the Chief Compliance Officer on any questions about the application or interpretation of economic sanctions laws or regulations. Sanctions laws and regulations are complex. Covered Persons are not expected to make individual decisions about these difficult questions. Rather, they are expected to call questions to the attention of Chief Compliance Officer to address the issue or consult with specialized outside attorneys, if necessary.
Economic sanctions change from time to time, usually in reaction to world events. These changes often take effect without advance notice. In cases where press reports alert Covered Persons to the possibility of a change in U.S. foreign policy that might give rise to new or tighter economic sanctions, they are expected to make appropriate inquiries with the Chief Compliance Officer. As necessary, the Chief Compliance Officer will provide updates and, where necessary, training, concerning periodic changes in economic sanctions.
Non-compliance—or even the perception of non-compliance—may place Capturiant at serious financial, legal, and reputational risk and may result in substantial criminal and civil sanctions for both Capturiant and individuals involved in the activity. Covered Persons who violate this Sanctions Policy may be subject to disciplinary action up to and including termination.
OFAC at the U.S. Treasury Department administers the main U.S. sanctions programs against targeted countries, organizations, and individuals. As the economic sanctions are intended to further the foreign policy goals of the U.S., they vary considerably from program to program. Likewise, OFAC has wide latitude to interpret and enforce its regulations based on the foreign policy goals of the U.S. Government.
When the U.S. Government imposes economic sanctions against a foreign country, entity, or individual, U.S. law often prohibits U.S. companies or U.S. persons from engaging in any transaction with or providing almost any services for the benefit of the targeted country, entity, or individual. U.S. law also may require a U.S. company or a U.S. person to “block” any assets received from, or for the benefit of, a sanctioned country, entity, or individual. A “blocked” transaction means a transaction in which a targeted country, entity, or individual has any interest, with respect to which payments, benefits, the provision of services or other dealings may not be made or effected except pursuant to an authorization or license from OFAC.
Extensive information about OFAC is found on its website: www.ustreas.gov/ofac. While Covered Persons are encouraged to consult OFAC’s website for general information about sanctions, they should consult the Chief Compliance Officer regarding all transactions potentially involving sanctioned countries or persons.
In general, U.S. economic sanctions apply to “U.S. persons,” which includes: U.S. companies and their domestic and foreign subsidiaries or branches; any individual who is a U.S. citizen or permanent resident (green card holders), regardless of their location in the world; and any individual located in the U.S., regardless of their nationality. In the case of U.S. sanctions applicable to Cuba, Iran, and North Korea, the sanctions specifically apply to all foreign subsidiaries of U.S. companies and any other entities owned or controlled by U.S. persons.
In general, two country sanctions programs exit: (a) comprehensive; and (b) limited. Comprehensive sanctions prohibit U.S. persons from dealing in any manner with sanctioned countries and/or their governments. The U.S. currently maintains comprehensive sanctions against the following countries:
· Cuba
· Iran
· Syria
· Crimea, Donestk People’s Republic (DNR) and Luhansk People’s Republic (LNR) regions (disputed region between Ukraine and Russia)
· North Korea
Generally, comprehensive sanctions prohibit transactions with, or services in, from, or benefitting, the country and its government. The country sanctions may apply to transactions outside the country. For example, the Cuban sanctions program prohibits engaging in transactions with Cuban nationals (persons or entities) located in countries outside of Cuba (except the U.S.) or Cuban goods outside of Cuba. As a further example, the current Iran sanctions apply outside of Iran to transactions involving the Government of Iran or entities that are owned or controlled by the Government of Iran.
Limited sanctions programs prohibit U.S. persons from participating in certain types of transactions with sanctioned countries and governments; for example, providing services, financing, investments, exports, and/or imports. Prohibited activities vary program to program. A list of the U.S. sanctions programs can be found on the OFAC website at Sanctions Programs and Country Information | U.S. Department of the Treasury and include the following entities, subjects, and countries, among others:
· Afghanistan
· The Balkans
· Belarus
· Burma
· Central African Republic
· Chinese Military Companies
· Countering American’s Adversaries Through Sanctions Act-Related Sanctions (“CAATSA)
· The Democratic Republic of the Congo
· Ethiopia
· Hong Kong
· Iraq
· Lebanon
· Libya
· Mali
· Nicaragua
· Russian Harmful Foreign Activities Sanctions
· Somalia
· Sudan and Darfur
· South Sudan
· Ukraine-/Russia-Related Sanctions
· Venezeula*
· Yemen
· Zimbabwe
Generally, OFAC enforces the limited sanctions programs by placing prohibited persons or entities on the SDN List. See § 3.3.
*Persons subject to U.S. jurisdiction are prohibited from engaging in direct or indirect transactions with the Government of Venezuela, unless authorized by OFAC. This prohibition likewise extends to all entities owned 50% or more by the Government of Venezuela. In Venezuela, the oil and gas sector is almost entirely controlled by Petroleos de Venezuela, S.A. (PDVSA)—an SDN—and other Venezuelan Government-owned entities. Accordingly, it is very unlikely that Capturiant would be able to engage in any transactions in Venezuela without potentially triggering sanctions.
In addition to country sanctions, list sanctions prohibit U.S. persons from dealing with individuals, entities and organizations that have been designated by the U.S. Government due to specific conduct or action. These parties are identified on the SDN List. The SDN List includes persons or entities designated under the following programs
· Counter Terrorism Sanctions
· Cyber-Related Sanctions;
· Transnational Criminal Organizations;
· Counter Narcotics Trafficking;
· Non-proliferation Sanctions
· Foreign Interference in a United States Election Sanctions;
· Magnitsky/ Global Magnitsky Sanctions;
· Hostages and Wrongfully Detained U.S. Nationals Sanctions; and
· Rough Diamonds Trade Controls.
U.S. persons may not have any dealings whatsoever with parties designated on the SDN List unless specifically authorized by OFAC via a License or other authorization. See § 3.6. The SDN List is updated often, and is available on OFAC’s website www.ustreas.gov/ofac.
As explained above, there are different types of sanctions programs with varying breadth and scope. Some U.S. economic sanctions programs prohibit U.S. persons from engaging in almost all business transactions with or in a sanctioned country, and other programs prohibit only specified transactions or dealings with certain individuals. For comprehensively sanctioned countries and any designated person or entity, U.S. law prohibits Direct and Indirect Dealings.
· No Direct Dealings
o U.S. persons are prohibited from transacting in any way with sanctions targets, both sanctioned countries and SDNs. This includes the provision, directly or indirectly, of goods, services, or any benefit to the target at any point. U.S. law generally prohibits direct and indirect imports from the targeted countries.
· No Indirect Dealings
o Facilitation: U.S. law generally prohibits U.S. persons from “approving or facilitating” dealings with sanctioned countries or parties by non-U.S. persons. For example, a U.S. person facilitates dealings with a sanctioned country by referring prohibited business to a non-U.S. entity. This prohibition generally prevents approval, financing, or other support of such transactions, including any technical or operational support from a U.S. company.
o Evasion: U.S. law generally prohibits transactions that evade or have the purpose or effect of evading other OFAC prohibitions. For example, if U.S. sanctions prohibit Capturiant from undertaking a transaction, Capturiant must not help the customer find an alternative way to complete the transaction.
In addition to list-based and comprehensive sanctions, the U.S. maintains a third primary sanction as to Russia and Belarus. These are often referred to as sectoral sanctions. OFAC designates entities to the Sectoral Sanctions Identification (“SSI”) List under one or more of four Directives restricting certain kinds of actions by U.S. persons with entities on the SSI list; not all transactions with entities on the SSI List are prohibited.
Any transactions in Russia, Belarus or Russian or Belarusian owned or controlled entities must be screened against the SSI List in addition to the SDN List and the results provided to Legal and Compliance.
Executive Order 13662
Directive 1 prohibits U.S. persons from transacting in, providing financing for, and other dealings in new debt of longer than 14 days maturity or new equity of persons in the Russian financial sector.
Directive 2 prohibits U.S. persons from transacting in, providing financing for, or otherwise dealing in new debt of longer than 60 days maturity of persons in the Russian energy sector.
Directive 3 prohibits U.S. persons from transacting in, providing financing for, or otherwise dealing in new debt of longer than 30 days maturity of persons in the Russian defense and related materiel sector determined to be subject to this Directive.
Directive 4 prohibits U.S. persons from providing, exporting, or re-exporting, directly or indirectly, goods, services (except for financial services), or technology in support of exploration or production for deep-water, Arctic offshore, or shale projects that have the potential to produce oil:
· in the Russian Federation, or in maritime area claimed by the Russian Federation and extending from its territory, and that involve any person determined to be subject to this Directive, its property, or its interests in property; or
· in any location, are initiated on or after January 29, 2018, and in which any person determined to be subject to this Directive or any earlier version thereof, their property, or their interests in property has (a) a 33 percent or greater ownership interest, or (b) ownership of a majority of the voting interests.
An account receivable from a party on the SSI List is considered “financing” and an extension of debt. Money owed by an SSI List party on the account receivable must be collected in strict accordance with payment periods defined in Directive 1-3 above. Failure to collect payment of the account receivable within the required payment period would result in a violation of Sectoral Sanctions.
Executive Order 14024
Directive 1A prohibits U.S. financial institutions from participating in the primary and secondary market of ruble and non-ruble denominated bonds issued by the Central Bank of Russia, National Wealth Fund of Russia, or the Ministry of Finance of Russia issued after March 1.
Directive 2 prohibits U.S. financial institutions from opening or maintaining of correspondent and payable through accounts and processing transactions for certain foreign financial institutions.
Directive 3 prohibits U.S. persons from transacting in, providing financing for, and other dealings in new debt of longer than 14 days maturity or new equity for certain entities.
Directive 4 prohibits U.S. persons from engaging in any transaction involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Ministry of Finance of the Russian Federation, including any transfer of assets to such entities or any foreign exchange transaction for or on behalf of such entities.
Executive Order 14071
This Executive Order prohibits (i) new investment in Russia by a U.S. person; (ii) the provision of accounting, trust and corporate formation, management consulting, and quantum computing services from the U.S. or by a U.S. person; and (iii) the approval, financing, facilitation, or guarantee by a U.S. person of a transaction by a foreign person that would be prohibited by (i) or (ii) above.
Executive Order 14038
Directive 1 prohibits U.S. persons from transacting in, provided financing for, and other dealings in new debt with a maturity of greater than 90 days issued on or after December 2, 2021 by the Ministry of Finance of the Republic of Belarus or the Development Bank of the Republic of Belarus.
OFAC may waive U.S. sanction prohibitions, at its discretion, in two ways. First, OFAC may create explicit exceptions contained within the regulations which are generally referred to as a “general license.” Alternatively, OFAC may issue case-by-case exceptions through a “specific license.”
OFAC also sometimes issues interpretative rulings about the scope of U.S. sanctions. Only some of these interpretative rulings are published on OFAC’s website. Applications to OFAC for licenses or interpretative rulings must be handled by the Chief Compliance Officer.
Civil and/or criminal penalties may be imposed on the individual or Capturiant for sanctions violations regardless of whether or not an individual or company engaged in the violating transaction knew the activity violated U.S. sanctions, and whether or not there was intent to violate U.S. sanctions. The penalties for violating U.S. sanctions laws or regulations vary, but can be severe.
3.7.1 PERSONAL LIABILITY
Individuals may be subject to civil fines up to $250,000 per violation or twice the value of the transaction, whichever is greater. Individuals who willfully commit violations of U.S. sanctions can be subject to criminal penalties, including fines up to $1 million and/or imprisonment up to 20 years depending on the sanctions program.
Failure of an Employee to comply with this Sanctions Policy may be grounds for disciplinary action, up to and including termination.
3.7.2 CAPTURIANT’S LIABILITY AND DAMAGE TO PUBLIC REPUTATION
Capturiant may be subject to civil fines up to $330,947 per violation and possible criminal prosecutions and fines up to $1,000,000 for each willful violation of U.S. sanctions laws or regulations. It is also possible that violations may expose Capturiant to cease-and-desist orders and to being barred from doing business with the federal or state governments. Finally, violations may result in adverse publicity for Capturiant and may have a serious effect upon Capturiant’s business reputation for integrity.
Officers and directors who participate in violations of U.S. sanctions may be subject to individual civil and criminal penalties for their actions.
The U.S. Government utilizes secondary sanctions to penalize non-U.S. persons engaging in certain commercial activities in or with certain countries. Secondary sanctions are extra-territorial in nature. Enforcement is indirect because the U.S. government cannot impose fines and penalties on a non-US person violating secondary sanctions. Instead, the U.S. government may limit non-U.S. persons’ access to the U.S. commercial market, U.S. government programs, and the U.S. financial system. As a U.S. person, Capturiant should not have secondary sanctions exposure; however, Capturiant’s counterparts may be subject to secondary sanctions, which may impact their ability to perform under contractual obligations to Capturiant. See further discussion in Section 4.1 below regarding counterparts.
OFAC published A Framework for OFAC Compliance Commitments (the “Framework”) in 2019 to provide organizations subject to U.S. jurisdiction, as well as foreign entities that conduct business in or with the United States or U.S. persons, or that use U.S.-origin goods or services, with OFAC’s perspective on the essential components of a sanctions compliance program. The Framework also outlines how OFAC may incorporate these components into its evaluation of apparent violations and resolution of investigations resulting in settlements. The Framework includes an appendix that offers a brief analysis of some of the root causes of apparent violations of U.S. economic and trade sanctions programs OFAC identified during its investigative process. The Framework is available at: framework_ofac_cc.pdf (treasury.gov).
Risk assessments and audits will be conducted to determine risk in Capturiant’s policies and procedures and operations, including customers, products, and services being provided via Capturiant’s platform, intermediaries, counterparties, transactions, and geographic locations to determine the appropriate screening and due diligence procedures.
The Chief Compliance Officer will perform, or cause to be performed, the periodic risk assessments and/or audits to evaluate whether there have been changes in law, practices or the business warranting adjustment to this Sanctions Policy. Necessary steps will be taken to address any adjustments, including, but not limited to, amending the Sanctions Policy, re-training under the Sanctions Policy, and the correction of any deficiencies in the Capturiant Onboarding Procedures to ensure compliance.
Capturiant is required to screen all customers to ensure it is not subject to the Sanctions Laws PRIOR to engaging in business with such customer. See Capturiant Onboarding Procedures. For purposes of this Sanctions Policy, a customer has the same meaning given in the Capturiant Onboarding Procedures.
Capturiant will maintain reasonable internal controls in place to ensure compliance with all applicable laws and regulations and this Sanctions Policy. The Chief Compliance Officer will assist with the implementation of policies and internal controls tailored to its operations to appropriately mitigate its economic sanctions compliance risks.
Capturiant should have appropriate risk-based procedures to screen customers in any transaction against the SDN List and sanctioned countries before granting access to Capturiant platforms, entering contracts, or otherwise completing a transaction with a customer.
Customers should be screened against the SDN List to ensure compliance with this Sanctions Policy. Third party data (e.g., name and address, including country) should be screened before entering into a business dealing with the third party. In addition, third party data in Capturiant’s databases should be screened periodically to detect changes since the initial screening (e.g., whether the third party has been added to the SDN List). Third party data should also be screened whenever there is a change to the data (e.g., change of name or address).
The Chief Compliance Officer is to develop a process for reporting transactions that may involve sanctioned countries or persons. The process includes requirements to report transactions involving sanctioned countries or persons to the Chief Compliance Officer.
If Capturiant out-sources operations to a vendor, Capturiant must ensure any screening or control that this Sanctions Policy would require the local operating company itself to perform for such operations is appropriately performed by the vendor to whom the operation is outsourced. Future outsourcing contracts subject to this obligation (including contract renewals, extensions, or amendments) should include binding and enforceable contractual provisions on the third party’s obligations for screening and controls.
In some instances, economic sanctions imposed by one country are opposed by other countries for foreign policy reasons of their own (e.g. Canada and the European Union). These conflicts present special compliance challenges for companies that do business internationally. All matters involving conflicts of this type should be referred to the Chief Compliance Officer to address potential legal risks under all applicable laws.
The Chief Compliance Officer is responsible for training Covered Persons on this Sanctions Policy and, in that regard, will be responsible for the preparation and dissemination of training programs applicable to all Covered Persons. All training records, including name, title and contact information of each trainee, should be retained by the Chief Compliance Officer.
To ensure the adopted policies, procedures and internal controls are being followed, Capturiant should monitor and audit their operations. The Chief Compliance Officer will have responsibility for the compliance monitoring function.
This Supplement applies to Capturiant Ltd. an entity organized in the Commonwealth of The Bahamas (“The Bahamas”).
In addition to OFAC sanctions, Capturiant will abide by and monitor orders made pursuant to Section 3 of the International Obligations (Economic and Ancillary Measures) Act, Chapter 16 (“IOEAMA”) which adopts and gives effect to resolutions imposed by the United Nations Security Council to sanctioned persons and/or foreign states. A list of Orders (and updates to Orders) made pursuant to IOEAMA can be found at this link:
https://www.scb.gov.bs/the-commission/cooperation-and-memberships/
Capturiant and directors and officers thereof may be subject to civil/criminal penalties for non-compliance with IOEAMA orders.
[Last updated on 08.01.2023]