US Agencies Under Pressure From Heavy Sanctions Workload

The past several weeks at U.S. sanctions agencies have ranked among the busiest times in recent memory, especially at the Office of Foreign Assets Control, where some employees are working nearly nonstop to implement and enforce new sanctions against Russia, former officials said in interviews. While some former officials said the extra work could shift minor projects to the side, lawyers are concerned it could also delay more pressing agency priorities, including licensing requests.

Some OFAC employees have worked 20-hour days, said Matthew Tuchband, who left the agency in 2019 after more than two decades in the chief counsel’s office, including 14 as deputy chief counsel. Although Tuchband said long hours are fairly routine for OFAC employees, the past month has been a particularly busy period.

“A lot of people that I worked with were always putting in extra hours, and I think OFAC generally does that across the board,” said Tuchband, a sanctions lawyer with ArentFox Schiff. “But my sense is, right now, it's a significant increase beyond that.”

Because most sanctions announcements are usually “fairly work intensive,” Tuchband said the agency is accustomed to working long hours. Russia’s annexation of Crimea in 2014 was also an especially busy period, he said, partly because OFAC had to help implement multiple executive orders and publish a string of general licenses. “They were rolling out very, very quickly,” Tuchband said, “and they were fairly complicated.”

Adam Smith, a senior adviser to the OFAC director during the Obama administration, also pointed to Russia’s invasion of Crimea as a busy time. He said the agency also dealt with large amounts of sanctions during the Trump administration, including hundreds of Syria-related designations. But he said those instances don't quite rival the current sanctions output, which has included hundreds of designations against Russian government officials, banks and oligarchs, debt and equity restrictions and an oil embargo (see 2203240045, 2203030062 and 2203030062).

“The number of designations, maybe we've seen before,” said Smith, a trade lawyer with Gibson Dunn. “But we’ve certainly never seen the variety of measures like this in such quick succession.”

The extra work could further delay some “back-burner” projects, Tuchband said, such as rules to align the wording in various sanctions regulations. “Certainly there's a limited amount of resources there, and they can be pulled in only so many directions at a time,” Tuchband said. But he doesn’t see the sanctions causing large-scale delays to licensing requests or enforcement work, partly because the agency is used to allocating tasks during busy times. “When I was there,” Tuchband said, “I generally saw them being very good about moving around the resources they have to cover things.”

Other lawyers think the extra work could have more significant downstream effects. The agency is already dealing with “dozens if not hundreds” of Russia-related license applications, industry requests for clarification and interpretive guidance, and could be working on more frequently asked questions, Smith said. Although he said OFAC has "historically been very flexible in its staffing" to properly allocate resources, it can be challenging to manage various sanctions programs amid a surge in new sanctions.

“I think it pressures everything,” Smith said. “It does increase the flow of requests into OFAC -- maybe other agencies too. But certainly OFAC.” A Treasury spokesperson didn't respond to a request for comment.

The Commerce Department’s Bureau of Industry and Security has seen an increased workload as well. The agency has put out hundreds of pages of new export control regulations in the past month, including two new foreign direct product rules, new restrictions against Russian state-owned entities and military end-users and new controls on oil refinery equipment and luxury goods (see 2202240069 and 2203110056). It also has added around 100 entities to the Entity List (see 2203040020).

BIS officials said they never have had to issue as many rules as quickly, calling the work “unprecedented” (see 2203150056). The agency still has a “substantial amount of ongoing work to ensure consistent implementation” of the new controls, Matt Borman, the agency’s deputy assistant secretary for export administration, said during a March technical advisory committee meeting.

Congress earlier this month passed a government funding bill, including an emergency Ukraine-related aid package, that will allocate millions of dollars for BIS to carry out export administration duties and hire more staff for its work on Russia-related export controls (see 2203100014 and 2203110011). Kevin Wolf, an Akin Gump lawyer and former BIS assistant secretary for export administration, said the extra staff should help the agency in the long term.

“Clearly career staff are working very hard,” Wolf emailed. “These are significant, novel rules being drafted and published under tight time pressures and in the limelight.”

The bill also included an additional $25 million for Treasury’s Office of Terrorism and Financial Intelligence, which oversees OFAC. The money will go to staff and salaries for a range of tasks, including sanctions targeting.

Although some OFAC officials are working “around the clock” and the agency has been understaffed for years (see 2010290028), Tuchband said it can manage. “At OFAC, you tend to go from fire to fire to fire,” he said. “It’s rare that there isn't some area of the world that people aren’t thinking about putting sanctions on or taking sanctions off.”