March 14, 2019

What are the sanctions implications of having a US citizen on a company’s board of directors?

Hypothetical: 

A non-US subsidiary of a US company has an opportunity to do business in Syria, but it has a US citizen on its board of directors.  Can the subsidiary proceed with the opportunity?

Key Considerations:

  • Has the US board member been directly involved in the business with Syria?  OFAC guidance indicates that the presence of a US board member does not necessarily preclude the entity from doing business with a sanctioned individual or entity.  
  • The company should “firewall” the US director from all discussions and decisions regarding the activity.
  • The company may want to consider a blanket recusal policy for the US director from all business involving Syria.  This will prevent case-by-case abstentions which can be considered a prohibited facilitation.