PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 1750 Pennsylvania Avenue NW, Suite 800 Washington, DC 20006
MEMORANDUM
TO: Victoria Chambers, Responsible Partner, White Collar & Investigations Jasmine Thornton, Lead Associate, White Collar & Investigations
CC: Howard Quinn, Billing Partner Liam Donahue, Working Associate
FROM: Conrad Reeves, Senior Counsel, Export Controls & Sanctions
DATE: April 27, 2022
RE: Applicable Sanctions Framework — OFAC Programs, Executive Order 14024, Directive 2 under E.O. 13662, and 31 C.F.R. Part 589 — Analysis as Applied to Dunmore Energy Holdings Ltd.
MATTER NO.: 1016-00009
CLIENT: Dunmore Energy Holdings Ltd.
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I. Purpose and Executive Summary
This memorandum provides a comprehensive analysis of the United States sanctions framework administered by the Office of Foreign Assets Control ("OFAC") of the U.S. Department of the Treasury, as that framework applies to the conduct currently under investigation at Dunmore Trading International Ltd. ("DTI"), the Dubai-based trading subsidiary of Dunmore Energy Holdings Ltd. ("Dunmore" or "DEH"). The memorandum is intended to serve as the foundational sanctions law analysis for the investigation team and to inform the development of the legal strategy in connection with both the ongoing Department of Justice inquiry and any prospective voluntary self-disclosure to OFAC.
This memorandum has been prepared at the direction of Victoria Chambers, Responsible Partner, in connection with the internal investigation triggered by the DOJ National Security Division's grand jury subpoena GJ No. 22-418, issued on April 19, 2022, by the U.S. District Court for the District of Columbia (Grand Jury 22-2). The subpoena seeks, inter alia, documents and records relating to transactions between Dunmore entities and certain Russian-connected counterparties, including Petronova Trading FZE, Zenith Petroleum DMCC, and entities associated with Volkhov Industrial Group JSC.
The memorandum addresses the following subjects in sequence:
(a) the OFAC sanctions programs applicable to Russia-related transactions, including the agency's general authority and jurisdictional scope;
(b) Executive Order 14024 (April 15, 2021) and the Specially Designated Nationals and blocked Persons List ("SDN List") blocking provisions thereunder;
(c) Directive 2 under Executive Order 13662 (imposing sectoral sanctions on the Russian energy sector);
(d) 31 C.F.R. Part 589 (the Ukraine-/Russia-Related Sanctions Regulations), which codifies and implements the foregoing executive orders;
(e) the specific application of these programs to Dunmore's transactions with Petronova Trading FZE, Zenith Petroleum DMCC, and entities connected to Volkhov Industrial Group JSC; and
(f) criminal liability under the International Emergency Economic Powers Act ("IEEPA"), 50 U.S.C. §§ 1701–1706, including the willfulness standard and corporate criminal liability principles.
Summary Conclusion. Based on the preliminary facts available as of the date of this memorandum, the conduct at issue — comprising 14 crude oil swap transactions totaling approximately $218.7 million in notional value with Petronova Trading FZE and Zenith Petroleum DMCC between June 2020 and February 2022, of which at least 9 transactions (approximately $156.3 million in notional value) involved crude oil sourced from or destined for Volkhov-controlled entities — potentially violates both Directive 2 sectoral sanctions (in effect from November 15, 2019) and the full SDN blocking sanctions imposed under E.O. 14024 on April 6, 2022, as well as the criminal prohibitions set forth in IEEPA. In addition, oilfield equipment exports valued at approximately $12.4 million facilitated through Caspian Logistik GmbH present additional sanctions exposure under Directive 2, and the $34.2 million in structured payments routed through 127 transactions at Crescent Commercial Bank PJSC constitute strong evidence of sanctions evasion in violation of 31 C.F.R. § 589.406. The total potential exposure is substantial, and the pattern of conduct — including the payment structuring and the use of intermediary counterparties to obscure connections to Volkhov Industrial Group JSC — raises serious questions regarding willfulness, which is the central element for criminal prosecution under IEEPA.
II. Background
A. The Client and Relevant Entities
The following entities and individuals are relevant to the sanctions analysis set forth in this memorandum.
Dunmore Energy Holdings Ltd. ("Dunmore" or "DEH"). Dunmore Energy Holdings Ltd. is a Cayman Islands–domiciled exempted company with limited liability (Cayman Islands Company Registration No. MC-334821). Dunmore maintains its operational headquarters at 1200 McKinney Street, Suite 3400, Houston, Texas 77010. For fiscal year 2021, Dunmore reported annual revenue of approximately $4.87 billion and employed approximately 3,200 individuals across its global operations. Dunmore operates as a diversified energy holding company with upstream exploration and production operations, midstream logistics and transportation assets, and a commodity trading arm that operates primarily through its Dubai-based subsidiary, DTI.
Dunmore Trading International Ltd. ("DTI"). DTI is a Dubai-based trading subsidiary of Dunmore, holding DIFC License No. CL-4827. DTI maintains its principal office at Level 14, Gate Building 3, Dubai International Financial Centre, P.O. Box 506774, Dubai, United Arab Emirates. DTI operated the overseas trading desk that is the primary focus of the current investigation. The trading desk engaged in crude oil swap transactions, commodity futures, and physical trading of petroleum products across the Middle East, Central Asia, and sub-Saharan Africa regions.
The following key individuals at DTI are relevant to the investigation:
• Derek Hargrave, President of DTI, who oversaw all trading operations and had ultimate sign-off authority on transactions exceeding $10 million in notional value;
• Natasha Sorokin, Senior Trader, who served as the primary point of contact with Sergei Volkov of Petronova Trading FZE and executed the majority of the crude oil swap transactions at issue;
• Omar Al-Rashidi, Head of Middle East Operations, who was responsible for counterparty relationship management and regional business development;
• Yves Leclerc, Director of Logistics & Shipping, who coordinated the physical delivery of commodities and managed the logistics of oilfield equipment shipments that transited through Caspian Logistik GmbH; and
• Rajesh Malhotra, Controller, who was responsible for accounting, financial reporting, and payment processing at DTI, including oversight of the Crescent Commercial Bank PJSC accounts.
Dunmore upstream Americas LLC ("DUA"). DUA is a Delaware limited liability company (EIN 84-2937561) whose principal office is co-located with DEH at the Houston address noted above. DUA is the domestic operating subsidiary responsible for Dunmore's upstream exploration and production activities in the Gulf of Mexico, the Permian Basin, and the Eagle Ford Shale. Although DUA is not a principal subject of the current investigation, its status as a U.S.-organized entity is relevant to the U.S.-person jurisdictional nexus analysis.
Dunmore Renewables GmbH. Dunmore Renewables GmbH is a German limited liability company with its registered office at Überseeallee 12, 20457 Hamburg, Germany. Its Managing Director, Tobias Engel, was tangentially involved in one suspect transaction — specifically, the approval of a €2.3 million payment to Caspian Logistik GmbH for logistics services connected to an oilfield equipment shipment. The nature and extent of Engel's knowledge regarding the ultimate end users of the equipment remain under investigation.
Ownership Structure. Dunmore's equity ownership is distributed as follows:
• Greystone Capital Partners Fund IV, L.P. holds 62.5% of the equity. Greystone Capital Partners Fund IV, L.P. is a Delaware limited partnership whose general partner is Greystone Capital Management LLC, managed by Richard Fairbanks. Greystone is a middle-market private equity firm based in New York.
• Dunmore management collectively holds 22.5% of the equity, allocated among senior officers and key employees pursuant to equity incentive plans.
• Thornbury Infrastructure Fund II, L.P. holds 15% of the equity. Thornbury Infrastructure Fund II, L.P. is a Cayman Islands limited partnership whose general partner is Thornbury Asset Management Ltd., based in London and managed by Helen Cresswell. Thornbury focuses on infrastructure and energy investments across Europe and the Middle East.
This ownership structure is significant in two respects. First, the majority ownership by a Delaware limited partnership (Greystone) and the presence of a U.S.-organized operating subsidiary (DUA) strengthen the argument that Dunmore and its subsidiaries, including DTI, are subject to U.S. sanctions jurisdiction. Second, the private equity sponsors will need to be briefed on the investigation and its potential implications for fund reporting, investor notifications, and portfolio company oversight obligations.
B. Counterparties at Issue
The following counterparties are the subjects of the transactions under investigation.
Petronova Trading FZE. Petronova Trading FZE is a Free Zone Establishment registered in the Jebel Ali Free Zone, United Arab Emirates. Its registered office is located at Office 1407, Al Shafar Tower, Dubai Internet City, Dubai, UAE. The Managing Director of Petronova is Sergei Volkov, a Russian national who is a resident of the United Arab Emirates. Based on preliminary information gathered during the early stages of the investigation, Petronova is alleged to be a front company for Volkhov Industrial Group JSC. The nature and extent of Volkhov's ownership interest in Petronova — and, critically, whether Volkhov's direct or indirect ownership interest equals or exceeds 50% — is the subject of a dedicated beneficial ownership analysis being prepared by Liam Donahue (targeted completion date: June 15, 2022). Petronova served as the principal counterparty to DTI in 11 of the 14 crude oil swap transactions at issue, and Sergei Volkov was Natasha Sorokin's primary point of contact for these transactions.
Volkhov Industrial Group JSC ("Volkhov" or "VIG"). Volkhov Industrial Group JSC is a Russian Joint Stock Company headquartered at 12 Kutuzovsky Prospekt, Moscow 121248, Russia. Its Chairman is Arkady Volkhov, a prominent Russian industrialist with reported ties to Russian government officials. Volkhov operates as a diversified energy and industrial conglomerate with significant upstream oil and gas exploration and production operations in Russia, including operations in the Arctic shelf, West Siberian shale formations, and deepwater developments in the Barents Sea. Volkhov was designated by OFAC under Directive 2 of E.O. 13662 as a Sectoral Sanctions Identification ("SSI") effective November 15, 2019, subjecting it to sectoral sanctions applicable to the Russian energy sector. Subsequently, Volkhov was added to the SDN List under E.O. 14024, effective April 6, 2022, triggering comprehensive blocking sanctions. Volkhov is the central sanctions target in this investigation.
Zenith Petroleum DMCC. Zenith Petroleum DMCC is a company registered with the Dubai Multi Commodities Centre ("DMCC"), with its registered address at Unit 2201, Jumeirah Bay Tower X2, Cluster X, Jumeirah Lakes Towers, Dubai, UAE. Its Managing Director is Farhan Qureshi, a Pakistani national who is a resident of the UAE. Zenith Petroleum served as the counterparty in 3 of the 14 crude oil swap transactions at issue. Preliminary analysis suggests that at least 2 of these 3 transactions involved crude oil that was ultimately sourced from or destined for entities connected to Volkhov Industrial Group. The precise nature of the relationship between Zenith Petroleum and Volkhov remains under investigation, and counterparty due diligence is being conducted by Amara Osei (targeted completion date: July 5, 2022).
Caspian Logistik GmbH. Caspian Logistik GmbH is a German limited liability company headquartered at Mönckebergstraße 22, 20095 Hamburg, Germany. Its Managing Director is Klaus Weidemann, a German national. Caspian Logistik facilitated the export of oilfield drilling equipment and components valued at approximately $12.4 million to end users in Russia. The equipment was shipped from European ports to Russian destinations, and Caspian Logistik served as the logistics intermediary and, in certain instances, as the named consignee or freight forwarder. Based on shipping documentation reviewed to date, the ultimate end users of the equipment appear to be entities connected to Volkhov's upstream oil and gas operations.
C. Chronology of Key Events
The following chronology sets forth the key dates and events relevant to the sanctions analysis in this memorandum.
III. Applicable Sanctions Framework
A. Overview of OFAC and Its Authority
The Office of Foreign Assets Control ("OFAC") is a division within the U.S. Department of the Treasury charged with administering and enforcing U.S. economic and trade sanctions programs. OFAC operates under the policy direction of the Under Secretary of the Treasury for Terrorism and Financial intelligence and acts pursuant to presidential national emergency powers, specific legislation, and executive orders. OFAC's primary mission is to administer targeted sanctions programs designed to advance U.S. foreign policy and national security objectives by restricting transactions and freezing assets of designated foreign countries, regimes, terrorists, international narcotics traffickers, proliferators of weapons of mass destruction, and other threats to U.S. national security, foreign policy, or economy.
OFAC derives its regulatory and enforcement authority primarily from the following statutes:
• The International Emergency Economic Powers Act ("IEEPA"), 50 U.S.C. §§ 1701–1706. IEEPA is the principal statutory authority for most modern sanctions programs. It authorizes the President to declare a national emergency with respect to "any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States" and to exercise economic powers, including the power to block transactions and freeze assets, to address that threat. 50 U.S.C. § 1701(a). IEEPA provides both civil and criminal penalties for violations, as discussed in Section IV below.
• The Trading with the Enemy Act ("TWEA"), 50 U.S.C. App. §§ 1–44. TWEA is an older statute that provides authority for certain legacy sanctions programs, most notably the Cuba embargo. TWEA is not directly applicable to the Russia-related sanctions at issue in this matter, but it is referenced here for completeness.
• Various specific authorizing statutes, including the Countering America's Adversaries Through Sanctions Act ("CAATSA"), Pub. L. 115-44 (2017), and the Protecting Europe's Energy Security Act ("PEESA"), Pub. L. 116-92, Title LXXV (2019), which provide supplemental authority and mandates for Russia-related sanctions.
OFAC exercises its authority through the issuance and administration of regulations codified in Title 31 of the Code of Federal Regulations, Chapter V. These regulations implement the various sanctions programs authorized by executive orders and statutes. For Russia-related sanctions, the principal regulatory framework is set forth in 31 C.F.R. Part 589, the Ukraine-/Russia-Related Sanctions Regulations, discussed in detail in Section III.D below.
OFAC administers multiple sanctions programs simultaneously, each governed by its own executive order(s), regulations, and designated persons lists. The Russia-related sanctions programs relevant to this matter are principally those established under Executive Order 13662 (including Directive 2, addressing sectoral sanctions on the Russian energy sector) and Executive Order 14024 (providing for full SDN blocking designations). These programs are discussed separately in Sections III.B and III.C below.
Scope of Application — "U.S. Persons." OFAC sanctions apply principally to "U.S. persons," a term that is defined broadly in the relevant regulations and executive orders to include:
(i) any United States citizen or permanent resident alien, wherever located in the world;
(ii) any entity organized under the laws of the United States or any jurisdiction within the United States (including foreign branches of such entities); and
(iii) any person in the United States, regardless of nationality.
See 31 C.F.R. § 589.312 (defining "United States person"); E.O. 13662, § 10(d); E.O. 14024, § 8(b). The breadth of this definition is critical to the present analysis, because it extends OFAC jurisdiction beyond U.S. territorial boundaries to encompass the global activities of U.S. citizens, U.S. permanent residents, and U.S.-organized entities. This extraterritorial reach is the mechanism by which DTI's Dubai-based trading operations may be subject to U.S. sanctions, notwithstanding that DTI is organized under UAE law and conducts its operations primarily in the Middle East.
In addition, certain sanctions programs — including those under E.O. 14024 — carry secondary sanctions implications, meaning that OFAC may impose sanctions on non-U.S. persons who engage in certain significant transactions with designated persons, even absent a traditional U.S.-person nexus. The secondary sanctions authorities are particularly relevant to the post-February 2022 enforcement landscape, as the U.S. government has significantly expanded its use of secondary sanctions tools in response to Russia's invasion of Ukraine.
Note on Jurisdictional Reach. A detailed analysis of whether DTI employees and transactions have a sufficient U.S.-person nexus to trigger OFAC jurisdiction is addressed separately in Jasmine Thornton's memorandum dated May 10, 2022 (Corporate Structure & Jurisdictional Nexus — U.S. Person Analysis). That memorandum will evaluate, inter alia, the implications of Dunmore's U.S.-organized parent and majority-equity holder (Greystone Capital Partners Fund IV, L.P.), the use of U.S. dollar-denominated transactions cleared through U.S. correspondent banks, and the U.S. citizenship or permanent residency status of certain DTI employees. For purposes of this memorandum, we assume jurisdictional applicability and focus on the substantive legal framework analysis.
B. Executive Order 13662 and Directive 2 (Sectoral Sanctions — Energy Sector)
1. E.O. 13662 — Overview
Executive Order 13662, titled "Blocking Property of Additional Persons Contributing to the Situation in Ukraine," was signed by President Obama on March 20, 2014, in response to the actions of the Government of the Russian Federation with respect to Ukraine, including the purported annexation of Crimea. E.O. 13662 was issued pursuant to the authority vested in the President by the Constitution and laws of the United States, including IEEPA, the National Emergencies Act (50 U.S.C. §§ 1601 et seq.), and Section 301 of Title 3 of the United States Code.
E.O. 13662 authorized the Secretary of the Treasury, in consultation with the Secretary of State, to impose sanctions on persons determined to operate in specified sectors of the Russian Federation economy, including the financial services, energy, metals and mining, engineering, and defense and related materiel sectors. Unlike the "full blocking" SDN designations that prohibit all transactions with designated persons, the sanctions imposed under E.O. 13662 were structured as "sectoral sanctions" — i.e., targeted restrictions on specific categories of transactions with designated persons, rather than a comprehensive prohibition on all dealings.
The sectoral sanctions were implemented through a series of OFAC Directives, each addressing a different sector of the Russian economy and specifying the particular types of transactions that are prohibited. For the energy sector, Directive 2 is the governing instrument.
2. Directive 2 — Sectoral Sanctions on the Energy Sector
Directive 2 under E.O. 13662 (as amended) establishes the sanctions framework applicable to entities operating in the Russian energy sector that have been identified on OFAC's Sectoral Sanctions Identifications ("SSI") List. The SSI List is distinct from the SDN List: entities on the SSI List are subject to the specific prohibitions set forth in the applicable Directive, rather than the comprehensive blocking sanctions applicable to SDN-listed persons.
Directive 2 imposes two categories of prohibitions relevant to this matter:
First, Directive 2 restricts certain financial transactions with SSI-listed persons in the energy sector. Specifically, U.S. persons are prohibited from transacting in, providing financing for, or otherwise dealing in new debt of longer than 60 days maturity or new equity of persons identified on the SSI List pursuant to Directive 2. This prohibition is designed to restrict designated Russian energy companies' access to U.S. capital markets and financing.
Second, and more directly relevant to the transactions under investigation, Directive 2 prohibits the provision, exportation, or reexportation, directly or indirectly, of goods, services (other than financial services), or technology in support of exploration or production for deepwater, Arctic offshore, or shale projects that (a) have the potential to produce oil in the Russian Federation, or in maritime areas claimed by the Russian Federation and extending from its territory, and (b) involve a person determined to be subject to Directive 2 (i.e., an SSI-listed person in the energy sector).
The scope of this prohibition is broad. It captures not only the direct provision of goods and technology to SSI-listed persons but also the indirect provision of goods, services, and technology in support of specified energy projects involving such persons. The phrase "in support of" is not defined with precision in the regulations, but OFAC has interpreted it broadly to encompass activities that facilitate, enable, or contribute to the identified exploration and production projects.
Volkhov Industrial Group JSC was designated under Directive 2 of E.O. 13662 and added to the SSI List effective November 15, 2019. This designation was based on OFAC's determination that Volkhov operates in the energy sector of the Russian Federation economy. As of November 15, 2019, U.S. persons were prohibited from engaging in transactions with Volkhov that fall within the scope of Directive 2's prohibitions — specifically, (a) transacting in new debt of longer than 60 days maturity or new equity of Volkhov, and (b) providing goods, services, or technology in support of exploration or production for deepwater, Arctic offshore, or shale projects involving Volkhov.
Key Legal Questions for Dunmore. The application of Directive 2 to Dunmore's transactions raises several specific legal questions:
Crude Oil Swap Transactions. Whether the crude oil swap transactions executed by DTI with Petronova Trading FZE and Zenith Petroleum DMCC constituted prohibited transactions under Directive 2 — specifically, whether they involved the provision of "services" in support of exploration or production for deepwater, Arctic offshore, or shale projects involving Volkhov. The answer depends on the factual determination of (a) whether the crude oil that was the subject of the swaps was sourced from or destined for Volkhov's prohibited energy projects (i.e., deepwater, Arctic offshore, or shale projects with the potential to produce oil in Russia), and (b) whether the swap transactions themselves constituted "services" "in support of" those projects within the meaning of Directive 2. OFAC has taken the position in prior enforcement actions that commodity trading activities that facilitate the monetization of production from sanctioned energy projects can constitute prohibited "services" under Directive 2, though the precise boundaries of this interpretation are not well-delineated in published guidance.
Oilfield Equipment Exports. Whether the oilfield equipment exports (ECCN 2B350 and 2B999 items, valued at approximately $12.4 million) facilitated through Caspian Logistik GmbH and destined for Russian end users constitute prohibited provision of "goods" or "technology" under Directive 2. This analysis turns on the factual determination of whether the equipment was used in connection with exploration or production for deepwater, Arctic offshore, or shale projects involving Volkhov. Based on preliminary review of shipping documentation and end-user certificates, the equipment appears to have been destined for drilling operations in the Yamal Peninsula and the Kara Sea shelf — both of which are geographically consistent with Arctic offshore and deepwater projects. If the end users are confirmed to be Volkhov-controlled entities, these exports would fall squarely within the goods/technology prohibition under Directive 2.
It is important to note that sectoral sanctions under Directive 2 are narrower in scope than full SDN blocking sanctions. The Directive 2 prohibitions restrict specific categories of transactions — they do not impose a blanket prohibition on all dealings with SSI-listed persons. Accordingly, not all transactions between DTI and Volkhov-connected entities during the November 2019 – April 2022 period necessarily violated Directive 2; only those transactions that fall within the specific categories of prohibited activity (i.e., financing restrictions or goods/services/technology for specified energy projects) are implicated. This distinction is relevant to the calculation of potential penalties and the scope of any voluntary self-disclosure.
3. Implications for Dunmore's Conduct (March 2020 – April 5, 2022)
During the period from March 2020 through April 5, 2022, Volkhov Industrial Group JSC was subject to Directive 2 sectoral sanctions but had not yet been placed on the SDN List. Accordingly, the relevant sanctions framework for this period is the Directive 2 prohibition on providing goods, services, or technology for specified energy projects involving Volkhov, rather than the comprehensive blocking sanctions that would later be imposed under E.O. 14024.
The transactions between DTI and Petronova Trading FZE and Zenith Petroleum DMCC during this period that involved Volkhov-connected entities may have violated Directive 2 prohibitions under two conditions: (a) the transactions constituted the provision of goods, services, or technology for deepwater, Arctic offshore, or shale projects involving Volkhov (an SSI-listed person), and (b) a U.S.-person nexus existed sufficient to bring the transactions within OFAC jurisdiction. As noted above, the U.S.-person nexus analysis is addressed in a separate memorandum; for purposes of this memorandum, we assume jurisdictional applicability.
The 9 tainted crude oil swap transactions identified by Ridgeline Advisory Group LLC (Engagement No. RAG-2022-0319; Dr. Margaret Liu, CPA, CFE, lead forensic analyst) as involving Volkhov-controlled entities represent $156.3 million in notional value. These transactions warrant particularly careful scrutiny under Directive 2. Ridgeline's preliminary forensic tracing analysis indicates that the crude oil underlying at least 7 of these 9 transactions was sourced from Volkhov's upstream production operations in the Yamal-Nenets Autonomous Okrug and the Kara Sea continental shelf — both of which are consistent with Arctic offshore and deepwater exploration and production that falls within the scope of Directive 2's prohibitions.
In addition, the $34.2 million in structured payments routed through 127 individual transactions at Crescent Commercial Bank PJSC (Dubai) between March 2020 and March 2022 raises significant concerns under the evasion and avoidance prohibition set forth in 31 C.F.R. § 589.406, discussed further in Section III.D below. The payment structuring — characterized by the use of multiple intermediary accounts, the breaking of larger payment obligations into smaller individual transactions, and the apparent concealment of Volkhov-connected entities as ultimate beneficiaries — suggests a deliberate effort to avoid detection by OFAC screening mechanisms and compliance controls. If this structuring was undertaken with the intent to evade or avoid the Directive 2 prohibitions, it constitutes an independent violation of the sanctions regulations, regardless of whether the underlying transactions themselves fall within the specific categories of activity prohibited by Directive 2.
C. Executive Order 14024 (Full SDN blocking Sanctions)
1. E.O. 14024 — Overview
Executive Order 14024, titled "Blocking Property With Respect to Specified Harmful Foreign Activities of the Government of the Russian Federation," was signed by President Biden on April 15, 2021. E.O. 14024 was issued pursuant to IEEPA, the National Emergencies Act, and Section 301 of Title 3 of the United States Code. The executive order declared a national emergency to address "the unusual and extraordinary threat to the national security, foreign policy, and economy of the United States" posed by "specified harmful foreign activities of the Government of the Russian Federation."
E.O. 14024 provides the Secretary of the Treasury, in consultation with the Secretary of State, with broad authority to designate for blocking sanctions any person determined, inter alia:
(i) to operate or to have operated in specified sectors of the Russian Federation economy, including the technology sector, the defense and related materiel sector, and the energy sector (among others identified in subsequent determinations);
(ii) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, the Government of the Russian Federation;
(iii) to be a leader, official, senior executive officer, or member of the board of directors of an entity operating in a specified sector, or of an entity whose property or interests in property are blocked pursuant to the order; or
(iv) to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any person whose property or interests in property are blocked pursuant to the order.
Persons designated under E.O. 14024 are placed on OFAC's Specially Designated Nationals and blocked Persons List ("SDN List"), which triggers comprehensive blocking sanctions. SDN designations represent the most severe form of U.S. economic sanctions: they result in the blocking (freezing) of all property and interests in property of the designated person that are in the United States or within the possession or control of any U.S. person, and they prohibit U.S. persons from engaging in any transactions or dealings with the designated person or its property or interests in property.
2. SDN List Designation — Volkhov Industrial Group JSC
OFAC added Volkhov Industrial Group JSC to the SDN List effective April 6, 2022, under E.O. 14024. This designation escalated the sanctions applicable to Volkhov from the sectoral restrictions of Directive 2 to comprehensive blocking sanctions. The April 6, 2022 designation was part of a broader package of sanctions imposed by the United States and its allies in response to Russia's full-scale invasion of Ukraine on February 24, 2022, and the atrocities committed in Bucha and other Ukrainian cities in March and early April 2022.
As of April 6, 2022, the following prohibitions apply to Volkhov under the SDN designation:
(a) blocking of property. All property and interests in property of Volkhov Industrial Group JSC that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any U.S. person, are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in. 31 C.F.R. § 589.201(a).
(b) Prohibition on transactions. U.S. persons are prohibited from engaging in any transaction or dealing in the property or interests in property of Volkhov, including the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of Volkhov.
(c) Prohibition on facilitation. U.S. persons are prohibited from engaging in any transaction that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions set forth in the executive order or implementing regulations. 31 C.F.R. § 589.406.
The SDN designation also carries significant secondary sanctions implications. Under E.O. 14024, OFAC has the authority to designate non-U.S. persons who have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any person whose property or interests in property are blocked pursuant to the order. This means that non-U.S. counterparties who continue to transact with Volkhov post-designation risk being designated themselves and having their own assets blocked. This authority extends the deterrent effect of the SDN designation well beyond the jurisdiction of U.S. persons and U.S. territory.
3. The OFAC 50% Rule
OFAC's "50% Rule," formally set forth in 31 C.F.R. § 589.406 and OFAC's Revised Guidance on Entities Owned by Persons Whose Property and Interests in Property Are blocked (August 13, 2014, as revised), provides that any entity that is owned, directly or indirectly, 50% or more in the aggregate by one or more blocked persons (SDN-listed persons) is itself treated as a blocked person, even if that entity is not independently listed on the SDN List.
The 50% Rule is an important analytical tool in the present investigation because it may extend the reach of the sanctions applicable to Volkhov to encompass entities that are majority-owned by Volkhov but that are not themselves named on any OFAC list. The critical question for Dunmore is: Whether Petronova Trading FZE is owned 50% or more, directly or indirectly, in the aggregate by Volkhov Industrial Group JSC (or by Arkady Volkhov in his individual capacity, if he is also an SDN).
If Petronova is 50% or more owned by Volkhov or other SDN-listed persons, then:
(a) Post-April 6, 2022: Any transaction with Petronova by a U.S. person constitutes a prohibited transaction under E.O. 14024 and 31 C.F.R. § 589.201, because Petronova would be treated as a blocked person by operation of the 50% Rule.
(b) Pre-April 6, 2022 (November 15, 2019 – April 5, 2022): During this period, Volkhov was subject to Directive 2 sectoral sanctions (SSI designation) rather than SDN blocking sanctions. The 50% Rule applies in the sectoral sanctions context as well, but its application is limited to the scope of the Directive 2 prohibitions — i.e., if Petronova is 50%+ owned by Volkhov, then transactions with Petronova that fall within the categories prohibited by Directive 2 (goods, services, or technology for specified energy projects) would be treated as transactions with Volkhov for Directive 2 purposes. See OFAC FAQ 404 (confirming application of the 50% Rule to SSI-listed entities in the context of sectoral sanctions).
The beneficial ownership analysis of Petronova Trading FZE is being conducted by Liam Donahue and is addressed in detail in his memorandum dated June 15, 2022 (Petronova Trading FZE — Beneficial Ownership Analysis), as well as in the companion memorandum by Conrad Reeves dated June 20, 2022 (Volkhov Industrial Group — OFAC Designation History & 50% Rule Analysis). Preliminary indicators from the investigation strongly suggest that Sergei Volkov — who shares a surname with, and appears to have familial ties to, Arkady Volkhov — has significant connections to the Volkhov family and that Petronova may be majority-owned by Volkhov or Volkhov-controlled entities. Among other things, initial review of DTI internal communications has revealed references to Petronova as "the Volkhov vehicle" in Natasha Sorokin's correspondence with Derek Hargrave, and financial flows between Petronova and known Volkhov-controlled entities have been identified in the Crescent Commercial Bank account records.
4. Implications for Dunmore's Post-April 6, 2022 Obligations
Following Volkhov's SDN designation on April 6, 2022, Dunmore — to the extent any of its entities or employees qualify as "U.S. persons" within the meaning of the sanctions regulations — is subject to comprehensive blocking obligations. The implications are as follows:
(a) Immediate blocking requirement. Any property or interests in property of Volkhov (or entities 50%+ owned by Volkhov, including potentially Petronova) that are within the possession or control of Dunmore or any Dunmore U.S.-person entity or employee must be immediately blocked (i.e., frozen in place) and may not be transferred, paid, exported, withdrawn, or otherwise dealt in.
(b) OFAC reporting obligation. Under 31 C.F.R. § 501.603, U.S. persons who hold blocked property are required to file a report with OFAC within 10 business days of the blocking, using OFAC's online reporting portal.
(c) Cessation of all dealings. All ongoing contracts, accounts receivable, accounts payable, or any other continuing business relationships or transactional arrangements with Volkhov-connected entities — including Petronova Trading FZE, Zenith Petroleum DMCC, and any other entity determined to be 50%+ owned by Volkhov — must be immediately suspended. No further performance, payment, or other dealing is permitted absent a specific license from OFAC.
(d) Wind-down general license. OFAC typically issues a general license authorizing a limited wind-down period (usually 30 days) for transactions with newly designated SDN persons. Any such general license must be carefully reviewed to determine its scope and applicability to Dunmore's specific transactions.
The April 11, 2022 identification of potential Volkhov exposure by then-CCO Gerald Fisk during a routine OFAC screening refresh — five days after the SDN designation — and the subsequent notification to General Counsel Marcus Wellbourne were appropriately responsive to the new designation. However, the fact that the underlying Directive 2 exposure predated the SDN designation by more than two years, and that the OFAC screening system apparently failed to flag the Volkhov-Petronova connection during the intervening period, raises serious questions about the adequacy of Dunmore's pre-existing sanctions compliance program. These compliance program failures are addressed in Nicholas Ferreira's memorandum dated August 15, 2022 (Sanctions Compliance Program Assessment — Dunmore Energy Holdings Ltd.).
D. 31 C.F.R. Part 589 — Ukraine-/Russia-Related Sanctions Regulations
31 C.F.R. Part 589 constitutes the comprehensive regulatory framework for the Ukraine-/Russia-Related Sanctions Regulations. Part 589 codifies and implements the sanctions programs established by Executive Orders 13660, 13661, 13662 (including Directive 2), 13685, 14024, and subsequent related executive orders. It was promulgated by OFAC and is the principal regulatory instrument governing the Russia-related sanctions at issue in this investigation.
Part 589 is organized into several subparts that collectively establish the definitions, prohibitions, interpretive rules, licensing provisions, reporting requirements, and penalty provisions applicable to the Russia/Ukraine sanctions programs. The following provisions are of particular relevance to the Dunmore investigation:
Section 589.201 — Blocking provisions. Section 589.201 implements the property-blocking provisions of the relevant executive orders, including E.O. 14024. It provides that all property and interests in property of persons designated under the applicable executive orders that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any U.S. person are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in. This provision is the regulatory basis for the comprehensive blocking of Volkhov's property following its April 6, 2022 SDN designation.
Section 589.209 — Prohibited transactions relating to the SSI List. Section 589.209 implements the Directive 2 prohibitions on certain transactions with persons identified on the SSI List. It provides the regulatory text of the Directive 2 restrictions on financing, goods, services, and technology, as discussed in Section III.B above. This provision governs the sanctions analysis applicable to the period from November 15, 2019 (the date of Volkhov's SSI designation) through April 5, 2022 (the day before Volkhov's SDN designation superseded the sectoral restrictions).
Section 589.406 — Evasion/avoidance prohibition. Section 589.406 provides:
"Any transaction on or after the effective date that evades or avoids, has the purpose of evading or avoiding, causes a violation of, or attempts to violate any of the prohibitions set forth in this part is prohibited."
This provision is of critical importance to the Dunmore investigation. The evasion and avoidance prohibition is broadly drafted and captures not only completed violations but also attempted violations and transactions that are structured to evade or avoid the sanctions prohibitions. The provision does not require that the underlying substantive prohibition actually be triggered; rather, the purpose of evading or avoiding the prohibition is itself sufficient to establish a violation.
The payment structuring identified by Ridgeline Advisory Group — specifically, the $34.2 million in payments across 127 individual transactions routed through intermediary accounts at Crescent Commercial Bank PJSC, structured to obscure the ultimate beneficial ownership of Volkhov-connected entities — falls squarely within the conduct that § 589.406 is designed to prohibit. The structuring exhibits several characteristics that are hallmarks of sanctions evasion:
(i) The use of multiple intermediary entities and accounts to create layers of separation between the transacting parties and the ultimate beneficiary (Volkhov);
(ii) The breaking of larger payment obligations into smaller individual transactions, which may have been designed to avoid transaction-monitoring thresholds or compliance screening triggers;
(iii) The omission of Volkhov's name and identifying information from payment instructions and transaction records, as reflected in the Crescent Commercial Bank account documentation reviewed to date; and
(iv) The temporal pattern of the transactions, which appear to have escalated after Volkhov's November 15, 2019 SSI designation, suggesting awareness of the sanctions risk and a deliberate effort to route transactions through channels that would avoid detection.
Section 589.701 *et seq.* — Licensing provisions. Part 589, Subpart E, sets forth the general and specific licensing provisions applicable to the Russia/Ukraine sanctions programs. OFAC has the authority to issue both general licenses (which authorize specified categories of transactions without the need for an individual application) and specific licenses (which authorize particular transactions on a case-by-case basis upon application). The availability of licensing relief is discussed in Section III.E below.
Penalties. Part 589 incorporates by reference the penalty provisions of IEEPA, which provide for both civil monetary penalties (administered by OFAC) and criminal penalties (administered by DOJ). The civil penalty framework is set forth in 31 C.F.R. Part 501, Appendix A (OFAC Economic Sanctions Enforcement Guidelines), and the criminal penalty provisions are codified at 50 U.S.C. § 1705. These penalty provisions are discussed in Section IV (criminal liability) and Section VI (OFAC civil enforcement) of this memorandum.
E. General Licenses and Exemptions
A critical component of any sanctions analysis is the determination of whether any applicable general license or exemption applies to the transactions under review. OFAC has issued numerous general licenses in connection with the Russia/Ukraine sanctions programs, and new general licenses continue to be issued on a rolling basis as the sanctions landscape evolves. The following general licenses and exemptions are potentially relevant to the Dunmore investigation:
Wind-Down General License for Newly Designated SDN Persons. OFAC typically issues a general license authorizing a limited wind-down period — commonly 30 days — for transactions with persons newly added to the SDN List. For the April 6, 2022 round of designations that included Volkhov, OFAC issued General License 19A, which authorized certain wind-down transactions through May 25, 2022 (subsequently extended through June 24, 2022 by GL 19B). This general license would authorize limited wind-down activities relating to existing contracts or agreements with Volkhov or Volkhov-owned entities entered into before April 6, 2022, provided that the wind-down activities are completed within the authorized time period and that all property blocked pursuant to the designation is reported to OFAC in accordance with applicable requirements. This license applies only to the narrow window following the April 6, 2022 SDN designation and does not provide any safe harbor for the historical conduct during the March 2020 – April 2022 period.
General Licenses for Certain Energy Sector Transactions. OFAC has issued several general licenses authorizing specific categories of energy-related transactions involving Russia, including licenses for certain transactions related to energy (GL 8A), for transactions involving certain Russian state-owned entities (GL 9A), and for transactions related to energy (GL 22). These general licenses are narrowly drawn and typically apply to specific counterparties or categories of energy transactions. A careful review of each applicable general license must be conducted to determine whether any of the DTI crude oil swap transactions or oilfield equipment exports fall within their scope.
Preliminary Assessment. Based on a preliminary review of the available general licenses, no general license appears to apply to the bulk of the historical conduct at issue (March 2020 – April 2022). The following considerations support this assessment:
(a) The wind-down general licenses are limited to post-designation transactions and do not provide retroactive authorization for pre-existing violations.
(b) The energy-related general licenses that have been issued are narrowly tailored to specific types of transactions (e.g., transactions necessary for the importation of certain Russian energy products into the United States, or transactions necessary to maintain the safety of energy infrastructure) and do not appear to encompass crude oil swap transactions or oilfield equipment exports of the type conducted by DTI.
(c) The payment structuring through Crescent Commercial Bank intermediary accounts is antithetical to reliance on any general license. OFAC has consistently taken the position that the use of structuring or evasive techniques to circumvent sanctions compliance controls is inconsistent with good-faith reliance on a general license and undermines any safe-harbor argument. Persons who engage in transactions designed to evade or avoid sanctions prohibitions cannot claim the benefit of a general license that would otherwise authorize the underlying transaction in the absence of the evasive conduct.
(d) Even if a general license were facially applicable to certain of the transactions, the apparent knowledge by DTI personnel of the Volkhov connection — suggested by the internal references to Petronova as "the Volkhov vehicle" — would undermine any argument that the transactions were conducted in good faith reliance on a general license or in the absence of knowledge of the sanctions designation.
A definitive analysis of general license applicability will require completion of the factual investigation, including confirmation of the specific commodities, counterparties, and end users involved in each transaction. This analysis will be updated as the investigation progresses.
IV. Criminal Liability Framework
A. International Emergency Economic Powers Act (IEEPA) — 50 U.S.C. §§ 1701–1706
The International Emergency Economic Powers Act provides both civil and criminal penalties for violations of sanctions regulations and executive orders issued pursuant to IEEPA authority. IEEPA is the principal criminal statute under which sanctions violations are prosecuted.
Criminal Penalties — 50 U.S.C. § 1705(c). Section 1705(c) provides that a person who willfully commits, willfully attempts to commit, or willfully conspires to commit, or aids or abets in the commission of, an unlawful act described in subsection (a) — i.e., a violation of any license, order, regulation, or prohibition issued under IEEPA — shall, upon conviction, be fined not more than $1,000,000, or, if a natural person, may be imprisoned for not more than 20 years, or both. The maximum fine for corporate entities is $1,000,000 per violation; for natural persons, the maximum fine is the greater of $1,000,000 or twice the amount of the transaction that is the basis of the violation, pursuant to the alternative fines provision of 18 U.S.C. § 3571(d). Given the notional value of the transactions at issue ($218.7 million total; $156.3 million for the 9 tainted transactions), the potential criminal fine exposure for Dunmore is substantial.
Civil Penalties — 50 U.S.C. § 1705(b). Section 1705(b) provides for civil penalties of up to the greater of $356,579 per violation (as adjusted for inflation pursuant to the Federal Civil Penalties Inflation Adjustment Act, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015) or twice the amount of the transaction that is the basis of the violation. Civil penalties are administered by OFAC through an administrative enforcement process and do not require a finding of willfulness — negligent or reckless conduct is sufficient. The OFAC civil enforcement framework is discussed in Section VI below.
DOJ Prosecutorial Authority. Criminal IEEPA prosecutions are handled by the DOJ National Security Division, Counterintelligence and Export Control Section ("CES"). The CES has primary jurisdiction over sanctions enforcement cases involving national security dimensions, including Russia-related sanctions violations. The present inquiry is being handled by the following DOJ personnel:
• AUSA Meredith Calloway, lead prosecutor, DOJ National Security Division, CES;
• Trial Attorney Samuel Kovacs, DOJ National Security Division, CES;
• Trial Attorney Diana Pressman, DOJ National Security Division, CES; and
• FBI Special Agent Paul Reinhardt, FBI Counterintelligence Division, Washington Field Office, serving as the case agent.
The involvement of the DOJ National Security Division and the FBI Counterintelligence Division underscores the seriousness with which the government views the potential violations. The use of a grand jury subpoena (GJ No. 22-418) in the initial stage of the inquiry indicates that DOJ is actively investigating potential criminal violations, not merely conducting a preliminary assessment.
B. Willfulness Standard
The threshold element that distinguishes criminal from civil liability under IEEPA is willfulness. Criminal penalties under 50 U.S.C. § 1705(c) require proof that the defendant acted "willfully" — that is, with knowledge that the conduct was unlawful, or with deliberate indifference to the legality of the conduct. See United States v. Hossain, 538 F. Supp. 3d 72 (D. Mass. 2021) (discussing willfulness standard under IEEPA); United States v. Banki, 685 F.3d 99 (2d Cir. 2012) (holding that IEEPA willfulness requires proof that the defendant "knew that his conduct was unlawful"). The government does not need to prove that the defendant had specific knowledge of the particular regulation or executive order provision that was violated; rather, it is sufficient to demonstrate that the defendant was aware, or deliberately avoided becoming aware, that the conduct was generally prohibited by law.
The willfulness inquiry is the central evidentiary question in evaluating Dunmore's criminal exposure. The following factual considerations bear on the willfulness analysis:
Knowledge of Sanctions Designations. Whether Derek Hargrave, Natasha Sorokin, or other DTI personnel knew or should have known about Volkhov's sanctions designations (the Directive 2 SSI designation effective November 15, 2019) and the ties between Petronova/Zenith Petroleum and Volkhov Industrial Group. Several preliminary indicators suggest potential knowledge:
(i) The internal DTI communications in which Natasha Sorokin referred to Petronova as "the Volkhov vehicle" in messages to Derek Hargrave, which, if authenticated, would constitute direct evidence that at least two senior DTI employees were aware of the Volkhov-Petronova connection.
(ii) Sorokin's role as the primary point of contact with Sergei Volkov of Petronova. The frequency and nature of her communications with Volkov — including in-person meetings in Dubai, Moscow, and Istanbul — suggest a level of familiarity with the counterparty that would be inconsistent with ignorance of the Volkhov connection. Sorokin's Russian-American dual nationality and her fluency in Russian further suggest that she was likely aware of publicly available information regarding Arkady Volkhov's prominence in the Russian energy sector and the sanctions designations targeting Volkhov entities.
(iii) The timing of the payment structuring through Crescent Commercial Bank intermediary accounts, which escalated after Volkhov's November 2019 SSI designation, suggesting awareness of the sanctions risk and a deliberate effort to circumvent compliance controls.
Payment Structuring as Circumstantial Evidence of Willfulness. The $34.2 million in structured payments across 127 transactions routed through intermediary accounts at Crescent Commercial Bank PJSC constitutes significant circumstantial evidence of willfulness. Payment structuring designed to evade sanctions detection mechanisms reflects affirmative steps to conceal the nature of the counterparties and the ultimate beneficiaries of the transactions. Courts have recognized that evidence of concealment, structuring, and the use of intermediaries to obscure prohibited transactions supports an inference of knowledge of illegality. See, e.g., United States v. Zarrab, No. 15-cr-867 (S.D.N.Y.) (discussing the use of intermediary banks and front companies as evidence of willful sanctions evasion); United States v. Halkbank, No. 19-cr-395 (S.D.N.Y.) (similar). The fact that the structuring appears to have been systematic and sustained over a two-year period further strengthens the inference of willfulness.
Compliance Program Failures. Gerald Fisk's compliance failures and the apparent inadequacy of Dunmore's OFAC screening protocols during the relevant period bear on the willfulness analysis at the corporate level. If Dunmore's compliance infrastructure was deliberately designed to be inadequate — or if compliance red flags were deliberately ignored — that would support a finding of corporate willfulness. Conversely, if the compliance failures were the result of negligence or resource constraints rather than deliberate avoidance, the willfulness analysis at the corporate level may be less clear-cut, though individual willfulness on the part of specific employees (particularly Sorokin and Hargrave) may still be established. The adequacy of Dunmore's compliance program is addressed in Nicholas Ferreira's memorandum dated August 15, 2022 (Sanctions Compliance Program Assessment — Dunmore Energy Holdings Ltd.), and the Sorokin trading activity is the subject of a separate memorandum dated September 10, 2022.
C. Corporate Criminal Liability
Under the doctrine of respondeat superior, a corporation may be held criminally liable for violations of law committed by its employees or agents acting within the scope of their employment and for the benefit of the company. See New York Central & Hudson River Railroad Co. v. United States, 212 U.S. 481 (1909); United States v. Harborline Enterprises Hotels Corp., 467 F.2d 1000 (9th Cir. 1972). If DTI employees — including Derek Hargrave, Natasha Sorokin, Omar Al-Rashidi, Yves Leclerc, or Rajesh Malhotra — committed IEEPA violations while acting within the scope of their employment and with the intent to benefit DTI or Dunmore, then the corporation may be charged under respondeat superior principles.
The DOJ's exercise of charging discretion in corporate criminal cases is guided by the DOJ Corporate Enforcement Policy (updated September 2022) and the DOJ Evaluation of Corporate Compliance Programs (updated March 2023). These policy documents establish the framework the government will use to evaluate whether to charge the corporation, negotiate a deferred prosecution agreement ("DPA") or non-prosecution agreement ("NPA"), or decline prosecution. The key factors considered include:
(a) Voluntary self-disclosure. Whether the company voluntarily and promptly disclosed the violations to the government. Under the Corporate Enforcement Policy, voluntary self-disclosure of criminal conduct is the most significant factor favoring a declination of prosecution. Absent aggravating factors, companies that voluntarily self-disclose, fully cooperate, and timely remediate may receive a presumption of declination.
(b) Full cooperation. Whether the company has provided full, proactive, and timely cooperation with the government investigation, including the production of all relevant documents, the identification and making available of key witnesses, and the disclosure of all relevant facts. Cooperation must be genuine, not selective or incomplete.
(c) Timely and appropriate remediation. Whether the company has taken timely and appropriate remedial measures, including the implementation or enhancement of an effective compliance program, the discipline of responsible employees, and any necessary changes to corporate governance and internal controls.
(d) Disgorgement of ill-gotten gains. Whether the company is willing to disgorge the profits attributable to the criminal conduct. Disgorgement is typically a prerequisite for a declination or favorable resolution.
(e) Nature and seriousness of the offense. The nature and severity of the violations, including the duration and scale of the conduct, the number of transactions involved, and whether the conduct involved a pervasive disregard for the law rather than isolated or aberrational behavior.
(f) Adequacy of the compliance program. Whether the company had an effective compliance program at the time of the violations and whether the compliance program has since been enhanced. A compliance program that was merely a "paper program" and did not function effectively will weigh against the company; a program that was genuinely designed and implemented to prevent and detect sanctions violations but was circumvented by rogue employees may weigh in the company's favor.
Factors Favoring Declination. To the extent that Dunmore can demonstrate the following, the investigation team should develop a narrative supporting a declination or, alternatively, a DPA with favorable terms:
(i) Voluntary self-disclosure — either through a formal VSD to OFAC or through the initial proffer to DOJ, or both;
(ii) Full and proactive cooperation with the DOJ investigation, in