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Financial Services Law Insights and Observations

OFAC announces sanctions against Russia-based organization for malware attacks on financial institutions

Financial Crimes OFAC Of Interest to Non-US Persons Sanctions Russia DOJ FinCEN

Financial Crimes

On December 5, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13694 against a Russia-based cybercriminal organization for allegedly developing and distributing malware that infected financial institutions and resulted in more than $100 million in theft. OFAC’s action targets 17 individuals and seven entities and is “intended to disrupt the massive phishing campaigns orchestrated by [the organization],” Treasury Secretary Steven T. Mnuchin stated. According to OFAC, the organization used the malware to infect computers and harvest login credentials from roughly 300 banks and financial institutions in over 40 countries, resulting in millions of dollars of damage to U.S. and international financial institutions and their customers. As a result of the sanctions, all property and interests in property of these persons subject to U.S. jurisdiction are blocked, along with “any entities 50 percent or more owned by one or more designated persons.” OFAC noted that its regulations “generally prohibit” U.S. persons from participating in transactions with designated persons, and warned that “foreign persons may be subject to secondary sanctions for knowingly facilitating a significant transaction or transactions with these designated persons.”

In a concurrent action announced the same day, the DOJ unsealed criminal charges—including those related to international computer hacking and bank fraud schemes—against two of the organization’s members. In addition, Treasury’s Financial Crimes Enforcement Network and the Cybersecurity and Infrastructure Security Agency released a report providing a technical analysis of the malware and related variants, emphasizing that because the malware continues to target the financial services sector, financial institutions should review and incorporate the report’s techniques, tactics, and procedures into existing network defense capabilities and planning.

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