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Financial Services Law Insights and Observations

OFAC sanctions Hizballah-associated Lebanon-based companies

Financial Crimes OFAC Department of Treasury Of Interest to Non-US Persons Sanctions OFAC Designations

Financial Crimes

On September 17, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13224 against two Lebanon-based companies for being owned, controlled, or directed by Hizballah. According to OFAC, the two companies are leveraged by Hizballah “to conceal money transfers to Hizballah’s own accounts,” which “further enrich[es] Hizballah’s leadership and supporters, and depriv[es] the Lebanese people of much-needed funds.” These sanctions are part of Treasury’s continuing efforts to disrupt the full range of Hizballah’s illicit financial activity. Since 2017, OFAC has designated more than 90 Hizballah-affiliated individuals and entities. As a result of the sanctions, all property and interests in property of the individuals, “and of any entities that are owned, directly or indirectly, 50 percent or more by them, individually, or with other blocked persons, that are in the United States or in the possession or control of U.S. persons, are blocked and must be reported to OFAC.” OFAC noted that its regulations “generally prohibit” U.S. persons from participating in transactions with the designated individuals, including “the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person or the receipt of any contribution or provision of funds, goods or services from any such person.” OFAC further warned that engaging in certain transactions with the designated individuals subjects persons to the risk of secondary sanctions pursuant to E.O. 13224 and the Hizballah Financial Sanctions Regulations, which implement the Hizballah International Financing Prevention Act of 2015. Furthermore, OFAC noted that it has the authority to “prohibit or impose strict conditions on the opening or maintaining in the United States of a correspondent account or a payable-through account by a foreign financial institution that knowingly facilitates a significant transaction for a terrorist group like Hizballah, or a person acting on behalf of or at the direction of, or owned or controlled by, [a Specially Designated Global Terrorist] such as Hizballah.”

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