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  • OFAC sanctions key financial facilitator for ISIS-K

    Financial Crimes

    On November 22, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order (E.O.) 13224, as amended, against an individual it claims is acting as a financial facilitator for the Islamic State’s Khorasan Province (ISIS-K). According to OFAC, ISIS-K was previously designated as a Specially Designated Global Terrorist under E.O. 13224, and as a Foreign Terrorist Organization by the Department of State in 2016. The designated individual, OFAC stated, has provided support to ISIS-K’s Afghani operations “by facilitating international financial transactions that fund human trafficking networks and facilitating the movement of foreign fighters who seek to escalate tensions in Afghanistan and the region.” According to OFAC Director Andrea Gacki, this designation “underscores the United States’ determination to prevent ISIS-K and its members from exploiting the international financial system to support terrorist acts in Afghanistan and beyond.” OFAC’s action was handled in coordination with the Department of State, which designated three individuals as Specially Designated Global Terrorists for their roles as leaders of ISIS-K.

    As a result, all property and interests in property belonging to the designated individual subject to U.S. jurisdiction are blocked, and 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 must be blocked and report to OFAC.” U.S. persons are generally prohibited from engaging in transactions with the designated individual unless authorized by a general or specific OFAC license or otherwise exempt. OFAC warned that the agency “can prohibit or impose strict conditions on the opening or maintaining in the United State[s] of a correspondent account or a payable-through account by a foreign financial institution that either knowingly conducted or facilitated any significant transaction on behalf of a Specially Designated Global Terrorist.” OFAC further noted that that engaging in certain transactions with the designated individual “entails risk of secondary sanctions pursuant to E.O. 13224, as amended.”

    Financial Crimes OFAC Department of Treasury OFAC Designations OFAC Sanctions SDN List Department of State

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  • Biden terminates Burundi sanctions program

    Financial Crimes

    On November 18, President Biden signed Executive Order (E.O.) “Termination of Emergency With Respect to the Situation in Burundi” to terminate a 2015 emergency declared in E.O. 13712 and revoke the authorization of sanctions with respect to Burundi. (See also OFAC’s announcement here.) According to Deputy Secretary of the Treasury Wally Adeyemo, the steps are a result of changed circumstances and positive political developments and reforms taken by President Ndayishimiye, who continues “to press the Government of Burundi to improve the human rights situation in the country and hold accountable those responsible for violations and abuses.” Adeyemo added that the revocation demonstrates that the U.S. “may ease or remove sanctions when circumstances warrant such an adjustment, including in cases where relevant parties change their behavior.” As a result, all persons previously blocked pursuant solely to the Burundi Sanctions Regulations are now removed from OFAC’s Specially Designated Nationals and Blocked Persons List, and all property and interests in property blocked solely pursuant to these regulations are unblocked. Additionally, OFAC will remove the Burundi Sanctions Regulations from the Code of Federal Regulations in the future. However, “[p]ending or future OFAC enforcement investigations or actions related to apparent violations of the Burundi Sanctions Regulations that occurred while E.O. 13712 was in effect may still be carried out,” Treasury stated.

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

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  • FinCEN hosts exchange on environmental crimes and related financial activity

    Financial Crimes

    On November 16, the Financial Crimes Enforcement Network (FinCEN) held a virtual “FinCEN Exchange” with representatives from financial institutions, other key industry stakeholders, and federal government agencies to discuss identifying and combating illicit financial flows related to environmental crimes and related money laundering. As previously covered by InfoBytes, FinCEN released the “FinCEN Exchange” program in 2017, which established regular briefings between FinCEN, law enforcement, and financial institutions to share high-priority information regarding potential national security threats and illicit financial transactions. Topics discussed at the recent FinCEN Exchange included, among other things: (i) illicit financial flows related to wildlife trafficking; (ii) illegal logging, fishing, and mining; (iii) waste and hazardous substances trafficking; and (vi) potential solutions for better understanding the associated illicit flows. According to FinCEN, the agency “is focusing on environmental crimes because of an upward trend in these activities and their related financial flows; their strong association with two of FinCEN’s national anti-money laundering and countering the financing of terrorism (AML/CFT) priorities, specifically corruption and transnational criminal organizations; and their contribution to the climate and biodiversity crises.”

    Financial Crimes FinCEN Of Interest to Non-US Persons Anti-Money Laundering Combating the Financing of Terrorism

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  • OFAC sanctions nine Nicaraguan officials and one entity

    Financial Crimes

    On November 15, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13851 against nine officials of the Nicaraguan government and one entity for allegedly engaging in actions or policies that undermine democratic processes or institutions in Nicaragua. According to OFAC, the designations “target[ed] those who are repressing Nicaraguans for exercising their human rights and fundamental freedoms.” As a result, all property and interests in property of the sanctioned individuals and entities, and any entities that own, directly or indirectly, 50 percent or more of such persons subject to U.S. jurisdiction, are blocked and must be reported to OFAC. U.S. persons are also generally prohibited from entering into transactions with the sanctioned persons.

    Financial Crimes OFAC Nicaragua Of Interest to Non-US Persons Department of Treasury OFAC Sanctions SDN List

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  • OFAC designates entities and individuals, issues general license and related Ethiopian FAQs

    Financial Crimes

    On November 12, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order (E.O.) 14046 against four entities and two individuals associated with the military conflict and human rights crisis in Ethiopia. OFAC noted that the E.O., which was signed by President Biden on September 17, authorized targeting of actors that contribute to the ongoing crisis in Ethiopia and is not directed at Ethiopian or Eritrean people (covered by InfoBytes here). As a result of the sanctions, all property and interests in property belonging to the sanctioned entities and individuals subject to U.S. jurisdiction are blocked and must be reported to OFAC. OFAC further noted that no entity is to be blocked “pursuant to E.O. 14046 solely because it is owned in whole or in part, directly or indirectly, by one or more sanctioned persons, unless the entity is itself a sanctioned person.”

    The same day, OFAC issued Ethiopia General License 4, “Authorizing the Wind Down of Transactions Involving Hidri Trust or Red Sea Trading Corporation,” which are two of the four entities for which sanctions were announced.  Ethiopia General License 4 authorizes “all transactions and activities prohibited by Executive Order (E.O.) 14046 that are ordinarily incident and necessary to the wind down of transactions involving Hidri Trust or Red Sea Trading Corporation” through December 14, provided certain criteria are met. OFAC also updated FAQ 927, which provides clarification on non-U.S. persons’ risk exposure to U.S. sanctions for engaging in transactions and activities that would be authorized for U.S. persons pursuant to the prior E.O. of September 17. Additionally, OFAC published two new FAQs (935 and 936), which provide further information on Ethiopia-related sanctions.

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

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  • FinCEN final rule updates reporting and recordkeeping requirements

    Financial Crimes

    On November 15, the Financial Crimes Enforcement Network (FinCEN) published a final rule in the Federal Register, which updates regulation 31 CFR 1010.370 to mirror statutory amendments to Section 5326 of the Bank Security Act (BSA). Specifically, Section 5326 has been amended three times (in 1992, 2001, and 2017) to expand the authority of the Secretary of the Department of the Treasury. The final rule updates the regulation to reflect the subsequent statutory amendments by, among other things, updating the authority of FinCEN to issue orders imposing additional reporting and recordkeeping requirements on financial institutions and nonfinancial trades or businesses in a geographic area. The final rule also notes that since the amendments promulgated by the rule conform the regulation to the statute and reflect no discretionary or substantive determination, no public comment was solicited; therefore, the final rule is effective immediately.

    Financial Crimes Bank Secrecy Act FinCEN Of Interest to Non-US Persons Federal Register Department of Treasury

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  • President Biden extends national emergency prohibiting securities investments in Chinese military companies

    Financial Crimes

    On November 9, President Biden issued a notice, extending for one year, the national emergency declared pursuant to Executive Order (E.O.) 13959, as expanded by E.O. 14032, involving securities investments related to Chinese military companies. As previously covered by InfoBytes, E.O. 14032 generally prohibits U.S. persons from “the purchase or sale of any publicly traded securities, or any securities that are derivative of such securities, or are designed to provide investment exposure to such securities, of” any listed Chinese military company. The E.O. also establishes deadlines for divestment of investments in companies currently listed as Chinese military companies as well as companies that later may be added to the list of Chinese military. Among other things, E.O. 14032 also prohibits any transactions by U.S. persons or within the U.S. that evade or avoid, have the purpose of evading or avoiding, cause a violation of, or attempt to violate the provisions set forth in the order, as well as any conspiracy to violate any of these prohibitions.

    In continuing the national emergency underlying these actions and extending E.O. 14032, Biden stated the “threat from securities investments that finance certain companies of the [People’s Republic of China] and certain uses and development of Chinese surveillance technology continue to pose an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States.”

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

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  • OFAC sanctions Cambodian officials

    Financial Crimes

    On November 10, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13818 against two Cambodian government officials under the Global Magnitsky Human Rights Accountability Act. According to OFAC, the sanctioned individuals, among other things, allegedly conspired to inflate the cost of facilities at a Cambodian naval base and personally benefit from the proceeds. As a result of the sanctions, all property and interests in property belonging to the sanctioned entities subject to U.S. jurisdiction are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” OFAC notes that its regulations generally prohibit U.S. persons from participating in transactions with these persons, which include “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.”

    The same day, OFAC published a Cambodia Business Advisory on High-Risk Investments and Interactions, which addresses two primary areas of risk exposure for U.S. companies: (i) illicit finance activities in Cambodia and related risks for certain sectors; and (ii) involvement with Cambodian entities connected to trafficking in persons, wildlife, and narcotics trafficking in Cambodia and associated risks for certain sectors.

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

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  • UAE bank fined $100 million for Sudanese sanctions violations

    Financial Crimes

    On November 9, NYDFS announced that a United Arab Emirates bank will pay a $100 million penalty to resolve an investigation into payments it allegedly processed through financial institutions in the state, including one of the bank’s New York branches. These transactions, NYDFS stated, were in violation of Sudan-related U.S. sanctions. According to NYDFS’ investigation, the bank instructed employees to avoid including certain details in messages sent between banks that would have linked the transactions to Sudan. By concealing these details, the transactions bypassed other banks’ sanctions filters, which otherwise might have triggered alerts or transaction freezes, NYDFS said. As a result, between 2005 and 2009, the bank illegally processed more than $4 billion of payments tied to Sudan. Following an announcement in 2009 that a Swiss bank used by the bank to process these transactions was being investigated by the New York County District Attorney’s Office for violating economic sanctions rules, the bank closed all U.S. dollar accounts held by Sudanese banks, but failed to disclose the prohibited transactions to NYDFS as required until 2015. NYDFS asserted that “despite having ample notice of the prohibited nature of the Sudan-related [transactions] by 2009,” the bank’s New York branch processed an additional $2.5 million in Sudan-related payments. Under the terms of the consent order, the bank—which was previously cited by NYDFS for anti-money laundering and sanctions compliance deficiencies in a 2018 consent order that included a $40 million fine—is also required to provide a status report on its U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) compliance program, in addition to paying the $100 million penalty. NYDFS acknowledged the bank’s substantial cooperation and ongoing remedial efforts.

    NYDFS coordinated its investigation with the Federal Reserve Board and OFAC, both of which announced separate settlements with the UAE bank the same day. The Fed’s announcement of its order to cease and desist cites the bank for having insufficient policies and procedures in place to ensure that activities involving branches outside the U.S. were in compliance with U.S. sanctions laws. Under the terms of the order, the bank is required, among other things, to implement an enhanced compliance program to ensure global compliance with U.S. sanctions, and must also conduct annual reviews, including a “risk-focused sampling” of its U.S. dollar payments, led by an independent external party. The order did not include any additional monetary penalties for the bank.

    OFAC also issued a finding of violation (FOV) for violations of the now-repealed Sudanese Sanctions Regulations related to the bank’s actions. These violations included 1,760 transactions that involved USD transfers from Sudanese banks that were processed by the bank’s London branch and routed through U.S. banks. In determining that the appropriate administrative action was an FOV rather than a civil monetary penalty, OFAC stated the bank “voluntarily entered into a retroactive statute of limitations waiver agreement, without which OFAC would have been time-barred from charging the violations.” Because the payment messages did not include the originating Sudanese bank, U.S. correspondent banking partners “could not interdict the payments, and the payments were successfully processed through the U.S. financial system,” OFAC stated. However, OFAC credited the bank with providing substantial cooperation during the investigation, and noted that the bank had taken “extensive remediation” efforts before the investigation began in 2015, and has spent more than $122 million on compliance enhancements.

    Financial Crimes Of Interest to Non-US Persons OFAC Department of Treasury NYDFS OFAC Sanctions Sudan Enforcement Bank Regulatory Federal Reserve State Issues

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  • FinCEN hosts exchange on SAR reporting

    Financial Crimes

    On November 9, the Financial Crimes Enforcement Network (FinCEN) held a virtual “FinCEN Exchange” with members of the financial industry and law enforcement “to discuss FinCEN’s analysis of suspicious activity reporting (SAR) with a transactional nexus to Alabama, Florida, Georgia, Mississippi, and South Carolina.” As previously covered by InfoBytes, SAR Stats—formerly called By the Numbers—is an annual compilation of numerical data gathered from SARs filed by financial institutions using FinCEN’s new unified SAR form and e-filing process. According to FinCEN, analysis of certain Bank Secrecy Act filing statistics for SARs and an analysis of SAR filings related to recent FinCEN advisories were among the topics discussed. FinCEN also noted that this FinCEN Exchange “supports one of FinCEN’s highest priorities—to strengthen public-private partnerships to identify and mitigate threats in order to safeguard our national security and protect communities and citizens from harm.”

    Financial Crimes FinCEN SARs Bank Secrecy Act

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