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  • OCC releases enforcement actions

    On May 19, the OCC released a list of recent enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with such entities. Included is a cease and desist order against an Alaska-based bank for allegedly engaging in Bank Secrecy Act/anti-money laundering (BSA/AML) program violations. The bank allegedly “failed to adopt and implement a compliance program that adequately covers the required BSA/AML program elements, including, in particular, internal controls for customer due diligence and procedures for monitoring suspicious activity, BSA officer and staff, and training.” The order requires the bank to, among other things, establish a compliance committee, submit a BSA/AML action plan, and develop a written suspicious activity monitoring and reporting program.

    Bank Regulatory Federal Issues Financial Crimes Anti-Money Laundering OCC Enforcement Bank Secrecy Act SARs

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  • Counter ISIS Finance Group continues efforts to isolate ISIS from international financial system

    Financial Crimes

    On May 17, the U.S. Treasury Department announced the release of a joint statement by members of the Counter ISIS Finance Group (CIFG) of the Global Coalition to Defeat ISIS, which coordinates efforts to isolate the Islamic State of Iraq and Syria (ISIS) from the international financial system and eliminate revenue sources. CIFG held its sixteenth meeting on May 9 to discuss ongoing efforts to combat ISIS financing worldwide. According to the statement, the Coalition is focusing “on disrupting international ISIS funds transfers and dismantling ISIS finance networks that support extremist activities, including terrorist attacks, militant recruitment, and promotion of violent ideology.”

    During the meeting, participants discussed that, despite having access to at least 25 million U.S. dollars in reserves, ISIS Core in Syria and Iraq is struggling to meet its financial obligations, as its expenditures exceed its income. CIFG also noted that Africa has emerged as a center of gravity for ISIS, and “the branches and networks in Africa generally have precarious finances and typically rely on local fundraising schemes.” CIFG further stressed the importance to “remain vigilant” to “deepen our understanding of ISIS’s financial operations, emerging financial threats, and activities.”

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

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  • Treasury says foreign financial institutions risk sanctions if they provide material support to Russia

    Financial Crimes

    On May 13, Deputy Secretary of the Treasury Wally Adeyemo warned representatives from several foreign financial institutions about the risks of aiding Russia in evading sanctions imposed by the U.S. and its allies following the country’s invasion of Ukraine. Adeyemo emphasized that institutions may face “sanctions exposure for providing material support to a sanctioned entity,” and stressed that the U.S. Treasury Department’s Office of Foreign Assets Control “expects all financial institutions to do their own due diligence to ensure they are not transacting with a sanctioned person.”

    Financial Crimes Of Interest to Non-US Persons Department of Treasury Illicit Finance Russia Ukraine Ukraine Invasion OFAC Sanctions

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  • Treasury issues 2022 national illicit finance strategy

    Financial Crimes

    On May 13, the U.S. Treasury Department issued the 2022 National Strategy for Combatting Terrorist and Other Illicit Financing (2022 Strategy). As required by federal law, the 2022 Strategy describes current U.S. government efforts to combat domestic and international illicit finance threats from terrorist financing, proliferation financing, and money laundering, and discusses potential risks, priorities and objectives, as well as areas for improvement. Among other things, the 2022 Strategy reflects challenges posed by the Covid-19 pandemic, the increasing digitization of financial services, and rising levels of corruption and fraud. Specifically, Treasury noted that 2022 risk assessments highlights threats “posed by the abuse of legal entities, the complicity of professionals that misuse their positions or businesses, small-sum funding of domestic violent extremism networks, the effective use of front and shell companies in proliferation finance, and the exploitation of the digital economy.”

    According to Treasury, the 2022 Strategy, along with the agency’s 2022 National Money Laundering Risk Assessment (covered by InfoBytes here), “will assist financial institutions in assessing the illicit finance risk exposure of their businesses and support the construction and maintenance of a risk-based approach to countering illicit finance for government agencies and policymakers.”

    Specifically, to protect the U.S. financial system from corruption and other illicit finance threats, the 2022 Strategy outlined four priorities and 14 supporting actions to address these threats. These include:

    • closing legal and regulatory gaps in the U.S. anti-money laundering/counter the financing of terrorism (AML/CFT) framework that are used to anonymously access the U.S. financial system through shell companies and all-cash real estate purchases;
    • increasing the efficiency of the U.S. AML/CFT regulatory framework “by providing clear compliance guidance, sharing information appropriately, and fully funding supervision and enforcement”;
    • enhancing the operational effectiveness of law enforcement, other U.S. government agencies, and international partnerships to prevent illicit actors from accessing safe havens; and
    • enabling technological innovation while mitigating risk to stay ahead of new avenues for abuse through virtual assets and other new financial products, services, and activities.

    The same day the U.S. and Mexico announced their commitment to establish a working group on anti-corruption, which will primarily focus on high-level strategic responses to public corruption. The announcement follows a recent agreement between delegates from the two countries to continue expanding information-sharing efforts to improve bilateral efforts for countering illicit finance.

    Financial Crimes Of Interest to Non-US Persons Department of Treasury Illicit Finance Risk Management Anti-Money Laundering Combating the Financing of Terrorism Covid-19

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  • OFAC updates Syrian sanctions guidance; issues DPRK advisory on information technology workers

    Financial Crimes

    On May 12, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) amended  a Frequently Asked Question (FAQ) and published a new General License (GL) regarding Syrian sanctions. Back in April (covered by InfoBytes here), OFAC published FAQ 884, which relates to non-U.S. persons’ (including nongovernmental organizations and foreign financial institutions) exposure to U.S. secondary sanctions under the Caesar Syrian Civilian Protection act of 2019 (Caesar Act). Specifically, FAQ 884 addresses sanctions exposure for activities authorized under the Syrian Sanctions Regulations. OFAC’s recent update of FAQ 884 clarifies that “OFAC will not consider transactions to be ‘significant’ for the purpose of a sanctions determination under the Caesar Act if U.S. persons would not require a specific license from OFAC to participate in such a transaction.” Additionally, GL 22 now authorizes “activities in certain economic sectors in non-regime held areas of Northeast and Northwest Syria.”

    Later in the week, OFAC announced that Treasury, the Department of State, and the FBI issued an advisory regarding an attempt by the Democratic People’s Republic of Korea (DPRK) and DPRK information technology (IT) workers to obtain employment while posing as non-DPRK nationals. Among other things, the advisory provides information on how DPRK IT workers operate and identifies red flags for companies to avoid hiring DPRK freelance developers. A Fact Sheet was also published to provide information on the advisory.

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

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  • OFAC sanctions ISIS facilitators

    Financial Crimes

    On May 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13224 against five Islamic State of Iraq and Syria (ISIS) financial facilitators operating across Indonesia, Syria, and Turkey for allegedly supporting financial transfers connected to ISIS efforts in Syria-based displaced persons camps by collecting funds in Indonesia and Turkey. As a result of the sanctions, all property and interests in property of the designated individuals within U.S. jurisdiction must be blocked and reported to OFAC. OFAC further noted that its regulations “generally prohibit” U.S. persons or persons within the United States from participating in transactions with the designated persons and warned foreign financial institutions that if they knowingly facilitate significant transactions for any of the designated individuals, OFAC may prohibit or impose strict conditions on the opening or maintaining of a U.S. correspondent account or payable-through account.

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

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  • DOJ seizes $300 million yacht as part of Task Force KleptoCapture; OFAC issues Russia-related general licenses and updated FAQs

    Financial Crimes

    On May 5, the DOJ executed a seizure warrant freezing a $300 million yacht owned by a sanctioned Russian oligarch, following a determination that the yacht is subject to forfeiture based on probable cause of violations of U.S. law, including the International Emergency Economic Powers Act, money laundering and conspiracy. The Russian oligarch was designated in 2018 by the U.S. Treasury Department’s Office of Foreign Assets Control pursuant to the Countering America’s Adversaries Through Sanctions Act and Executive Order (E.O.) 13582 (covered by InfoBytes here). According to the DOJ’s announcement, the sanctioned oligarch owned the yacht after his designation and “caused U.S. dollar transactions to be routed through U.S. financial institutions for the support and maintenance of the [yacht].” The seizure was coordinated through the DOJ’s Task Force KleptoCapture, which is “an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export controls, and economic countermeasures that the United States, along with its foreign allies and partners, have imposed in response to Russia’s unprovoked military invasion of Ukraine” (covered by InfoBytes here.)

    The same day OFAC also issued several Russia-related general licenses (GL), including GL 7A, which authorizes “transactions ordinarily incident and necessary to the receipt of, and payment of charges for, services rendered in connection with overflights of the Russian Federation or emergency landings in the Russian Federation by aircraft registered in the United States or owned or controlled by, or chartered to, U.S. persons that are prohibited by the Russian Harmful Foreign Activities Sanctions Regulations”; GL 26A, which authorizes all transactions ordinarily incident and necessary to the wind down of transactions involving Joint Stock Company SB Sberbank Kazakhstan or Sberbank Europe AG, or any entity that Sberbank subsidiaries owns, through July 12, provided certain criteria are met; GL 31, which authorizes certain transactions related to patents, trademarks, copyrights, or other forms of intellectual property protections in the U.S. or Russia that would otherwise be prohibited; and GL 32, which authorizes the wind down of transactions involving Amsterdam Trade Bank NV that would ordinarily be prohibited by E.O. 14024 through July 12. Additionally, OFAC issued one new and one amended Russia-related frequently asked questions.

    Financial Crimes OFAC Department of Treasury DOJ Of Interest to Non-US Persons Ukraine Russia Ukraine Invasion OFAC Sanctions OFAC Designations

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  • OFAC announces first-ever sanctions against virtual currency mixer

    Financial Crimes

    On May 6, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13722 against a virtual currency mixer used by the Democratic People’s Republic of Korea (DPRK) to support its cyber activities and money-laundering. According to OFAC, in March, a DPRK state-sponsored cyber-hacking group carried out the largest virtual currency heist to date, worth almost $620 million, from a blockchain project linked to an online game. The virtual currency mixer was used to process over $20.5 million of the illicit proceeds. OFAC noted that the sanctions are the first-ever sanctions on a virtual currency mixer. 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.” U.S. persons are generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons.

    Financial Crimes OFAC Department of Treasury North Korea SDN List Virtual Currency Digital Assets OFAC Sanctions OFAC Designations Of Interest to Non-US Persons

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  • OFAC issues Russian sanctions, general licenses, and expanded E.O.s

    Financial Crimes

    On May 8, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced “sweeping” sanctions, which include the designations of board members from two of Russia’s most important banks, a Russian state-owned bank and 10 of its subsidiaries, a state-supported weapons manufacturer, and three of Russia’s state-controlled television stations that generate revenue for the state. OFAC also published a Determination Pursuant to Section 1(a)(i) of Executive Order (E.O.) 14024 and a Determination Pursuant To Section 1(a)(ii) Of E.O. 14071. According to OFAC's press release, the sanctions, issued pursuant to E.O. 14071, “cut off access to services that are used by the Russian Federation and Russian elites to evade sanctions.” OFAC identified accounting, trust and corporate formation, and management consulting as categories of services that are subject to a prohibition on the export, reexport, sale, or supply, directly or indirectly, from the U.S., or by a U.S. person, wherever located, to any person located in the Russian Federation. Additionally, OFAC determined that these same services sectors of the Russian Federation economy are subject to sanctions pursuant to E.O. 14024. OFAC also issued four Russia-related general licenses (GLs): (i) GL 25A authorizes transactions related to telecommunications and certain internet-based communications; GL 33 authorizes the wind down of operations or existing contracts involving certain blocked entities; GL 34 authorizes the wind down of accounting, trust and corporate formation, and management consulting services; and GL 35 authorizes transactions involving credit rating and auditing services. OFAC also issued a new frequently asked question clarifying transactions related to telecommunications and certain internet-based communications that involve Joint Stock Company Channel One Russia, Television Station Russia-1, or Joint Stock Company NTV Broadcasting Company authorized by Russia-related GL 25A.

    OFAC also recently published amended Russia-related frequently asked questions 1034, 1035, and 1038 clarifying, among other things, (i) terms related to Executive Order (E.O.) 14071’s prohibition on certain accounting, trust and corporate formation, and management consulting services; (ii) what “credit rating services” and “auditing services” mean under General License 35; and (iii) certain activities related to products and services in or involving the Russian Federation in relation to E.O. 14024.

    Find continuing InfoBytes coverage on the U.S. sanctions response to Russia’s invasion of Ukraine here.

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

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  • DOJ to strengthen kleptocracy asset recovery

    Financial Crimes

    On April 28, the DOJ issued a fact sheet outlining legislative proposals to strengthen kleptocracy asset recovery as part of the Biden administration’s efforts “to isolate and target the crimes of Russian officials, government-aligned elites, and those who aid or conceal their unlawful conduct.” The proposed measures would “streamline asset forfeiture proceedings in certain circumstances” and also:

    • Enable the DOJ and Treasury and State Departments to work together to return forfeited kleptocrat funds to remediate harms caused to Ukraine;
    • Expand forfeiture authorities under the International Emergency Economic Powers Act (IEEPA) to include property used to facilitate the violations of sanctions and “amend IEEPA’s penalty provision to extend the existing forfeiture authorities to facilitating property, not just to proceeds of the offenses”;
    • Expand the definition of “racketeering activity” in the Racketeer Influenced and Corrupt Organizations Act to include criminal violations of IEEP and the Export Control Reform Act to improve the U.S.’s ability to investigate and prosecute sanctions evasion and export control violations;
    • Extend the statute of limitations for prosecuting sanctions violations and the statute of limitations for seeking forfeitures based on foreign offenses from five years to 10 years; and
    • Improve the U.S.’s ability to work with international partners to facilitate enforcement of foreign restraint and forfeiture orders for criminal property and improve the ability to take these actions in the U.S.

    As previously covered by InfoBytes, the DOJ launched “Task Force KleptoCapture,” an “interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export restrictions, and economic countermeasures that the United States has imposed, along with allies and partners,” in order to “isolate Russia from global markets” in March. The task force has since engaged in numerous transatlantic efforts to sanction numerous Russian elites, Russia’s largest privately-owned aircraft, and one of the world’s largest superyachts (covered by InfoBytes here), and has “seized approximately $625,000 associated with sanctioned parties held at nine U.S. financial institutions.”

    Find continuing InfoBytes coverage on the U.S. sanctions response to Russia’s invasion of Ukraine here.

    Financial Crimes DOJ Digital Assets Russia Ukraine Ukraine Invasion Of Interest to Non-US Persons Biden RICO OFAC Sanctions Department of Treasury Department of State

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