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  • FinCEN, virtual currency exchanger agree to penalty for BSA/AML violations

    Financial Crimes

    On April 18, the Financial Crimes Enforcement Network (FinCEN) announced a civil money penalty against an individual operating as peer-to-peer exchanger for willful violations of Bank Secrecy Act (BSA) money service business (MSB) requirements. According to FinCEN, the exchanger engaged in activities such as (i) advertising his intentions to purchase and sell bitcoin; and (ii) completing transactions using in-person cash payments, currency sent or received in the mail, or wire transfers through the use of a depository institution. These activities, FinCEN claimed, qualified him as a virtual currency exchanger, MSB, and a financial institution under the BSA. As such, the exchanger was required to register as a MSB with FinCEN, establish and implement an effective written anti-money laundering program, detect and file suspicious activity reports, and report currency transactions, which he failed to do. The order requires the exchanger to pay a $35,350 civil money penalty and permanently prohibits him from engaging in any activity that would qualify him as a MSB.

    Financial Crimes FinCEN Bank Secrecy Act Anti-Money Laundering Money Service / Money Transmitters Virtual Currency

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  • Treasury sanctions Venezuela’s central bank and official connected to Maduro regime; sanctions Nicaraguan bank and official

    Financial Crimes

    On April 17, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against Venezuela’s central bank, along with an individual determined to be a current or former official of the Government of Venezuela, for providing support to former President Maduro’s regime. OFAC states that the U.S. “has taken steps to ensure that regular debit and credit card transactions can proceed and personal remittances and humanitarian assistance continue unabated and are able to reach those” affected by the humanitarian crisis in Venezuela. Financial Crimes Enforcement Network advisories FIN-2017-A006, FIN-2017-A003, and FIN-2018-A003 provide additional information concerning the efforts of Venezuelan government agencies and individuals to use the U.S. financial system and real estate market to launder corrupt proceeds, as well as human rights abuses connected to foreign political figures and their financial facilitators. OFAC concurrently issued amendments to existing Venezuela-related general licenses as well as two new general licenses in connection with the designations, including “authorizations to ensure that U.S. persons may continue to engage in and facilitate non-commercial, personal remittances and the provision of humanitarian assistance to the people of Venezuela.”

    Additionally the same day, OFAC designated the Nicaraguan president’s son along with a Nicaraguan bank for actions supporting the Ortega regime. According to OFAC, the bank has, among other things, provided material, technical, and financial support to the previously sanctioned vice president, as well as money laundering assistance to the regime. OFAC also cited to the president’s son’s involvement with foreign investors to provide “preferential access to the Nicaraguan economy.” As a result, all property and interests in property of the sanctioned entities and individuals, and of any entities owned 50 percent or more by them 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 entities and individuals. 

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

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  • FATF releases permanent mandate to combat money laundering and other proliferate financing

    Financial Crimes

    On April 12, the U.S. Department of the Treasury announced that the Financial Action Task Force (FATF) agreed to a permanent mandate for the FATF to continue its work against combating money laundering, terrorist financing, and the financing of the proliferation of weapons of mass destruction. FATF ministers agreed to meet every two years, starting in 2022, to support the commitment to implementing the mandate. Among other things, the mandate states the FATF will (i) develop and refine international standards for combating money laundering; (ii) respond to significant new and emerging threats to the global financial system; (iii) maintain engagement with other international organizations and bodies; and (iv) consult the private sector on matters relating to FATF’s work. The mandate also provides a detailed layout of the organization’s membership composition and internal organization.

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

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  • German-headquartered financial institution to pay $1.3 billion for Iran sanctions violations

    Financial Crimes

    On April 15, U.S. regulators announced settlements totaling $1.3 billion with several banking units of a German-headquartered financial institution to resolve allegations by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), the DOJ, the Federal Reserve Board, the New York Department of Financial Services (NYDFS), and the New York County District Attorney’s Office of apparent violations of multiple sanctions programs, including those related to Burma, Cuba, Iran, Libya, Sudan, and Syria. According to OFAC’s announcement, between January 2007 and December 2011, the institution’s banking units in Germany, Austria, and Italy processed thousands of payments through U.S. financial institutions on behalf of sanctioned entities “in a manner that did not disclose underlying sanctioned persons or countries to U.S. financial institutions which were acting as financial intermediaries.”

    According to the roughly $611 million combined settlement agreements (see here, here, and here), OFAC considered various aggravating factors, and noted, among other things, that the institution’s banking units failed to sufficiently enforce policies addressing OFAC sanctions concerns or restrict the processing of transactions in U.S. dollars involving persons or countries subject to sanctions programs administered by OFAC. Additionally, OFAC asserted that the Austrian banking unit claimed on several occasions that OFAC’s sanctions programs “were not legally binding or relevant to [the bank].” OFAC further stated that while the banking units failed to voluntarily self-disclose the alleged violations, they have each agreed to implement and maintain compliance commitments to minimize the risk of the recurrence of the alleged conduct.

    The approximate $611 million penalty will be deemed satisfied by the banking units’ payments to other U.S. regulators, which includes an almost $317 million forfeiture and roughly $468 million fine to the DOJ, $158 million fine to the Federal Reserve, and $405 million fine to the NYDFS.

    Financial Crimes Of Interest to Non-US Persons OFAC Department of Treasury Settlement Iran Sanctions DOJ Federal Reserve NYDFS

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  • Treasury sanctions key persons in ISIS’ financial network

    Financial Crimes

    On April 15, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against seven individuals and one entity for allegedly providing financial support to the Islamic State of Iraq and Syria (ISIS) operating in Europe, Africa, and the Middle East. According to OFAC, six of the designated individuals, as well as the identified entity, belong to a key ISIS financial facilitation group, which uses “money service businesses to circumvent the formal banking sector” and move funds through financial cells around the globe. The seventh designated individual is a financial facilitator in East Africa. As a result, all property and interests in property of the sanctioned entity and individuals, and of any entities owned 50 percent or more by them 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 entity and individuals. 

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

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  • OFAC imposes additional oil sector sanctions against companies connected to Maduro regime

    Financial Crimes

    On April 12, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against four companies for their alleged involvement in the transportation of oil from Venezuela to Cuba. According to OFAC, the companies’ actions offer support to former President Maduro’s regime and contribute to the humanitarian crisis in Venezuela. In addition, OFAC identified nine vessels as blocked property owned by the identified companies. As a result, all property belonging to the sanctioned entities, and interests in property of the sanctioned entities (or of any entities owned 50 percent or more by them) 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 them. Furthermore, OFAC also referred financial institutions to Financial Crimes Enforcement Network advisories FIN-2017-A006FIN-2017-A003, and FIN-2018-A003 for further information concerning the efforts of Venezuelan government agencies and individuals to use the U.S. financial system and real estate market to launder corrupt proceeds, as well as human rights abuses connected to foreign political figures and their financial facilitators.

    Visit here for continuing InfoBytes coverage of actions related to Venezuela.

    Financial Crimes Of Interest to Non-US Persons OFAC Department of Treasury Settlement Cuba Venezuela Sanctions

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  • U.K. subsea services company and subsidiaries to pay $440,000 for Cuban and Iranian sanctions violations

    Financial Crimes

    On April 11, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced two settlements totaling more than $440,000 with a U.K. subsea services company and certain subsidiaries that operate in the oil and gas industry. The first settlement, for $227,500, resolves potential civil liability for seven alleged violations of the Cuban Assets Control Regulations (CACR). According to OFAC, two of the company/subsidiaries’ Malaysian affiliates produced analytical reports and conducted workshops for oil well drilling projects in Cuban territorial waters related to projects managed by companies including Venezuela’s state-owned oil company, which was previously designated by OFAC in January (see InfoBytes coverage here). OFAC considered various aggravating factors—including that the alleged violations constitute an egregious case—and noted that the company/subsidiaries “willfully violated U.S. sanctions laws and regulations when they knowingly dealt with Cuban interests despite prior notification of their unlawfulness.” OFAC also noted that senior managers “deliberately concealed their dealings with Cuba on multiple occasions.” OFAC considered numerous mitigating factors, including the company/subsidiaries’ voluntarily self-disclosure of the apparent violations and remedial efforts taken to avoid similar violations from occurring in the future.

    The same day OFAC announced a second settlement, this time for $213,866, which resolves potential civil liability for 13 alleged CACR violations. The settlement also resolves three alleged violations of the Iranian Transactions and Sanctions Regulations (ITSR) by the company’s U.S.-based investor-parent company. According to OFAC, the company issued sanctions compliance guidance to all of its subsidiaries with instructions that transactions with Cuba and Iran (including indirect third parties) were prohibited. However, certain subsidiaries disregarded the guidance and allegedly engaged in transactions within Cuban and Iranian territorial waters. In reaching the settlement amount, OFAC determined, among other things, that (i) the company voluntarily self-disclosed the apparent violations; (ii) the alleged violations constitute a non-egregious case; (iii) the subsidiaries have confirmed the conduct has been terminated; and (iv) remedial efforts have been undertaken to minimize the risk of similar violations from occurring in the future.

    Financial Crimes Of Interest to Non-US Persons OFAC Department of Treasury Settlement Cuba Iran Sanctions

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  • OFAC sanctions companies for transporting Venezuelan oil to Cuba

    Financial Crimes

    On April 5, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against two non-U.S. companies for their alleged involvement in the transportation of oil from Venezuela to Cuba. According to OFAC, the companies have engaged in a “barter system,” in which Venezuelan oil supplies are exchanged for Cuban assistance in the form of “political advisors, intelligence and military officials, and medical professionals. . . all of whom” prop up “the illegitimate Maduro regime through oil-for-repression schemes as [an] attempt to keep Maduro in power.” 

    Visit here for continuing InfoBytes coverage of actions related to Venezuela.

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

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  • London-based financial institution to pay $1.1 billion for U.S. sanctions violations

    Financial Crimes

    On April 9, U.S. and U.K regulators announced that a London-based global financial institution would pay $1.1 billion to settle allegations by the DOJ, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), the Federal Reserve Board, the New York Department of Financial Services (NYDFS), the Manhattan District Attorney, and the U.K.’s Financial Conduct Authority (FCA) for allegedly violating multiple sanctions programs, including those related to Burma, Cuba, Iran, Sudan, and Syria. According to the OFAC announcement, from June 2009 until May 2014, the institution processed thousands of transactions involving persons or countries subject to sanctions programs administered by OFAC, but the majority of the actions at issue concern Iran-related accounts maintained by the institution’s Dubai branches. OFAC alleged the Dubai branches processed transactions through the institution’s New York branches on behalf of customers that were physically located or ordinarily resident in Iran.

    According to the $639 million settlement agreement, OFAC noted, among other things, that the institution “acted with reckless disregard and failed to exercise a minimal degree of caution or care” with respect to the actions at issue. Moreover, OFAC alleged that the institution had actual knowledge or reason to know its compliance program was “inadequate to manage the [the institution]’s risk.” OFAC considered numerous mitigating factors, including that the institution’s substantial cooperation throughout the investigation and its undertaking of remedial efforts to avoid similar violations from occurring in the future.

    The $639 million penalty will be deemed satisfied by the institution’s payments to other U.S. regulators, which includes, $240 million forfeiture and $480 million fine to the DOJ, $164 million fine to the Federal Reserve, and $180 million fine to the NYDFS. The institution also settled with the FCA for $133 million. The settlement illustrates the risks to foreign financial institutions associated with compliance lapses when processing transactions through the U.S. financial system.

    Financial Crimes OFAC Department of Treasury Sanctions DOJ Federal Reserve NYDFS UK FCA Settlement Of Interest to Non-US Persons

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  • Ninth Circuit denies rehearing in Wadler FCPA whistleblower retaliation case

    Financial Crimes

    On April 8, the Ninth Circuit denied a petition to rehear its February order affirming most of the jury’s award – $8 million of the original $11 million – in a landmark FCPA whistleblower-retaliation case. The court denied the life sciences manufacturing company’s petition without explanation. 

    For prior coverage of the matter, including an analysis of the Ninth Circuit’s February opinion, please see hereherehere, and here.

    Financial Crimes FCPA Whistleblower

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