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  • OFAC sanctions Iranian petrochemical network

    Financial Crimes

    On July 6, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13846 against an international network of individuals and entities for facilitating the delivery and sale of hundreds of millions of dollars’ worth of Iranian petroleum and petrochemical products from Iranian companies to East Asia through a web of Gulf-based front companies. The designations follow OFAC sanctions announced June 16 against a network of Iranian petrochemical producers, as well as front companies in the People’s Republic of China and the United Arab Emirates, working to support Iranian petrochemical sales (covered by InfoBytes here). As a result, all property and interests in property of the sanctioned persons subject to U.S. jurisdiction are blocked and must be reported to OFAC, as well as any entities owned 50 percent or more by such persons. U.S. persons are also generally prohibited from entering into transactions with the sanctioned persons. Additionally, OFAC warned that “any foreign financial institution that knowingly facilitates a significant transaction for any of the individuals or entities designated today could be subject to U.S. sanctions.”

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

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  • OFAC sanctions Iranian petrochemical producers and other supporting entities

    Financial Crimes

    On June 16, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against a network of Iranian petrochemical producers, as well as front companies in the People’s Republic of China (PRC) and the United Arab Emirates (UAE), for supporting two entities connected to the sale of Iranian petrochemicals abroad. According to OFAC, the designated network "helps effectuate international transactions and evade sanctions, supporting the sale of Iranian petrochemical products to customers in the PRC and the rest of East Asia.” As a result, all property and interests in property of the sanctioned persons subject to U.S. jurisdiction are blocked, as well as any entities owned 50 percent or more by such persons. U.S. persons are also generally prohibited from entering into transactions with the sanctioned persons. Additionally, OFAC warned that “any foreign financial institution that knowingly facilitates a significant transaction for any of the individuals or entities designated today could be subject to U.S. sanctions.”

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

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  • OFAC issues FAQs related to securities investments in Chinese military companies

    Financial Crimes

    On June 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) published three new frequently asked questions related to the Chinese military-industrial complex sanctions. As previously covered by InfoBytes, Executive Order 13959, as amended, addressed threats from securities investments that finance Communist Chinese military companies. The FAQs address questions pertaining to (i) whether U.S. financial institutions are required to block the attempted purchase or sale of covered securities after the relevant 365-day divestment period; (ii) whether U.S. financial institutions are permitted to process transactions for holders of covered securities related to stock splits, cash dividends, or dividend reinvestments; and (iii) whether U.S. persons are required to divest their holdings of covered securities before the end of the relevant 365-day divestment period.

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

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  • NYDFS fines money transmitter $8.25 million for AML compliance failures

    State Issues

    On March 16, NYDFS announced the imposition of an $8.25 million fine on a money transmitter alleged to have violated anti-money laundering (“AML”) requirements and New York law by failing to adequately supervise local agents in New York City that processed an unusual volume of suspicious transactions to China. NYDFS conducted an examination and enforcement investigation, which found that the company “did not adequately oversee the activity of six agents that saw a large spike in transaction volume of business with China.” According to the investigation, there were roughly 7,500 transactions aggregating approximately $30 million in 2014. These figures rose to more than 25,000 transactions aggregating more than $100 million during the period between January 2016 and May 2017. Most of these transactions were processed by small, store-front independent agents—“a clear indicator of increased money laundering risk, particularly given that the destination was known to carry a high AML risk,” NYDFS stated, adding that the company should have also addressed risks resulting from a suspicious pattern of different senders transmitting money to the same recipient. NYDFS acknowledged that the company, when alerted to the increased transaction activity, severed its relationship with the problematic agents and implemented remedial measures to improve supervision of its agents. Under the terms of the consent order, the company will pay an $8.25 civil money penalty and is required to submit a report to NYDFS outlining enhancements made with respect to new and existing agents, suspicious activity reporting program, and special transaction limitations. Additionally, NYDFS announced that the company will also update the Department on improvements to the policies and procedures of its Bank Secrecy Act/AML compliance program and will provide data to NYDFS for ongoing monitoring purposes.

    State Issues State Regulators NYDFS Enforcement Compliance Money Service / Money Transmitters Payments Anti-Money Laundering Bank Secrecy Act SARs Of Interest to Non-US Persons China

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  • OFAC adds regulations on Chinese military companies and WMDs

    Financial Crimes

    On February 15, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced that it is adding regulations to implement a November 2020 Executive Order (E.O.), which is related to securities investments that finance Communist Chinese military companies, as amended by a June 2021 E.O. related to the Chinese military-industrial complex and Chinese surveillance technology. As previously covered by InfoBytes, President Biden issued E.O. 14032, “Addressing the Threat from Securities Investments that Finance Communist Chinese Military Companies.” The E.O. took additional steps pursuant to the national emergency declared pursuant to E.O. 13959 (covered by Infobytes here), including the threat posed by the military-industrial complex of the People’s Republic of China (PRC) and “its involvement in military, intelligence, and security research and development programs, and weapons and related equipment production under the PRC’s Military-Civil Fusion strategy.” According to OFAC, with respect to the recent regulations, the agency “intends to supplement these regulations with a more comprehensive set of regulations, which may include additional interpretive guidance and definitions, general licenses, and other regulatory provisions.” The regulations took effect February 16.

    Additionally, OFAC announced that it is publishing an amendment to the Weapons of Mass Destruction Proliferators Sanctions Regulations “to revise an existing general license authorizing the provision of certain legal services and add a general license authorizing payments for legal services from funds originating outside the United States.” (Covered by InfoBytes here.) The amendment also took effect February 16. 

    Financial Crimes OFAC Of Interest to Non-US Persons China Executive Order Biden OFAC Sanctions

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  • House passes America COMPETES Act

    Federal Issues

    On February 4, the U.S. House passed, by a vote of 222-210, the “America Creating Opportunities for Manufacturing Pre-Eminence in Technology and Economic Strength (COMPETES) Act” H.R. 4521, which aims to strengthen the competitiveness of the U.S. economy and U.S. businesses, and counters anti-competitive actions taken by the People’s Republic of China. The COMPETES Act includes provisions affecting financial services, such as:

    • U.S. Policy on World Bank Group and Asian Development Bank Loans to China. This provision would, among other things, direct Treasury to vote against any loans to China from the World Bank or Asian Development Bank under certain circumstances, and allow borrowing countries to seek restructuring of China loans in official multilateral debt relief forums.
    • Prohibitions or Conditions on Certain Transmittal of Funds. This provision would streamline the process by which special measures may be introduced and modernizes the authorities granted to the FinCEN by permitting the agency to pursue bad actors.
    • Study on Chinese Support for Afghan Illicit Finance. This provision would direct Treasury’s Office of Terrorism and Financial Intelligence to brief Congress on the identification and analysis of Chinese economic, commercial, and financial connections to Afghanistan, to include illicit financial networks involved in narcotics trafficking, illicit financial transactions, official corruption, natural resources exploitation, and terrorist networks.
    • Support for Debt Relief for Developing Countries. This provision would direct the Treasury secretary and U.S. representatives at the International Monetary Fund and the World Bank to engage with international financial institutions, official creditors, and relevant commercial creditor groups to advocate for the effective implementation of the G-20’s Common Framework.

    Federal Issues Federal Legislation U.S. House FinCEN Financial Crimes Debt Relief G20 China

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  • OFAC sanctions North Koreans

    Financial Crimes

    On January 12, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13382 against five Democratic People’s Republic of Korea (DPRK) individuals based in Russia and China that OFAC designated as “responsible for procuring goods for the DPRK’s weapons of mass destruction (WMD) and ballistic missile-related programs.” According to OFAC, these sanctions are part of the U.S.’s ongoing efforts to counter the DPRK’s “continued use of overseas representatives to illegally procure goods for weapons.” As a result of the sanctions, all property and interests in property of the sanctioned individuals subject to U.S. jurisdiction 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 person, including transactions transiting the U.S. OFAC’s announcement further warned that any foreign financial institution that knowingly facilitates significant transactions or provides significant financial services for any of the designated individuals may be subject to U.S. correspondent account or payable-through account sanctions.

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

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  • OFAC reaches $5.2 million settlement with Hong Kong company for apparent Iranian sanctions violations

    Financial Crimes

    On January 11, the U.S. Treasury Department’s Office of Foreign Assets Control announced a $5.2 million settlement with a Hong Kong, China-based company for allegedly processing certain transactions related to goods of Iranian origin through U.S. financial institutions in violation of the Iranian Transactions and Sanctions Regulations (ITSR). According to OFAC’s web notice, from August 2016 through May 2018, certain company employees violated company-wide policies and procedures by causing the company to purchase Iranian-origin goods from a supplier in Thailand for resale to buyers in China. Under the terms of the trading arrangement, the company made 60 separate U.S. dollar payments from its bank in Hong Kong to the Thai supplier’s banks in Thailand, transferring a total of $75.6 million. Each of these payments were allegedly “processed and settled through multiple U.S. financial institutions, including the U.S. correspondent banks of the Hong Kong and Thai banks.” Due to the noncompliant employees’ misconduct, the funds transfer instructions omitted references to Iran. As a result, U.S. financial institutions were unable to flag the transfers as violating the ITSR, which would have “caused them to reject and report each of these U.S. dollar denominated funds transfers.”

    In calculating the settlement amount, OFAC considered the following aggravating factors: (i) the noncompliant employees omitted Iranian country of origin references from all relevant transactional documents over a period of two years, despite knowing and having been advised repeatedly that this conduct violated the ITSR and company policy; (ii) the noncompliant employees “had actual knowledge about the [supplier’s] relation to Iran”; (iii) the company’s actions conferred significant economic benefits to Iran, specifically with respect to Iran’s petrochemical sector; and (iv) the company “is a sophisticated offshore trading and cross-border trade financing company with ready access to experience and expertise in international trade, investment, financing, and sanctions compliance.”

    OFAC also considered various mitigating factors, including that (i) the company repeatedly reminded noncompliant employees not to make U.S. dollar payments in connection with Iran-related business transactions; (ii) senior management and compliance personnel were unaware of the violations due to the concealment of the information internally; (iii) the company has not received a penalty notice from OFAC in the preceding five years; and (iv) the company voluntarily self-disclosed the apparent violations, cooperated with OFAC’s investigation, and has undertaken significant remedial measures to ensure sanctions compliance.

    Financial Crimes Of Interest to Non-US Persons OFAC Department of Treasury OFAC Sanctions OFAC Designations Settlement Enforcement Hong Kong Iran China

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  • OFAC sanctions Chinese tech firms

    Financial Crimes

    On December 16, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) added eight Chinese companies to OFAC’s Non-SDN Chinese Military-Industrial Complex Companies sanctions list. The eight Chinese technology firms were identified by OFAC pursuant to E.O. 13959, as expanded by E.O. 14032, for “actively support[ing] the biometric surveillance and tracking of ethnic and religious minorities in China.” As previously covered by InfoBytes, last month President Biden extended, for one year, the national emergency declared pursuant to E.O. 13959, as expanded by E.O. 14032, involving securities investments related to Non-SDN Chinese Military-Industrial Complex Companies. Among other things, 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 such companies. 

    Additionally, the U.S. Commerce Department’s Bureau of Industry and Security issued a final rule, amending the Export Administration Regulations through the addition of 37 new foreign entities to the Entity List after determining the entities have engaged in activities that are “contrary to the foreign policy or national security interests of the United States.” According to OFAC’s announcement, these 37 entities “include 25 PRC entities that contribute to Beijing’s efforts to develop and deploy biotechnology and other technologies for military applications and human rights abuses, including four entities previously identified in E.O. 13959, as amended.”

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

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  • OFAC announces human rights abuse sanctions

    Financial Crimes

    On December 10, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13818 against 15 individuals and 10 entities under the Global Magnitsky Human Rights Accountability Act. According to OFAC, the sanctioned individuals and entities are connected to human rights abuse and repression in several countries. The same day, OFAC announced that it imposed investment restrictions on one company in connection with the surveillance technology sector of the People’s Republic of China’s economy, highlighting the human rights abuses allowed through technology. OFAC also noted that the actions are taken on International Human Rights Day, which marks the day the United Nations General Assembly adopted the Universal Declaration of Human Rights in 1948. 

    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 noted 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.”

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

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