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FinCEN recognizes law enforcement agencies for use of BSA data
On June 24, the Financial Crimes Enforcement Network (FinCEN) honored the recipients of its 2021 Law Enforcement Awards Program, which recognizes agencies that use Bank Secrecy Act (BSA) data provided by financial institutions to successfully pursue and prosecute criminal investigations. The awards were presented in eight different categories related to: (i) Covid-19 fraud; (ii) cyber threats; (iii) transnational organized crime; (iv) transnational security threats; (v) state and local law enforcement; (vi) third-party money launderers; (vii) a suspicious activity review team; and (viii) significant fraud. Awards work included investigation into Paycheck Protection Program fraud that resulted in the seizure of case over $3 million, seizure of over $47 million dollars in narcotics proceeds, and seizure of 300 cryptocurrency accounts, among other work. FinCEN acting Director Michael Mosier stated that “[t]he law enforcement work that we recognize today highlights both the importance of an effective partnership between FinCEN, financial institutions, and our law enforcement agencies, and the value of BSA reporting in protecting the American people from fraud, cybercrime, and the illicit finance threats confronting our nation.”
OFAC issues Covid-19 related general license and FAQs
On June 17, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued three general licenses, Iran GL N, Syria GL 21, and Venezuela GL 39, (referred to as the “COVID-19-related GLs”) to expand upon Treasury’s existing authorizations for Covid-19-related transactions and activities. As previously covered by InfoBytes, OFAC published a Fact Sheet providing guidance to ensure humanitarian-related trade and assistance reaches at-risk populations through legitimate and transparent channels during the global Covid-19 pandemic. The recently released COVID-19-related GLs build on longstanding humanitarian exemptions, exceptions, and authorizations to cover Covid-19-related transactions and activities, which include, among others, “transactions and activities involving the delivery of face masks, ventilators and oxygen tanks, vaccines and the production of vaccines, COVID-19 tests, air filtration systems, and COVID-19-related field hospitals.” These GLs are also part of the Biden Administration’s efforts designated in National Security Memorandum – 1, which directs certain government agencies to review existing U.S. and “multilateral financial and economic sanctions to evaluate whether they are unduly hindering responses to the COVID-19 pandemic worldwide.” According to OFAC, these new authorizations will continue to support the effort by governments, international organizations, non-governmental organizations, and private sector actors in providing Covid-19-related assistance to people in certain sanctioned jurisdictions. OFAC also published six FAQs related to the COVID-19-related GLs (see 906, 907, 908, 909, 910, and 911).
OFAC sanctions network connected to Iran, Houthis in Yemen
On June 10, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13224 against members of a smuggling organization that allegedly contributes to funding Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and the Houthis in Yemen. According to OFAC, the group is led by an Iran-based Houthi financier and generates millions of dollars from selling commodities, such as Iranian petroleum, of which a significant amount is directed through an intricate network of intermediaries in several countries to the Houthis in Yemen. OFAC Director Andrea M. Gacki noted that financial support from the network “enables the Houthis’ deplorable attacks threatening civilian and critical infrastructure in Yemen and Saudi Arabia,” and that the attacks “undermine efforts to bring the conflict to an end and, most tragically, starve tens of millions of innocent civilians.” As a result of the sanctions, all property and interests in property belonging to the sanctioned individuals, and “any entities that are owned, directly or indirectly, 50 percent or more” by the individuals that are subject to U.S. jurisdiction are blocked and must be reported to OFAC. OFAC’s announcement further noted that OFAC regulations “generally prohibit” U.S. persons from participating in transactions with designated persons and foreign financial institutions that knowingly participate in significant transactions related to the designated individuals risk sanctions that could discontinue their access to the U.S. financial system or block their property or interests in property under U.S. jurisdiction.
In addition, OFAC announced the removal of sanctions on three former Government of Iran officials, and two companies who were previously connected to the handlings of Iranian petrochemical products. According to OFAC, “these delistings are a result of a verified change in behavior or status on the part of the sanctioned parties and demonstrate the U.S. government’s commitment to lifting sanctions in the event of a change in behavior or status for sanctioned persons.”
OFAC sanctions individuals connected to Ortega regime
On June 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13851 against four individuals connected to the Ortega regime. According to the announcements, the Ortega regime has undermined democracy, abused civilians’ human rights, implemented corrupt laws with negative economic results, and attempted to censor the independent news media. OFAC Director Andrea M. Gacki, stated that the Ortega regime “intends to continue its suppression of the Nicaraguan people,” and “[t]he United States will continue to expose those officials who continue to ignore the will of its citizens.” As a result of the sanctions, all property and interests in property belonging to the sanctioned individual, and “any entities that are owned, directly or indirectly, 50 percent or more” by the individual that are subject to U.S. jurisdiction are blocked and must be reported to OFAC. OFAC’s announcement further noted that OFAC regulations “generally prohibit” U.S. persons from participating in transactions with designated persons.
President Biden issues executive order blocking U.S. entry by some persons connected to the Western Balkans
On June 8, President Biden issued an Executive Order (E.O.) on “Blocking Property And Suspending Entry Into The United States Of Certain Persons Contributing To The Destabilizing Situation In The Western Balkans.” According to the E.O., expanding the scope will address the national emergency declared in E.O. 13219, “including the undermining of post-war agreements and institutions following the breakup of the former Socialist Federal Republic of Yugoslavia, as well as widespread corruption within various governments and institutions in the Western Balkans, stymies progress toward effective and democratic governance and full integration into transatlantic institutions, and thereby constitutes an unusual and extraordinary threat to the national security and foreign policy of the United States.” The E.O blocks property and interests in property that are in the U.S. or in the possession or control of certain persons who meet one or more of the criteria set forth in the order, including those who are determined, among other things: (i) “to be responsible for or complicit in, or to have directly or indirectly engaged in, actions or policies that threaten the peace, security, stability, or territorial integrity of any area or state in the Western Balkans”; (ii) “to be responsible for or complicit in, or to have directly or indirectly engaged in, actions or policies that undermine democratic processes or institutions in the Western Balkans”; or (iii) “to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any person whose property and interests in property are blocked pursuant to this order.” Additionally, the Treasury Secretary is authorized to take actions, including promulgating rules and regulations, to carry out the purposes of the E.O.
President Biden issues executive order prohibiting securities investments in Chinese military companies
On June 3, President Biden issued Executive Order (E.O.) 14032, “Addressing the Threat from Securities Investments that Finance Communist Chinese Military Companies.” The E.O. takes 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.” The E.O. 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 the 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, the prohibitions apply “except to the extent provided by statutes, or in regulations, orders, directives, or licenses that may be issued pursuant to this order, and not withstanding any contract entered into or any license or permit granted before the date of the order.” The E.O. 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. Additionally, the Treasury Secretary—after consulting with heads of other executive departments as deemed appropriate—is authorized to take actions, including promulgating rules and regulations, to carry out the purposes of the E.O.
OFAC also published eight new FAQs and seven updated FAQs regarding the new E.O. In addition, several names and entities have been added to OFAC’s Non-SDN Chinese Military-Industrial Complex Companies List.
OFAC sanctions Bulgarian individuals and their networks
On June 2, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13818 against three individuals for their extensive roles in corruption in Bulgaria and their networks, which encompasses 64 entities. According to the announcement, this is the single largest action targeting corruption to date. Andrea Gacki, Director of OFAC, noted that the U.S. joins Bulgarians in “promoting accountability for corrupt officials who undermine the economic functions and democratic institutions.” Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” The sanctions also generally prohibit U.S. persons from engaging in any dealings involving the property or interests in property of designated or otherwise blocked persons.
OFAC amends Venezuela-related general license
On June 1, the U.S. Treasury Department’s Office of Foreign Assets Control issued Venezuela-related General License (GL) 8H, which authorizes transactions involving Petróleos de Venezuela, S.A. (PdVSA) necessary for the limited maintenance of essential operations in Venezuela or the wind down of operations in Venezuela for certain entities that would otherwise be prohibited by Executive Order 13850, as incorporated into the Venezuela Sanctions Regulations. (Covered by InfoBytes here.) Effective June 1, GL 8H replaces GL 8G, which was issued November 2020.
OFAC publishes Burma Sanctions Regulations
On May 28, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued the Burma Sanctions Regulations to implement Executive Order (E.O.) 14014, “Blocking Property with Respect to the Situation in Burma.” As previously covered by InfoBytes, President Biden issued E.O. 14014 in February granting OFAC the authority to target any person determined to have operated in the defense sector of the Burmese economy, or any other sector of the economy as determined by the Secretary of the Treasury. Among other things, the Burma Sanctions Regulations provide guidance on (i) prohibited transactions; (ii) general definitions; (iii) interpretations; (iv) licenses and authorizations; (v); reports; (vi) penalties and findings of violations; and (vii) procedures and the delegation of certain authorities to the Treasury secretary. OFAC noted that while the regulations have been published in an abbreviated form to provide “immediate guidance to the public,” it intends to provide a more comprehensive set of regulations in the future that “may include additional interpretive and definitional guidance, general licenses, and other regulatory provisions.”
Swiss bank to pay $79 million to settle money laundering charges
On May 27, the DOJ announced it had entered into a three-year deferred prosecution agreement with a Swiss bank charged with conspiring to commit money laundering, in which the bank agreed to pay more than $79 million after admitting that it “conspired to launder over $36 million in bribes through the United States to soccer officials” in exchange for broadcasting rights to international soccer matches. According to the DOJ, between February 2013 and May 2015, the bank, through a former bank relationship manager (who pleaded guilty in June 2017 for his role in the scheme and was sentenced last November), conspired with sports marketing executives to launder at least $36 million in bribes through the U.S. in order to “conceal the true nature of the payments and promote the fraud.” During this period, the DOJ claimed the bank’s anti-money laundering (AML) controls “failed to detect or prevent money laundering transactions related to the bribery schemes,” and that had the former bank relationship manager’s supervisors or compliance personnel conducted meaningful due diligence they would have been alerted to “multiple, significant red flags, including facially false contracts, payments to third parties at the direction of a [soccer federation] official, and services purportedly rendered by shell corporations—all of which would have alerted the [b]ank to the bribery, money laundering or other illegal activity.” The DOJ further noted that the bank admitted it was aware that the former bank relationship manager’s clients’ accounts were associated with international soccer—an area “generally understood to involve high corruption risks”—but still directed these accounts to be fast tracked in the hopes of obtaining lucrative business.
The terms outlined in the deferred prosecution agreement are based on several factors, the DOJ stated, including the bank’s prior criminal history and the fact that the bank failed to voluntarily disclose the conduct and played a critical rule in the scheme for more than two years. The DOJ further noted that the bank did not receive any cooperation credit because it made misleading representations about relevant facts in the case, which hindered the investigation, and failed to provide all evidence pertaining to the involvement of senior management. However, the bank did receive some credit for making significant efforts to remediate its compliance program and spent $112 million on a three-year AML initiative designed to upgrade all accounts held by the bank, not just high-risk accounts. Under the terms of the agreement, the bank will pay a fine of roughly $43.3 million and forfeit approximately $36.4 million.