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  • OFAC clarifies North Korea SDNs

    Financial Crimes

    On May 13, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) provided clarifying text related to the modified North Korea Sanctions and Policy Enforcement Act (covered by InfoBytes here), which bars foreign subsidiaries of U.S. financial institutions from knowingly engaging in transactions with Specially Designated Nationals (SDNs) identified under North Korea-related authorities. OFAC added the following text to 490 SDN records to assist the private sector in identifying persons that have been so designated: “Transactions Prohibited For Persons Owned or Controlled by U.S. Financial Institutions: North Korea Sanctions Regulations section 510.214.”

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

  • OFAC issues new Venezuela-related general licenses, revokes other

    Financial Crimes

    On May 12, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued two new General Licenses (GL) Venezuela GL 3H, “Authorizing Transactions Related to, Provision of Financing for, and Other Dealings in Certain Bonds,” and GL 9G, “Authorizing Transactions Related to Dealings in Certain Securities.” OFAC removed and revoked GL13E. The changes reflect the need to remove Nynas AB. According to the announcement, Nynas AB “has undertaken a corporate restructuring that has resulted in Nynas AB no longer being blocked pursuant to the Venezuela Sanctions Regulations.” Therefore, U.S. persons can engage in transactions or activities with Nynas AB, “provided such activities do not involve blocked persons or otherwise prohibited activities.” OFAC also made conforming technical updates to two FAQs to reflect the issuance of the new GLs.

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

  • FinCEN renews GTOs covering 12 metropolitan areas

    Financial Crimes

    On May 8, the Financial Crimes Enforcement Network (FinCEN) reissued the renewal of its Geographic Targeting Orders (GTOs). The GTOs require U.S. title insurance companies to identify the natural persons behind shell companies that pay “all cash” (i.e., the transaction does not involve external financing) for residential real estate in the 12 major metropolitan areas covered by the orders. The renewed GTOs are identical to the November 2019 GTOs (covered by InfoBytes here). The purchase amount threshold for the beneficial ownership reporting requirement remains set at $300,000 for residential real estate purchased in the covered areas. The GTOs do not require reporting for purchases made by legal entities that are U.S. publicly-traded companies.

    The renewed GTOs take effect May 10, will extend until November 5, 2020, and cover certain counties within the following areas: Boston; Chicago; Dallas-Fort Worth; Honolulu; Las Vegas; Los Angeles; Miami; New York City; San Antonio; San Diego; San Francisco; and Seattle. 

    FinCEN FAQs regarding GTOs are available here.

    Financial Crimes FinCEN GTO Of Interest to Non-US Persons

  • OFAC settles Cuban Assets Control Regulation violations

    Financial Crimes

    On May 6, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $257,862 settlement with an animal nutrition company for 44 alleged violations of the Cuban Assets Control Regulations (CACR). According to OFAC, between July 2012 and September 2017, the company and its owned or controlled foreign entities allegedly coordinated agricultural commodity sales to a Cuban company without OFAC authorization by processing Cuba-related business through its foreign affiliates and developing “a transaction structure that it incorrectly determined would be consistent with U.S. sanctions requirements.” OFAC noted that the company “could potentially have availed itself of such authorization” or applied for a specific licenses from OFAC, but “failed to seek appropriate advice or otherwise take the steps necessary to authorize these transactions.” OFAC determined that in light of the fact that the transactions may have been eligible for authorization, as well as the company’s voluntary self-disclosure, compliance enhancements, and other factors, the apparent violations constituted a non-egregious case.

    OFAC advised U.S. companies with a global presence to maintain an appropriate sanctions compliance program and to seek “appropriate advice and guidance” when contemplating business that may be impacted by U.S. sanctions programs. In addition, OFAC referenced enforcement and compliance resources and cautioned that sanctions violations can arise from a misinterpretation or lack of understanding of OFAC’s regulations, including general licenses and authorizations. OFAC advised U.S. persons to “exercise[e] caution when dealing with foreign subsidiaries or affiliates located in regions subject to U.S. sanctions programs” and to understand the full scope and applicability of authorizations related to certain sanctions prohibitions.

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

  • OFAC issues Finding of Violation to company for issuing prepaid card to SDN

    Financial Crimes

    On April 30, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued a Finding of Violation to a travel-related services company for alleged violations of the Weapons of Mass Destruction Proliferators Sanctions Regulations. According to OFAC, the company allegedly issued a prepaid card to, and processed 42 transactions totaling more than $35,000 on behalf of, a Specially Designated National (SDN) due to human error and screen system defects. When issuing the Finding of Violation, OFAC considered the fact that, among other things, (i) the company did not engage in willful or reckless behavior; (ii) there is no indication that the company was aware that it provided a card to an SDN or that its risk engine could be overridden; (iii) the company took remedial action in response to the violations to prevent similar reoccurrences; (iv) the company cooperated with OFAC and voluntarily disclosed the violations; and (v) OFAC has not issued a penalty notice or Finding of Violation to the company in at least five years prior to the alleged violations. A civil monetary penalty was not issued to the company.

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

  • OFAC designates Iranian front company and owner; DOJ files concurrent criminal charges and related civil forfeiture action

    Financial Crimes

    On May 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) designated a dual Iranian and Iraqi national and a company owned, controlled, or directed by the designated individual for their alleged involvement with Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF). According to OFAC, the designated individual allegedly provided support for several years to IRGC-QF’s smuggling operations by securing entry to vessels carrying IRGC-QF shipments, using business connections to facilitate logistics, and developing revenue generating illicit business opportunities. As a result of the sanctions, “all property and interests in property of these persons that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC.” OFAC further noted that its regulations “generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked or designated persons,” and warned foreign financial institutions that knowingly facilitating significant transactions or providing significant financial services to the designated individuals may subject them to U.S. correspondent account or payable-through sanctions.

    On the same day, the DOJ announced a two-count criminal complaint against the designated individual and another Iranian national for allegedly conspiring to provide U.S. financial services to help several Iranian entities and their front companies purchase a petroleum tanker. The defendants allegedly concealed that the sale of the vessel was destined for Iran, and attempted to evade the regulations, prohibitions, and licensing requirements of the International Emergency Economic Powers Act and the Iranian Transactions and Sanctions Regulations. The DOJ also filed a related civil forfeiture complaint claiming that more than $12 million is subject to forfeiture.

    Financial Crimes OFAC Department of Treasury Iran Of Interest to Non-US Persons Financial Institutions

  • OFAC issues amended Venezuela-related general license

    Financial Crimes

    On April 21, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued amended Venezuela General License (GL) 8F, titled “Authorizing 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.” GL 8F supersedes GL 8E and extends the expiration date for certain authorizations through December 1 that would otherwise be prohibited under Executive Orders 13850, 13857, or 13884.

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

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

  • Korean bank settles investigation into Iran transfers; resolves BSA/AML violations allegations

    Financial Crimes

    On April 20, the U.S. Attorney for the Southern District of New York and the New York attorney general announced that a Korean bank will pay $51 million in penalties to resolve a six-year investigation into the bank’s transfer of more than $1 billion to Iranian entities in violation of U.S. economic sanctions. According to the U.S. Attorney’s press release and deferred prosecution agreement and statement of facts (as well as a press release from the state attorney general), the bank violated the Bank Secrecy Act (BSA) by “willfully failing to establish, implement, and maintain an adequate anti-money laundering (‘AML’) program” at its New York branch—even though its compliance officer repeatedly asked it to do so—which led to the illegal transfer of approximately $1 billion in transactions to Iran in violation of the International Emergency Economic Powers Act. According to the government, the bank’s lack of an effective AML program resulted in its failure to detect and report $10 million in payments through the bank and other U.S. financial institutions from Korean entities to Iranian entities, as well as its failure to “report the balance of the $1 billion of such sanctioned transactions” between the parties. Furthermore, the bank also failed to self-report to the U.S. Treasury Department’s Office of Foreign Assets Control its wrongdoing in a timely manner or its willful violations of the BSA prior to the investigation. Under the terms of the deferred prosecution agreement, the bank will pay $51 million through a civil forfeiture action, half of which will go to the United States Victims of State Sponsored Terrorism Fund, and will undergo regular reviews of its AML and sanctions compliance programs.

    The bank also reached a separate agreement with NYDFS for violating state regulations, under which it will pay an additional $35 million penalty for violations of BSA/AML laws. Among other things, NYDFS found that the compliance program of the bank’s New York branch failed to achieve satisfactory levels until its 2019 examination. “While the department applauds the bank for its ultimate efforts after eight examination cycles of noncompliance, one positive examination report does not equate to a sustainable, safe and sound financial institution,” NYDFS said in its consent order. Under the terms of the order, the bank is required to revise its BSA/AML compliance program and enhance its customer due diligence program to ensure compliance with relevant state laws and regulations. NYDFS acknowledged the bank’s substantial cooperation in the matter, including remediating identified shortcomings.

    Financial Crimes DOJ State Attorney General NYDFS OFAC Department of Treasury Settlement Of Interest to Non-US Persons Korea Anti-Money Laundering Bank Secrecy Act

  • Multiagency advisory warns of North Korean cyber-threat to international finance system

    Financial Crimes

    On April 15, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), in conjunction with the Departments of State and Homeland Security and the Federal Bureau of Investigation, issued an advisory warning that North Korea’s (DPRK) cyber activities—including cybertheft, money laundering, extortion, and cryptojacking—“pose a significant threat to the integrity and stability of the international finance system.” These activities, the agencies caution, highlight DPRK’s use of cyber-enabled means to generate revenue while mitigating the impact of OFAC-imposed sanctions. In addition to providing examples of cyber activities that target the international financial sector and DPRK state-sponsored cyber incidents, the advisory also outlines recommended measures that governments, industry, civil society, and individuals can take to counter DPRK cyber threats. These include (i) raising awareness; (ii) sharing technical information; (iii) implementing and promoting cybersecurity best practices; (iv) notifying law enforcement; and (v) strengthening anti-money laundering, countering the financing of terrorism, and counter-proliferation financing compliance. The agencies reiterate the consequences of engaging in prohibited and sanctionable conduct, and remind individuals and entities that OFAC has the authority to impose sanctions on any persons found to have engaged in conduct supporting DPRK cyber-related activity. The agencies also point out that foreign financial institutions that knowingly conduct or facilitate significate trade or transactions on behalf of a designated person for DPRK-related activity, may “lose the ability to maintain a correspondent or payable-through account in the [U.S.]”

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

  • OFAC issues amended Venezuela-related general license and FAQ

    Financial Crimes

    On April 10, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Venezuela General License (GL) 5C, which supersedes GL 5B and authorizes certain transactions otherwise prohibited under Executive Orders 13835 and 13857 related to, or that provide financing for, dealings in the Petróleos de Venezuela, S.A. 2020 8.5 Percent Bond on or after July 22, 2020. Concurrently, OFAC issued a new Venezuela-related frequently asked question regarding GL 5C.

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

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