InfoBytes Blog
Filter
Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.
OFAC settles with global money services business for alleged sanctions violations
On June 7, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced an approximately $400,000 settlement with a global money services business for alleged violations of the Global Terrorism Sanctions Regulations (GTSR). The settlement resolves potential civil liability for the money services business' processing of certain transactions totaling roughly $1.275 million. According to OFAC, the transactions were paid out to third-party, non-designated beneficiaries who collected their remittances from a company in Gambia that OFAC designated pursuant to the GTSR in December 2010. Notwithstanding this designation, the money services business continued processing payments to the company until March 2015. In arriving at the settlement amount, OFAC considered various mitigating factors, including the fact that the money services business voluntarily self-disclosed the issue to OFAC. OFAC also considered various aggravating factors, including that the money services business could have identified that the company was a sanctions target with the exercise of reasonable due diligence.
OFAC sanctions Iran’s largest petrochemical holding group for funding IRGC
On June 7, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against Iran’s largest petrochemical holding group for providing financial support to the Islamic Revolutionary Guard Corps (IRGC), an entity targeted for sanctions under OFAC’s Iran-related sanctions. In addition, OFAC designated the holding group’s network of 39 subsidiary petrochemical companies and foreign-based sales agents. According to OFAC, profits derived from the holding group’s activities “support the IRGC’s full range of nefarious activities, including the proliferation of weapons of mass destruction . . . and their means of delivery, support for terrorism, and a variety of human rights abuses, at home and abroad.”
As a result, all property and interests in property belonging to the identified entities subject to U.S. jurisdiction are blocked and must be reported to OFAC, and U.S. persons are generally prohibited from transacting with them. Moreover, OFAC warned foreign financial institutions that they may be subject to U.S. correspondent account or payable-through account sanctions—which, if imposed, could restrict their access to the U.S. financial system—if they knowingly facilitate significant transactions for any of the designated entities. OFAC further issued a reminder that as of November 5, 2018, purchasing, acquiring, selling, transporting, or marketing petrochemical products from Iran is sanctionable under OFAC’s sanctions against Iran (covered by InfoBytes here).
Visit here for additional InfoBytes coverage of actions related to Iran.
OFAC amends three Venezuela-related General Licenses
On June 6, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) amended three General Licenses (GL), (i) GL 7B, which supersedes GL 7A; (ii) GL 8A, which supersedes GL 8; and (iii) GL 13A, which supersedes GL 13, to clarify that these general licenses do not authorize transactions or dealings related to the exportation or re-exportation of diluents, directly or indirectly, to Venezuela. Additionally, OFAC is issuing corresponding FAQ 672 to provide further guidance with respect to restrictions regarding diluents.
Visit here for additional InfoBytes coverage of actions related to Venezuela.
SFO fines shipping and logistics company over $1 million for bribery scheme
On June 3, the UK Serious Fraud Office (SFO) announced that it had fined a shipping and logistics company £850,000 (approximately $1.08 million) for bribes paid to secure contracts in Angola. The SFO started investigating the company in September 2014 and announced in July 2016 that it had charged the company and seven individuals with making corrupt payments. The company pleaded guilty in 2017. The SFO found that executives had bribed an agent of the Angolan state oil company to obtain $20 million worth of shipping contracts.
Executive pleads guilty in oil company bribery case
On May 29, the DOJ announced that a dual U.S.-Venezuelan citizen pleaded guilty for his role in a bribery scheme involving oil and natural gas company officials. The citizen pleaded guilty in the Southern District of Texas to conspiracy to violate the FCPA, violating the FCPA, and failing to report foreign bank accounts. His sentencing is set for August 28.
He controlled multiple U.S. and international companies that provided goods and services to the company. According to the DOJ, the U.S. citizen and a co-conspirator paid at least $629,000 in bribes to a former company official in exchange for favorable business treatment for his companies. Prior FCPA Scorecard coverage is available here.
OFAC issues Finding of Violation, no penalties, against bank for alleged Iranian sanctions violations
On May 28, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a Finding of Violation against a U.S. bank, acting as a trustee for a customer, for violations of the Iranian Transactions and Sanctions Regulations (ITSR). According to the announcement, OFAC’s Finding of Violation was based on the fact that the bank processed at least 45 pension payments totaling over $11,000 to a U.S. citizen with a U.S. bank account, but who was residing in Iran. According to OFAC, the bank appears to have known that it was processing payments for the benefit of a person in Iran, not only because its internal system indicated that the individual’s address was located in Tehran, but also because the bank’s sanctions screening software produced an alert on each of the 45 payments. These alerts, however, were reviewed by compliance personnel who were not sanctions specialists instead of the bank’s central sanctions compliance unit. After learning of and reporting the issue to OFAC, the bank modified its review and reporting process to ensure that retirement payments are screened by the right screening platform and that sanctions alerts are handled through the appropriate process, including review by compliance specialists with expertise in sanctions.
When issuing a Finding of Violation against the bank, as opposed to a civil money penalty, OFAC considered the fact that, among other things, (i) no managers or supervisors appear to have been aware of the conduct that led to the violations; (ii) the payments at issue may not have actually been transferred to Iran; (iii) the bank took remedial action in response to the violations; and (iv) the bank cooperated with OFAC by self-disclosing the alleged violations and agreeing to tolling the matter with extensions.
FinCEN announces innovation hours program
On May 24, the Financial Crimes Enforcement Network (FinCEN) announced a new program that will provide opportunities for fintech/regulatory technology companies and financial institutions to showcase new and emerging innovative approaches for combating money laundering and terrorist financing and to demonstrate how other financial institutions could use similar technologies. The FinCEN Innovation Hours Program will accept meetings once per month, with primary consideration given to entities that are already operational. According to FinCEN, the program is part of a broader initiative introduced last year (previously covered by InfoBytes here and here) that encourages banks and credit unions to explore innovative approaches such as artificial intelligence, digital identity technologies, and internal financial intelligence units to combat illicit financial threats, as well as collaborative arrangements to share resources and enhance the effectiveness and efficiency of Bank Secrecy Act/anti-money laundering compliance programs.
FinCEN renews GTOs covering 12 metropolitan areas; continued focus on AML risk in related shell companies
On May 15, the Financial Crimes Enforcement Network (FinCEN) announced the renewal of its Geographic Targeting Order (GTO), which requires 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 high-end residential real estate in 12 major metropolitan areas. The purchase amount threshold for the beneficial ownership reporting requirement remains set at $300,000 for residential real estate purchased in the 12 covered areas.
The renewed GTO takes effect May 16, and covers 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.
Previous InfoBytes coverage on FinCEN GTOs available here.
Brazilian telecom settles World Cup ticket bribery charges for $4.125 million
On May 9, Brazilian telecom company settled SEC charges that it spent $621,756 on 2014 World Cup tickets and hospitality for Brazilian and foreign government officials. The company will pay $4.125 million to settle SEC claims that it violated internal accounting controls and recordkeeping requirements connected to providing 124 World Cup tickets and hospitality to 93 government officials at an average cost per guest of $3,204. The SEC took the company’s remediation efforts into account, including “enhanced internal accounting controls” and “adopting a new anti-corruption policy and compliance structure.”
Hawaii man sentenced to 30 months for bribery conspiracy
On May 13, a Hawaiian businessman was sentenced to 30 months imprisonment to be followed by three years of supervised release after pleading guilty in January to a charge of conspiracy to bribe a Micronesian official in violation of the FCPA. The DOJ alleged that the businessman’s consulting company paid $440,000 in bribes to officials to obtain and keep contracts with the Micronesian government worth more than $10 million. One of the officials also pleaded guilty in April. See more previous coverage here.