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OFAC sanctions Russian entities and individuals for cyber activities connected to FSB
On June 11, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced its decision to sanction five Russian entities and three Russian individuals connected to Russia’s Federal Security Service (FSB), pursuant to Section 244 of the Countering America’s Adversaries Through Sanctions Act of 2017 (CAATSA) and Executive Order 13694. The sanctions target individuals and entities who, through “malign and destabilizing cyber activities,” have provided material and technological support to the FSB. Pursuant to OFAC’s sanctions, all property and interests in property of the designated persons within U.S. jurisdiction are blocked, and U.S. persons are “generally prohibited” from participating in transactions with these individuals and entities. As part of the announcement, Treasury Secretary Steven Mnuchin stated that “The United States is committed to aggressively targeting any entity or individual working at the direction of the FSB whose work threatens the United States and will continue to utilize our sanctions authorities, including those provided under CAATSA, to counter the constantly evolving threats emanating from Russia.”
Visit here for additional InfoBytes coverage on Russian sanctions.
Baltimore-based investment management firm settles FCPA allegations with DOJ
On June 4, the DOJ announced that a Baltimore-based investment management firm, had entered into a non-prosecution agreement and agreed to pay $64.2 million to resolve FCPA allegations in connection with the firm’s involvement in Libya through a London-based fund purchased by the firm. Between 2004 and 2010, Permal, subsidiary of the Baltimore firm, partnered with a Paris-based multinational bank, “to solicit business from state-owned financial institutions in Libya.” As admitted by the bank in its own resolution with the DOJ, the bank paid bribes of over $90 million through the use of a Libyan broker with respect to 14 investments made by Libyan state-owned financial institutions. For seven of the transactions, the bank made payments to the Libyan broker to benefit the firm, through its subsidiary. The subsidiary managed the investments and earned profits of approximately $31 million.
The firm’s resolution includes a penalty of $32.625 million and disgorgement of $31.617 million. As part of the agreement, the firm agreed to continue to cooperate with the DOJ in related investigations and prosecutions, as well as to enhance its compliance program. According to the DOJ, the resolution is based on factors including the firm’s cooperation in the investigation, as well as the fact that the company “did not voluntarily and timely disclose the conduct at issue.” The DOJ also found that the misconduct was “not pervasive throughout the firm or its subsidiary,” but rather that the bank was responsible for running the scheme, noting that the firm and its subsidiary earned less than one-tenth of the profits earned by the bank.
As FCPA Scorecard previously reported, the firm had announced the near completion of the agreement in a recent SEC filing.
Paris-based multinational bank settles FCPA allegations concerning bribery of Libyan officials
On June 4, the DOJ announced that a Paris-based multinational bank and its wholly owned subsidiary agreed to pay $585 million to resolve charges in the United States and France involving bribes to Libyan officials. According to the DOJ, the bank will enter into a deferred prosecution agreement related to charges of conspiracy to violate the FCPA’s anti-bribery provisions. The bank’s subsidiary will also plead guilty in the Eastern District of New York to similar charges. Almost $293 million of the resolution will be paid to France and credited by the U.S. This is the first coordinated anti-bribery enforcement action by the DOJ and French authorities.
The bank admitted that it had paid over $90 million in bribes through a Libyan broker in connection with 14 investments made by state-owned financial institutions in Libya. For each transaction, the bank paid the Libyan broker a commission, some of which the Libyan broker then paid to high ranking Libyan officials to secure the investments for the bank from the state institutions. This scheme resulted in the bank obtaining 13 investments and one restructuring from the Libyan state institutions, and earning approximately $523 million in profits. The scheme also involved payments for the benefit of a a Baltimore-based investment management firm subsidiary; the firm resolved its FCPA issues with the DOJ on the same day.
As part of the same deferred prosecution agreement, the bank also agreed to pay $275 million to resolve charges arising from manipulation of U.S.-dollar and Japanese yen LIBOR.
OFAC issues Ukraine-/Russia-related General Licenses to extend expiration dates
On June 4, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Ukraine-/Russia-related General License 16 (GL 16) authorizing specified wind-down activities, which would be otherwise prohibited by Ukraine-Related Sanctions Regulations. Permissible activities with the two designated, previously sanctioned companies (and any entity in which either of the two companies has a 50 percent or greater ownership interest, directly or indirectly) apply to operations, contracts, and agreements that were effective prior to April 6. GL 16 extends the wind-down period, which was originally set to expire June 5 under General License 12C (GL 12C), until October 23. (See previous InfoBytes coverage on GL 12C here.)
Earlier on May 31, OFAC issued Ukraine-/Russia-related General License 13B (GL 13B) to replace and supersede General License 13A (GL 13A) in its entirety, and to extend the expiration date through 12:01 a.m. EDT August 5. (See previous InfoBytes coverage on GL 13A, which was set to expire June 6, here.) GL 13B permits the same conduct as GL 13A, including authorizing certain divestiture transactions with specified blocked persons to a non-U.S. person, and allowing the facilitation of transfers of debt, equity, or other holdings involving listed blocked persons, including entities owned 50 percent or more and issued by the named persons.
Visit here for additional InfoBytes coverage on Ukraine/Russian sanctions.
OFAC adds Iranians to Specially Designated Nationals List
On May 30, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) made additions to the Specially Designated Nationals List under the Iranian Financial Sanctions Regulations and Global Terrorism Sanctions Regulations. OFAC’s additions to the designations identify nine individuals and entities that were found to have (i) committed serious human rights abuses on behalf of the Government of Iran; (ii) operated technology that facilitates monitoring that could assist in serious human rights abuses by the Government of Iran; or (iii) engaged, or acting on behalf of someone engaged, in censorship activities limiting the freedom of expression or assembly of citizens in Iran. As a result, all assets belonging to the identified individuals and entities subject to U.S. jurisdiction are blocked and must be reported to OFAC, and U.S. persons are generally prohibited from engaging in transactions with them.
See here for continuing InfoBytes coverage of actions related to Iran.
Baltimore-based investment management firm preparing for FCPA settlement
On May 30, a Baltimore-based investment management firm, announced in a 10-K SEC filing that it will soon complete negotiations with the DOJ and SEC to resolve FCPA allegations stemming from how a London-based fund purchased by the firm in 2005, managed assets of Libyan governmental entities in 2005-2007. The firm reserved $67 million for the settlement, which reflects, in part, the net revenues of approximately $31 million earned by the fund for managing the assets.
OFAC updates Ukraine-/Russia-related FAQs to address authorized wind-down activities permitted under certain general licenses
On May 25, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) published two additional FAQs to provide additional guidance on authorized wind-down activities outlined within General Licenses (GL) 12C, 14, and 15. (See previous InfoBytes coverage here concerning GL 14 and here for GL 12C and GL 15.) Specifically, the FAQs discuss conditions under which a U.S. person is authorized to receive scheduled principal and interest payments from identified blocked persons for a loan or bond in existence before the April 6 sanctions against Russian oligarchs or entities. The FAQs also address sanction implications for a foreign entity—that is itself not blocked—who pays dividends to a blocked person holding less than 50 percent equity interest.
Visit here for additional InfoBytes coverage on Ukraine/Russian sanctions.
OFAC issues new Ukraine-/Russia-related General Licenses authorizing additional wind-down activities
On May 22, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Ukraine-/Russia-related General License 15 (GL 15) authorizing specified wind-down activities through October 23, which would be otherwise prohibited by Ukraine-Related Sanctions Regulations. Permissible activities with the designated company and its subsidiaries apply to operations, contracts, and agreements that were effective prior to April 6. OFAC further stated that, while funds blocked prior to May 22 remain blocked, GL 15 permits the use of these blocked funds for specified maintenance and wind-down activities.
The same day, OFAC also issued Ukraine-/Russia-related General License 12C (GL 12C) to replace and supersede General License 12B (GL 12B) in its entirety. (See previous InfoBytes coverage on GL 12B here.) GL 12C, which incorporates exemptions permitted under GL 15, authorizes wind-down activities “originating and intermediary U.S. financial institutions to process funds transfers that they would otherwise block to an account held by a blocked U.S. person at a U.S. financial institution,” and allows the release of “such funds for authorized maintenance and wind-down purposes.” GL 12C is effective May 22.
OFAC also released six new FAQs and published updated FAQs related to these general licenses.
Visit here for additional InfoBytes coverage on Ukraine/Russian sanctions.
President Trump issues new Executive Order prohibiting the purchase of debt from the Venezuelan government
On May 21, President Trump issued an Executive Order (E.O.) prohibiting U.S. companies or individuals from buying debt or accounts receivable from the Venezuelan government “in light of the recent activities of the Maduro regime, including endemic economic mismanagement and public corruption at the expense of the Venezuelan people and their prosperity.” The sanctions specifically prohibit transactions related to the following: (i) “the purchase of debt owed to the Venezualan government, including accounts receivable;” (ii) debt pledged as collateral after May 21, including accounts receivable; and (iii) “the sale, transfer, assignment, or pledging as collateral by the Government of Venezuela of any equity interest in any entity in which the Government of Venezuela has a 50 percent or greater ownership interest.”
The E.O., issued in conjunction with E.O. 13692, follows two prior E.O.s, which also targeted the Maduro regime—E.O. 13827, which prohibits U.S. persons from engaging in transactions that involve digital currency issued by, for, or on behalf of the Venezuelan government, and E.O. 13808, which prohibits transactions related to new debt, bonds, and dividend payments in conjunction with the Venezuelan government and the state-owned oil company. (See previous InfoBytes coverage here and here.). The E.O. took effect on May 21 at 12:30 p.m. EDT.
See here for continuing InfoBytes coverage of actions related to Venezuela.
OFAC further expands Iranian sanctions, includes Hizballah-associated individuals
On May 17, U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) identified two Hizballah-associated individuals for their alleged role in financing terrorist networks, in addition to five companies owned or controlled by one of the designated individuals, as “Specially Designated Global Terrorists.” According to OFAC, the sanctions were issued pursuant to Executive Order 13224 (E.O. 13224), and designated individuals who had previously worked with the Central Bank of Iran, which was “recently identified as being complicit in facilitating the [Islamic Revolutionary Guard Corps-Qods Force’s (IRGC-QF)] access to hundreds of millions of dollars in U.S. currency, to expand banking access between Iran and Lebanon.” As covered earlier in InfoBytes, on May 15 OFAC sanctioned the governor and a senior official of the Central Bank of Iran for allegedly funneling millions of dollars on behalf of the IRGC-QF to Hizballah. The May 17 actions are designed to “further restrict Hizballah’s access to the U.S. financial system and the Iranian regime’s network of regional proxy groups.” As a result, all assets belonging to the identified individuals and entities subject to U.S. jurisdiction must be blocked and reported to OFAC, and U.S. persons are generally prohibited from dealing with them.
Separately, on May 22, OFAC announced that five Iranian individuals who allegedly provided ballistic missile-related technical expertise on behalf of the IRGC-QF have also been sanctioned pursuant to E.O. 13224. In addition to freezing assets subject to U.S. jurisdiction and prohibiting U.S. persons from engaging in transactions with the individuals, “foreign financial institutions that knowingly facilitate significant transactions for, or persons that provide material or certain other support to, the individuals and entities designated [] risk exposure to sanctions that could sever their access to the U.S. financial system or block their property and interests in property under U.S. jurisdiction.”
See here for continuing InfoBytes coverage of actions related to Iran.