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  • OFAC reaches $5.8 million settlement to resolve Cuban Assets Control Regulations violations

    Financial Crimes

    On October 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a more than $5.8 million settlement with a New York-incorporated travel assistance services company to resolve 2,593 apparent violations of the Cuban Assets Control Regulations (CACR). According to OFAC’s web notice, from roughly June 2010 to January 2015, the company formally codified an indirect payment process in its procedures manual, in which it “intentionally referred” Cuba-related payments to a Canadian affiliate to avoid “processing reimbursement payments directly to Cuban parties and to travelers while they were located in Cuba.” Reimbursements were then sent from the company to the Canadian affiliate for those payments. While the company had a sanctions compliance policy during the time of the apparent violations to screen for individuals or entities on OFAC’s List of Specially Designated Nationals and Blocked Persons, it allegedly failed to comply with screening requirements for countries and regions subject to OFAC prohibitions.

    In arriving at the settlement amount, OFAC considered various aggravating factors, including that the company (i) knew it was illegal to make direct payments to Cuban service providers and therefore formalized the aforementioned referral process; (ii) provided “prohibited post-travel claim reimbursements directly to unauthorized Canadian subscribers who travelled to Cuba”; and (iii) knew of the conduct at issue because the indirect payment process was codified and approved by its CEO.

    OFAC also considered various mitigating factors, including that (i) the CACR was later amended to authorize some of the apparent violations; (ii) the company enhanced its sanctions compliance program by, among other things, implementing a formal structure for compliance personnel and conducting sanctions training for all employees; (iii) the company voluntarily disclosed the violations and signed a tolling agreement, including multiple extensions; and (iv) the company terminated the conduct leading to the apparent violations and has undertaken remedial measures to minimize the risk of similar violations from occurring in the future.

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

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  • OFAC amends CACR to restrict revenue sources to the Cuban regime

    Financial Crimes

    On September 23, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a final rule amending the Cuban Assets Control Regulations (CACR) to further implement portions of the President’s foreign policy to deny the Cuban regime sources of revenue. Among other things, the final rule (i) amends an interpretive provision and several general licenses regarding lodging and related transactions at certain properties in Cuba identified on the State Department’s “Cuba Prohibited Accommodations List,” including those owned or controlled by the Cuban government; (ii) amends four general licenses to restrict the importation of Cuban-origin alcohol and tobacco products into the U.S.; (iii) amends a general license to eliminate the authorization for U.S. persons to attend or organize professional meetings or conferences in Cuba (specific licenses may be issued on a case-by-case basis for certain transactions); and (iv) eliminates a general license that authorizes U.S. persons “to participate in or organize certain public performances, clinics, workshops, other athletic or non-athletic competitions, and exhibitions, and replaces it with a specific licensing policy” (again permitting the authorization of specific activities via specific license on a case-by-case basis). The final rule also makes several technical and conforming changes, and is effective September 24.

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

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  • OFAC sanctions investors supporting Syrian government

    Financial Crimes

    On July 29, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against one individual and nine entities for providing significant investment support to the Syrian government. OFAC noted that, among other things, the designated individual and his companies knowingly provided “significant financial, material, or technological support to, or knowingly engag[ed] in a significant transaction with, the Government of Syria (including any entity owned or controlled by the Government of Syria) or a senior political figure of the Government of Syria.” As a result, all property and interests in property belonging to the designated persons and subject to U.S. jurisdiction are blocked and must be 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 designated persons,” and warned that non-U.S. persons that engage in transactions with the designated persons may expose themselves to designation. OFAC also referenced a previously published Fact Sheet (covered by InfoBytes here), which highlights the most pertinent exemptions, exceptions, and authorizations for humanitarian assistance and trade under the Syria, Iran, Venezuela, North Korea, Cuba, and Ukraine/Russia-related​ sanctions programs to ensure humanitarian-related trade and assistance reaches at-risk populations through legitimate and transparent channels during the global Covid-19 pandemic.

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

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  • OFAC settles with global e-commerce, digital service provider over multiple sanctions violations

    Financial Crimes

    On July 8, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $134,523 settlement with a Washington-based company that provides retail, e-commerce, and digital services worldwide. According to OFAC, due to deficiencies in the company’s sanctions screening process, between 2011 and 2018, the company provided goods and services to OFAC sanctioned persons; to persons located in the sanctioned region or countries of Crimea, Iran, and Syria; and “for persons located in or employed by the foreign missions of Cuba, Iran, North Korea, Sudan, and Syria.” Additionally, the company allegedly accepted and processed orders that primarily consisted of low-value retail goods and services from persons listed on OFAC’s List of Specially Designated Nationals and Blocked Persons who were blocked pursuant to sanctions regulations involving the Democratic Republic of Congo, Venezuela, Zimbabwe, among others. These apparent violations occurred “primarily because [the company’s] automated sanctions screening processes failed to fully analyze all transaction and customer data relevant to compliance with OFAC’s sanctions regulations,” OFAC stated, claiming the company also “failed to timely report several hundred transactions conducted pursuant to a general license issued by OFAC that included a mandatory reporting requirement, thereby nullifying that authorization with respect to those transactions.”

    In arriving at the settlement amount, OFAC considered various mitigating factors, including that the apparent violations were non-egregious and (i) the company voluntarily disclosed the violations and cooperated with the investigation; and (ii) the company has undertaken significant remedial efforts to address the deficiencies and to minimize the risk of similar violations from occurring in the future.

    OFAC also considered various aggravating factors, including that the company failed to exercise due caution or care to ensure its sanctions screening process was able to properly flag transactions involving blocked persons and sanctioned jurisdictions. “This case demonstrates the importance of implementing and maintaining effective, risk-based sanctions compliance controls,” OFAC stated. “[G]lobal companies that rely heavily on automated sanctions screening processes should take reasonable, risk-based steps to ensure that their processes are appropriately configured to screen relevant customer information and to capture data quality issues.”

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

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  • OFAC sanctions investors supporting Syrian government

    Financial Crimes

    On June 17, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against 24 individuals and entities for providing significant investment support to the Syrian government. According to OFAC, the designations include Treasury’s “first implementation of sanctions pursuant to the Caesar Syria Civilian Protection Act of 2019,” and involve actions taken against a holding company, a private sector investment venture, and luxury tourism developments. Concurrent with OFAC’s sanctions, the U.S. State Department also designated 15 persons, including President Bashar al-Assad and his wife, pursuant to Executive Order 13984, which focuses on persons identified as “obstructing, disrupting, or preventing a ceasefire or a political solution to the Syrian conflict.” As a result, all property and interests in property belonging to the designated persons and subject to U.S. jurisdiction are blocked and must be reported to OFAC. OFAC further noted that its regulations “generally prohibit all dealings by U.S. persons or those within (or transiting) the United States that involve any property or interests in property of designated persons,” and warned non-U.S. persons that engage in transactions with the designated persons may expose themselves to designation. OFAC also referenced a previously published Fact Sheet (covered by InfoBytes here), which highlights the most pertinent exemptions, exceptions, and authorizations for humanitarian assistance and trade under the Iran, Venezuela, North Korea, Syria, Cuba, and Ukraine/Russia-related​ sanctions programs to ensure humanitarian-related trade and assistance reaches at-risk populations through legitimate and transparent channels during the global Covid-19 pandemic.

    Financial Crimes OFAC Department of Treasury Sanctions Syria Of Interest to Non-US Persons Covid-19

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  • 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

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  • Special Alert: OFAC encourages humanitarian aid, promises consideration of Covid-19 compliance challenges

    Federal Issues

    The Department of the Treasury’s Office of Foreign Assets Control recently took two actions to address the impact of Covid-19. First, OFAC issued a fact sheet that consolidates existing authorizations and guidance permitting humanitarian, agricultural, and medical aid to six jurisdictions subject to sanctions. Second, OFAC encouraged companies facing compliance challenges due to Covid-19 to shift resources to higher-risk areas, noting that it would take this move into consideration if it leads to a violation during the pandemic. Companies facing compliance challenges may wish to consider such a shift, while documenting their risk-based rationale for doing so.

    Humanitarian fact sheet

    Last week, OFAC issued a fact sheet regarding the provision of Covid-19-related assistance under its Iran, Cuba, North Korea, Syria, Ukraine/Russia, and Venezuela sanctions regimes. The fact sheet made no changes to existing laws and guidance, but consolidated existing licenses, exemptions, authorizations, and related FAQs relevant to humanitarian aid and medical equipment for these regimes. The fact sheet should prove to be a valuable resource for financial institutions and other organizations confronting a wave of transactions to provide personal protective equipment to sanctions-targeted jurisdictions wracked by Covid-19, while complying with OFAC regulations. 

    Federal Issues Department of Treasury OFAC Sanctions Covid-19

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  • OFAC guidance addresses Covid-19 humanitarian assistance and trade

    Federal Issues

    On April 16, the U.S. Treasury Department’s Office of Foreign Assets Control (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. Specifically, the Fact Sheet highlights the most pertinent exemptions, exceptions, and authorizations for humanitarian assistance and trade under the IranVenezuelaNorth KoreaSyriaCuba, and Ukraine/Russia-related​ sanctions programs. OFAC notes, however, that under certain sanctions program, entities may be required to obtain separate authorization from other U.S. government agencies. The Fact Sheet also provides guidance for persons seeking to export personal protective equipment from the U.S. Additional questions regarding the scope or applicability of any humanitarian-related authorizations can be directed to OFAC’s Sanction Compliance and Evaluation Division.

    Federal Issues Financial Crimes Department of Treasury OFAC Covid-19 Of Interest to Non-US Persons Sanctions

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  • Venezuela’s state-owned airline subject to OFAC sanctions

    Financial Crimes

    On February 7, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced that it identified a previously blocked state-owned Venezuelan airline and its fleet of aircraft pursuant to Executive Order (E.O.) 13884. The entities—subject to sanctions under E.O. 13884, which blocks property of the Venezuelan government—have been added to OFAC’s Specially Designated Nationals (SDN) List. According to OFAC’s press release, the commercial airline and its fleet have been used by Venezuela’s illegitimate government “to promote its own political agenda, including shuttling regime officials to countries such as North Korea, Cuba, and Iran.” OFAC observed that Venezuelan citizens may still travel by air on a number of other airlines that provide domestic service as well as service to and from Venezuela. OFAC also reiterated that its “regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked persons.”

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

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  • OFAC settles with travel insurance companies

    Financial Crimes

    On December 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a settlement with a U.S.-based property and casualty company for 6,474 alleged violations of the Cuban Assets Control Regulations (CACR). According to OFAC, between August 2010 and January 2015, the company’s Canadian branch provided travel insurance policies to Canadian citizens traveling to Cuba, and continued to do so even though the company knew early on that that policies were being issued related to travel to Cuba but did not investigate it until 2014. In arriving at the settlement amount, OFAC considered various mitigating factors, including the fact that the company voluntarily self-disclosed the issue to OFAC, and that the company enhanced its OFAC compliance. OFAC also considered various aggravating factors, including that the company had knowledge of the violations as early as 2010, and that the travel policies “provided economic benefit to Cuba.”

    Also on December 9, OFAC announced another settlement, this time with a Swiss worldwide insurance and reinsurance company, which formerly was a subsidiary of a U.S. company. The settlement resolves potential civil liability for 20,291 alleged violations of the CACR between January 2010 and December 2014 for issuing insurance policies for Cuba-related travel, because the policies, though global in scope, did not include an exclusionary clause “for risks that would violate U.S. sanctions law.” OFAC considered a number of mitigating factors in determining the settlement amount, including the fact that the company voluntarily self-disclosed the alleged violations and represented that it conducted a risk assessment of its offices and developed compliance policies and procedures. Additionally, OFAC considered several aggravating factors, including that the company issued global policies that did not contain exclusionary clauses, the activity resulted from a pattern or practice spanning several years, and the company is a large and commercially sophisticated financial institution.

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

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