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  • OFAC sanctions IRGC-connected entities

    Financial Crimes

    On October 29, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order (E.O.) 13224, as amended, as well as E.O. 13382, against members of a network of companies and individuals that supported Iran’s Islamic Revolutionary Guard Corps (IRGC) and its expeditionary unit, the IRGC Qods Force (IRGC-QF). The IRGC-QF used and proliferated lethal Unmanned Aerial Vehicles (UAVs) for use by Iran-supported terrorist groups, and to Ethiopia, where a crisis threatens to destabilize the region. Additionally, deadly UAVs were utilized in attacks on international shipping and on the U.S. OFAC also announced sanctions against the commander of the IRGC Aerospace Force (IRGC ASF) UAV Command who allegedly directs the planning, equipment, and training for IRGC ASF UAV operations. As a result of the sanctions, all property and interests in property belonging to the sanctioned individual subject to U.S. jurisdiction are blocked. U.S. persons are also generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons.

    Financial Crimes OFAC Of Interest to Non-US Persons Department of Treasury Iran OFAC Designations OFAC Sanctions SDN List

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  • District Court: News reports cannot reverse dismissal of sanctions suit

    Financial Crimes

    On October 13, the U.S. District Court for the Southern District of New York denied a relator’s motion seeking indicative relief, ruling that post-ruling news reports were insufficient to reverse the dismissal of a qui tam suit accusing a UK-based bank and related entities (collectively, “defendants”) of violating U.S. sanctions against Iran. In 2020, the court dismissed the complaint after finding that the government “had articulated multiple valid purposes served by dismissal, and that relator had not carried its burden to show that a dismissal would be ‘fraudulent, arbitrary or capricious, or illegal.’” The relator’s appeal to the U.S. Court of Appeals for the Second Circuit is pending. At the district court, the relator moved for indicative relief based on the premise that if the court had jurisdiction, it would have vacated the dismissal based on disclosures in post-dismissal media reports.

    According to the opinion, the defendants entered into a deferred prosecution agreement (DPA) with the DOJ in 2012 following a multi-year, multi-agency investigation concerning allegations that defendants deceptively facilitated U.S. dollar transactions by Iranian clients between 2001 and 2007 in violation of U.S. sanctions and various New York and federal banking regulations. The defendants admitted to the violations and paid hundreds of millions of dollars in fines and penalties. The relator subsequently filed a qui tam action alleging the defendants misled the government in negotiating the DPA. A government investigation found no support for the allegations. In 2019, the DOJ entered a new DPA with defendants. The relator amended its complaint alleging improper conduct related to the 2019 DPA, which the court dismissed.

    The relator then filed the instant motion to reopen the case, arguing that news reports published in 2020 showed that the defendants engaged in transactions with sanctioned Iranian entities after 2007, which was contrary to the government’s representations when it moved to dismiss the case. The relator claimed that the government incorrectly asserted that it closely examined records before seeking dismissal and failed to honestly conclude that the allegations were meritless. In denying the relator’s motion, the court explained that the relator failed to show that the news reports would be admissible or were important enough to change the outcome of the earlier motion to dismiss. The court held that news reports are inadmissible and further concluded that none of the suspicious activity reports discussed in the news reports contradicted the government’s representations in its motion to dismiss.

    Financial Crimes Courts Of Interest to Non-US Persons OFAC OFAC Sanctions Iran Relator Qui Tam Action DOJ Appellate Second Circuit SARs

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  • OFAC updates Iran, Venezuela FAQs

    Financial Crimes

    On September 30, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the publication of a new Iran-related FAQ. FAQ 932 clarifies that “transactions ordinarily incident to travel to or from Iran by U.S. persons are within an exemption under the Iranian Transactions and Sanctions Regulations (ITSR), 31 C.F.R. part 560, and therefore generally are not prohibited.” OFAC also noted that U.S. persons could be prohibited from engaging in transactions associated with persons blocked by sanctions programs or authorities outside the scope of the ITSR.

    The same week, on October 1, OFAC announced the publication of a new Venezuela-related FAQ. FAQ 933 clarifies that authorizations in paragraph (a) of Venezuela-related General Licenses 7C and 20B, respectively, have not expired.

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

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  • OFAC sanctions entities connected to international terrorism

    Financial Crimes

    On September 17, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13224 against members of Lebanon- and Kuwait-based financial conduits that fund Hizballah. In addition, OFAC designated members of an international network of financial facilitators and front companies connected to Hizballah and Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF). Together, these networks allegedly “laundered tens of millions of dollars through regional financial systems and conducted currency exchanges and trades” for the benefit of both entities. According to OFAC, Hizballah, supported by the IRGC-QF, utilized the revenues from these networks to fund terrorism, and condoned instability throughout the region. As a result, all property and interests in property belonging to the designated persons subject to U.S. jurisdiction are blocked, and any “entities that are owned, directly or indirectly, 50 percent or more by them, individually, or with other blocked persons, that are in the United States or in control of a U.S. person must be blocked.” U.S. persons are “generally prohibited from engaging in transactions” with the designated members. OFAC further warned that the agency “can prohibit or impose strict conditions on the opening or maintaining in the United States of a correspondent account or a payable-through account by a foreign financial institution that either knowingly conducted or facilitated any significant transaction on behalf of a Specially Designated Global Terrorist or, among other things, knowingly facilitates a significant transaction for Hizballah or certain persons designated for their connection to Hizballah.”

    Financial Crimes OFAC Department of Treasury OFAC Sanctions OFAC Designations Lebanon Kuwait SDN List Of Interest to Non-US Persons

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  • OFAC reaches settlement with Texas technology company

    Financial Crimes

    On September 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a roughly $190,000 settlement with a Texas-based company for allegedly knowingly exporting goods, technology, and services in violation of the Iranian Transactions and Sanctions Regulations. According to OFAC’s web notice, between December 2013 and May 2018, the company exported 49 products from the U.S. to two third-country distributors with prior knowledge, or reason to know, that its products were intended specifically for a reseller in Iran. The Iranian reseller then sold three of the exported products to an entity on OFAC’s SDN List, at the time of the relevant exports. On at least three occasions, the company also allegedly provided support, software updates, reseller training, or other services in support of sales to customers located in Iran.

    In arriving at the settlement amount, OFAC considered various aggravating factors, including, among other things, that the company: (i) demonstrated reckless disregard for U.S. sanctions regulations by authorizing distribution and support of its goods; (ii) possessed knowledge of the conduct; and (iii) “caused harm to U.S. sanctions objectives by facilitating access to the bank’s products and support services by resellers and users in Iran.”

    OFAC also considered various mitigating factors, including, among other things, that the: (i) “volume and total amount of payments underlying the Apparent Violations was not significant compared to [the company’s] overall revenue”; (ii) the company demonstrated remedial actions, including establishing export controls and sanctions compliance policies and procedures; and (iii) the company cooperated with OFAC’s investigation.

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

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  • OFAC sanctions Iranian officials in plot to kidnap American citizen in the U.S.

    Financial Crimes

    On September 3, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13553 against four Iranian intelligence operatives who allegedly targeted a U.S. citizen and Iranian dissidents in a wide-ranging campaign to silence critics of the Iranian government. According to OFAC, a senior official led a network that plotted to kidnap a U.S. journalist, which failed and led to the indictment of members of the network. OFAC also noted that this network has played a key role in the Iranian government’s brutal human rights abuses against Iranians. 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.

    Financial Crimes Iran SDN List Department of Treasury OFAC Sanctions OFAC Sanctions Of Interest to Non-US Persons

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  • OFAC settles with Romanian bank for Iranian and Syrian sanctions violations

    Financial Crimes

    On August 27, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $862,318 settlement with a Romania-based bank and its U.S. parent company to resolve 98 apparent violations of OFAC’s Iran and Syria sanctions programs. According to OFAC’s web notice, the bank processed 98 commercial transactions totaling more than $3.5 million through U.S. banks on behalf of parties located in Iran and Syria. OFAC considered various aggravating factors in arriving at the settlement amount, including that the bank (i) demonstrated “a reckless disregard for U.S. sanctions regulations by failing to implement appropriate controls to comply with applicable U.S. regulations with respect to payments it processed” that had a “sanctions nexus that transited the U.S. financial system” or “after the bank became a foreign subsidiary of a U.S. person”; (ii) knew, or had reason to know, “it was processing payments on behalf of persons in Iran and Syria because of underlying finance and trade documents in its possession that referenced those countries”; and (iii) conveyed more than $3.5 million in economic benefit to Iranian and Syrian persons, thus causing harm to the integrity of U.S. sanctions programs and their associated policy objectives.

    OFAC also considered various mitigating factors, including that the bank voluntarily self-disclosed the apparent violations and the apparent violations constitute a non-egregious case. OFAC also determined that the bank (i) has not received a penalty notice from OFAC in the preceding five years; (ii) cooperated with OFAC’s investigation, conducted a lookback, and entered into a tolling agreement; and (iii) has undertaken remedial measures to ensure sanctions compliance. As such, OFAC noted that under its Economic Sanctions Enforcement Guidelines, the base civil money penalty amount is applicable in this matter with the final settlement amount reflecting OFAC’s consideration of general factors.

    Financial Crimes OFAC Department of Treasury Of Interest to Non-US Persons OFAC Sanctions OFAC Designations Enforcement Romania Syria Iran

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  • OFAC issues Iran general license and related FAQs

    Financial Crimes

    On August 24, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Iran General License (GL) M-1, “Authorizing the Exportation of Certain Graduate Level Educational Services and Software,” which authorizes accredited graduate and undergraduate degree-granting academic institutions in the U.S. to engage with Iranian students in online educational services and exploration of software through September 1, 2022, provided certain criteria are met. OFAC also published an updated FAQ related to GL M-1 (see 853). Effective August 24, GL M-1 supersedes and replaces GL M.

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

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  • OFAC sanctions international oil smuggling network

    Financial Crimes

    On August 13, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13224 against several individuals and businesses allegedly involved in an international oil smuggling network supporting Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF). According to OFAC, senior IRGC-QF officials use proceeds from the designated persons’ involvement in Iranian oil exports, including through the shipment of Iranian oil to foreign customers, to help fund the group’s destabilizing regional activities. Director Andrea M. Gacki noted the “sales rely on key foreign intermediaries to obscure the IRGC-QF’s involvement” and stressed that OFAC “will continue to disrupt and expose anyone supporting these efforts.” As a result of the sanctions, all property and interests in property belonging to the sanctioned persons are blocked. OFAC’s announcement further noted that OFAC regulations generally prohibit U.S. persons from participating in transactions with designated persons, adding that “foreign financial institutions that knowingly facilitate significant transactions for, or persons that provide material or certain other support to, the persons designated today risk exposure to sanctions that could sever their access to the U.S. financial system or block their property or interests in property under U.S. jurisdiction.”

    Financial Crimes OFAC Of Interest to Non-US Persons Department of Treasury OFAC Sanctions OFAC Designations Iran SDN List

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  • OFAC reaches $1.4 million settlement with money transmitter

    Financial Crimes

    On July 23, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $1.4 million settlement with a New York-based online money transmitter for 2,260 apparent violations of multiple sanctions programs. According to OFAC’s web notice, between February 4, 2013 and February 20, 2018, the company allegedly processed 2,241 payments for parties located in sanctioned jurisdictions and regions, including the Crimea region of Ukraine, Iran, Sudan, and Syria, as well as 19 payments on behalf of sanctioned persons identified on OFAC’s List of Specially Designated Nationals and Blocked Persons. Identified deficiencies in the company’s sanctions compliance program related to screening, testing, auditing, and transaction review procedures allowed persons in these jurisdictions and regions and those on the SDN List to engage in roughly $802,117.36 worth of transactions, OFAC stated. The apparent violations—related to commercial transactions that the company processed on behalf of its corporate customers and card-issuing financial institutions—allegedly occurred as a result of weak algorithms, business identifier code screening failures, backlogs, and a failure to monitor IP addresses or flag addresses in sanctioned locations.

    In arriving at the settlement amount, OFAC considered various aggravating factors, including that (i) the company failed to exercise sufficient caution or care for its sanctions compliance obligations; (ii) the company had reason to know users were located in sanctioned jurisdictions and regions based on common indications it had within its possession; and (iii) the apparent violations harmed six different sanctions program.

    OFAC also considered various mitigating factors, including that (i) senior management quickly self-disclosed the apparent violations upon discovery and provided substantial cooperation during the investigation; (ii) the company has not received a penalty notice from OFAC in the preceding five years; and (iii) the company has taken remedial measures to minimize the risk of recurrence, including terminating the conduct leading to the apparent violations, retraining compliance employees, enhancing screening software, putting flagged transactions into a pending status rather than completing them, and conducting a daily review of customers’ and counter-parties’ identification documents.

    Financial Crimes OFAC Department of Treasury Enforcement Settlement Of Interest to Non-US Persons OFAC Sanctions Iran Ukraine Sudan Syria

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