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  • OFAC clarifies wind-down period for Iran transactions

    Financial Crimes

    On January 16, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the issuance of Iran-related Frequently Asked Question (FAQ) 816, which addresses the question, “Is there a wind-down period for Executive Order [(E.O.)] 13902?” (previously covered in InfoBytes here). According to the FAQ, individuals and entities involved in activities that qualify as sanctionable under E.O. 13902, which include activities dealing with the mining, construction, manufacturing and textiles industries in Iran, should wind down those transactions within 90 days after the E.O. was issued. OFAC stresses that new engagements entered into with the specified Iranian sectors on or after January 10 will not be considered wind-down activities. These new engagements may be sanctionable during the wind-down period, even if the new engagements commence prior to the end of the 90-day wind-down period, which expires on April 9.

    Financial Crimes Department of Treasury Iran Combating the Financing of Terrorism Of Interest to Non-US Persons OFAC Sanctions

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  • Executive Order, OFAC designations sanction Iranian industries

    Financial Crimes

    On January 10, President Trump issued a new Executive Order, “Imposing Sanctions with Respect to Additional Sectors of Iran,” while OFAC took action by designating eight Iranian officials, 17 Iranian entities, three China-and-Seychelles-based entities, and a vessel in response to recent military action taken by Iran against U.S. military interests. Specifically, E.O. 13902 imposes penalties on foreign financial institutions that knowingly do business with or on behalf of the designated Iranian entities and individuals. According to the E.O., the purpose of the sanctions is to deny revenue to the government of Iran that may be used to further the development of nuclear weapons.

    Financial Crimes Department of Treasury OFAC Sanctions Of Interest to Non-US Persons Combating the Financing of Terrorism Executive Order Iran

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  • OFAC issues amended Iran-related General License, FAQs

    Financial Crimes

    On December 19, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued amended Iran General License (No. K-1), which permits transactions “ordinarily incident and necessary to the maintenance or wind down of transactions” involving certain shipping entities blocked by Executive Order 13846. In conjunction with the amendment, OFAC amended three Iran-related FAQs (FAQ 804, 806, and 807), which discuss whether sanctions on certain shipping tankers apply to their corporate parent and affiliates, the types of activities considered “maintenance” in General License K-1, and the processing of transactions by U.S. financial institutions involving a specific shipping tanker under General License K-1.

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

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  • Aircraft maintenance company issued OFAC violation

    Financial Crimes

    On December 12, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued a Finding of Violation to a now dissolved Texas-based aircraft maintenance company for alleged violations of the Global Terrorism Sanctions Regulations (GTSR). According to OFAC, in 2016, the company negotiated and entered into a memorandum of understanding (MOU) for aircraft maintenance with an Iranian commercial airline that was on OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List) for providing financial, material, and technological support to the Islamic Revolutionary Guard Corps-Qods Force. Although the company was aware that the airline was on the SDN list, and in fact, had made the MOU contingent upon the airline being removed from the list, they incorrectly believed that Iran General License I (GL I) allowed them to negotiate and enter into the contingent contract. The GL I, however, excluded transactions and dealings with anyone, including the airline, whose property is blocked pursuant to Executive Order 13224. In deciding to issue a Finding of Violation, OFAC considered as mitigating factors that the company had not been issued a penalty or a Finding of Violation in at least five years prior to the alleged violations and that the company was a small company with financial problems that led to its bankruptcy and dissolution. OFAC also considered a number of aggravating factors including that the airline was a “high-profile entity identified on the SDN List,” that the company knew that the airline was on the SDN list, and that the company “engaged in a reckless violation of the law” by negotiating and entering an MOU with the airline. According to OFAC, had it not dissolved, the company would have been subject to “a strong civil monetary penalty.”

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

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  • OFAC updates and issues new Iran-related FAQs

    Financial Crimes

    On November 27, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) updated two existing Iran-related FAQs: FAQ 303, which discusses insurance, reinsurance, and underwriting activities; and FAQ 804, which discusses whether sanctions on certain shipping tankers apply to their corporate parent and affiliates. Additionally, OFAC issued three new Iran-related FAQs (FAQ 805-807) covering the sanctions exposure of non-U.S. persons, the types of activities considered “maintenance” in General License K, and the processing of transactions involving a specific shipping tanker under General License K.

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

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  • OFAC sanctions Iran’s central bank and national development fund

    Financial Crimes

    On September 20, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13224 against Iran’s central bank, the country’s national development fund, and an Iran-based company for providing financial support to the Islamic Revolutionary Guards Corps, its Qods Force (IRGC-QF), and Hizballah, the regime’s terrorist proxy. OFAC designated the bank for purportedly providing billions of dollars to these entities, and alleged that the national development fund “has been a major source of foreign currency and funding” for both the IRGC-QF and Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL). Sanctions were brought against the Iran-based company for concealing financial transfers for MODAFL’s military purchases, including those originating from the national development fund. As a result of the sanctions, “all property and interests in property of these entities that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC.” OFAC noted that its regulations “generally prohibit” U.S. persons from participating in transactions with the designated persons, and warned foreign financial institutions that if they knowingly facilitate significant transactions for any of the designated entities, they may be subject to U.S. correspondent account or payable-through account sanctions.

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

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  • District Court dismisses suit claiming banks evading Iran sanctions

    Courts

    On September 16, the U.S. District Court for the Eastern District of New York dismissed an action alleging 10 financial institutions (defendants) conspired to evade U.S. sanctions on financial and business dealings with Iran, resulting in the direct and indirect material support for terrorism. According to the opinion, the plaintiffs—a group of veterans who served in Iraq from 2004 to 2011 and were injured or killed by terrorist attacks during that time—alleged that the defendants conspired with the Government of Iran, and multiple state-affiliated and private Iranian entities that work with the Islamic Revolutionary Guard Corps’s (IRGC) and Hezbollah’s terrorist activities, to evade U.S. sanctions and conduct illicit trade-finance transactions, which helped to facilitate Iran’s provision of material support to terrorist activities. The defendants moved to dismiss the action and, in July 2018, a magistrate judge issued a Report and Recommendation (R&R) recommending that the motions be denied in their entirety.

    On review, the district court declined to adopt the R&R and granted the defendants’ motion to dismiss. The court noted that the plaintiffs’ allegations indicate that Iran conspired to provide material support to the terrorist organizations, but failed to establish that the defendants “agreed to provide illegal financial services to Iranian financial and commercial entities . . . with the intent that those services would ultimately benefit a terrorist organization.” Moreover, the court reasoned that “it is up to Congress, and not the judiciary, to authorize terrorism victims to recover damages for their injuries from financial institutions that conspire with state sponsors of terrorism like Iran to evade U.S. sanctions under circumstances such as those presented in this case.”

    Courts Sanctions Department of Treasury OFAC Class Action Iran Of Interest to Non-US Persons

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  • OFAC sanctions Iranian petroleum shipping network

    Financial Crimes

    On September 4, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order (E.O.) 13224 against a complex shipping network “that is directed by and financially supports the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and its terrorist proxy Hizballah.” According to OFAC, the IRGC-QF managed to obfuscate its involvement in moving hundreds of millions of dollars’ worth of Iranian oil over the past year through the use of the sanctioned shipping network for the benefit of illicit actors. The sanctioned shipping network includes 16 entities and 10 individuals, as well as 11 vessels identified as “as property in which blocked persons have an interest.”

    As a result of the sanctions, “all property and interests in property of these entities that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC.” OFAC noted that its regulations “generally prohibit” U.S. persons from participating in transactions with the designated persons, and warned foreign financial institutions that if they knowingly facilitate significant financial transactions for any of the designated entities, they may be subject to U.S. correspondent account or payable-through account sanctions. Additionally, OFAC issued a reminder that “the purchase, acquisition, sale, transport, or marketing of petroleum or petroleum products from Iran is sanctionable pursuant to E.O. 13846,” and released a new shipping advisory warning the maritime community of these types of schemes and the sanctions risks associated with blocked persons.

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

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  • OFAC sanctions bank connected to Hizballah; identifies several individuals as facilitators for HAMAS

    Financial Crimes

    On August 29, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13224 (E.O. 13224) against a Lebanon-based financial institution, along with three of its subsidiaries, for allegedly facilitating banking activities for Hizballah. OFAC designated the financial institution as a Specially Designated Global Terrorist “for assisting in, sponsoring, or providing financial, material, or technological support for, or financial or other services to or in support of, Hizballah.” As a result of the sanctions, “all property and interests in property of these targets that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC.” OFAC noted that its regulations “generally prohibit” U.S. persons from participating in transactions with the designated persons. The designated entities are also subject to secondary sanctions pursuant to the Hizballah Financial Sanctions Regulations, which implement the Hizballah International Financing Prevention Act of 2015, and allow OFAC the authority to “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 knowingly facilitates a significant transaction for Hizballah, or a person acting on behalf of or at the direction of, or owned or controlled by, Hizballah.”

    The same day, OFAC also designated several financial facilitators pursuant to E.O. 13224 for allegedly acting as intermediaries between Iran’s Islamic Revolutionary Guard Corps-Qods Force and HAMAS’s operational arm. According to OFAC, the Lebanon and Gaza-based financial facilitators are responsible for moving tens of millions of dollars from Iran through Hizballah to HAMAS, funding violence against people in Gaza. As a result, all property and interests in property of the sanctioned targets subject to U.S. jurisdiction are blocked and must be reported to OFAC. U.S. persons are also generally prohibited from entering into transactions with designated persons. Furthermore, “persons that engage in certain transactions with the individuals designated today may themselves be exposed to sanctions or subject to an enforcement action.” 

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

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  • OFAC sanctions procurement networks supporting Iran’s missile programs

    Financial Crimes

    On August 28, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), pursuant to Executive Order (E.O.) 13382, designated two Iranian networks involved in the procurement of materials for persons related to the Islamic Revolutionary Guard Corps, the Iranian regime’s missile program, and Iran’s Ministry of Defense and Armed Forces Logistics. According to OFAC, one of the identified networks utilized a Hong Kong-front company to evade U.S. and international sanctions in order to “facilitate tens of millions of dollars’ worth of proliferation activities targeting U.S. technology and electronic components.” As a result of the sanctions, “all property and interests in property of these individuals that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC.” OFAC noted that its regulations “generally prohibit” U.S. persons from participating in transactions with the designated individuals, and warned foreign financial institutions that if they knowingly facilitate significant transactions for any of the designated individuals, they may be subject to U.S. correspondent account or payable-through account sanctions.

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

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