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  • OFAC, Canada, and the EU sanction Russian-backed officials for Crimean incursion

    Financial Crimes

    On January 29, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced that it took action against seven “Crimean Officials” backed by Russia, and a Russian railway company and its CEO. The announcement states that the officials unilaterally assumed governmental control of the Crimean Peninsula. OFAC designated the officials under Executive Order (E.O.) 13660, in partnership with Canada and the European Union (EU), which both also designated the officials “in a strong demonstration of the international community’s continued condemnation of Russia’s interference in Crimean politics.” According to the announcement, Secretary of the Treasury, Steven T. Mnuchin, asserts that he believes the coordinated designations by OFAC and the two nations may prevent the “illegitimate officials” from doing business internationally. The OFAC designations of the railway company and its CEO for operating in the Crimea Region of Ukraine under E.O. 13685, come shortly after the railway started a passenger route from Russia to the Crimean Peninsula in late December. As a result of the sanctions, “all property and interests in property of these individuals and entity 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 persons that if they knowingly facilitate significant transactions for any of the designated persons, they may be designated themselves.

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

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  • OFAC issues Ukraine-/Russia-related FAQs

    Financial Crimes

    On December 20, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC), published a new Ukraine-/Russia-related FAQ. FAQ 815 explains that Section 7503 of the National Defense Authorization Act for Fiscal Year 2020, or the Protecting Europe’s Energy Security Act of 2019 became effective immediately upon the President signing it on December 20. This section—entitled “Imposition of sanctions with respect to provision of certain vessels for the construction of certain Russian energy export pipelines”—specifies that parties who have knowingly provided vessels engaged in deep sea pipe laying for the Nord Stream 2 or Turkstream pipelines must ensure that such vessels cease such activity as soon as safely possible in order to protect human life and “avoid any environmental or other significant damage.”

    Financial Crimes OFAC Department of Treasury Sanctions Ukraine Russia

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  • District Court voids OFAC fine of $2 million

    Financial Crimes

    On December 31, the U.S. District Court for the Northern District of Texas vacated a $2 million civil penalty imposed on a global petroleum company (company) by OFAC for the company’s purported violation of sanctions, ruling that the OFAC regulations did not provide “fair notice” to the company that its actions were prohibited. In May of 2014, OFAC issued sanctions regulations relating to Ukraine. Shortly afterwards, the company and a Russian oil company, with which it had a long-established business relationship, executed several contracts. Although the Russian company was not a blocked entity, its president, who signed the contracts, had been named a specially designated national (SDN). In July of 2014, OFAC issued a penalty notice with a $2 million penalty to the company, alleging that the contracts the company executed with the Russian company violated the Ukraine-related sanctions. The company immediately challenged the penalty notice and fine, asserting that at the time it entered into the subject transactions, the OFAC regulations on Ukraine were not clear, and it interpreted them to allow the transactions. The court agreed with the company, holding that the “text of the regulations does not provide fair notice of its interpretation” in accordance with the Due Process Clause, because “the text [of the regulation] does not ‘fairly address’ whether a U.S. entity receives a service from a SDN when that SDN performs a service enabling the U.S. person to contract with a non-blocked entity. Therefore, the court granted the company’s motion for summary judgment and vacated OFAC’s Penalty Notice.

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

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  • OFAC announces sanctions against Russia-based organization for malware attacks on financial institutions

    Financial Crimes

    On December 5, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13694 against a Russia-based cybercriminal organization for allegedly developing and distributing malware that infected financial institutions and resulted in more than $100 million in theft. OFAC’s action targets 17 individuals and seven entities and is “intended to disrupt the massive phishing campaigns orchestrated by [the organization],” Treasury Secretary Steven T. Mnuchin stated. According to OFAC, the organization used the malware to infect computers and harvest login credentials from roughly 300 banks and financial institutions in over 40 countries, resulting in millions of dollars of damage to U.S. and international financial institutions and their customers. As a result of the sanctions, all property and interests in property of these persons subject to U.S. jurisdiction are blocked, along with “any entities 50 percent or more owned by one or more designated persons.” OFAC noted that its regulations “generally prohibit” U.S. persons from participating in transactions with designated persons, and warned that “foreign persons may be subject to secondary sanctions for knowingly facilitating a significant transaction or transactions with these designated persons.”

    In a concurrent action announced the same day, the DOJ unsealed criminal charges—including those related to international computer hacking and bank fraud schemes—against two of the organization’s members. In addition, Treasury’s Financial Crimes Enforcement Network and the Cybersecurity and Infrastructure Security Agency released a report providing a technical analysis of the malware and related variants, emphasizing that because the malware continues to target the financial services sector, financial institutions should review and incorporate the report’s techniques, tactics, and procedures into existing network defense capabilities and planning.

    Financial Crimes OFAC Of Interest to Non-US Persons Sanctions Russia DOJ FinCEN

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  • OFAC targets Russian facilitators of illicit North Korean transactions

    Financial Crimes

    On June 19, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced its decision to sanction a Russian financial entity, pursuant to Executive Order 13382, for allegedly “having provided, or attempted to provide, financial, material, technological, or other support for, or goods or services” on behalf of an entity that is owned and controlled by North Korea’s primary foreign exchange bank. According to OFAC, since at least 2017 and continuing through 2018, the Russian entity has provided multiple accounts to the North Korean entity, which has “enabled North Korea to circumvent U.S. and UN sanctions to gain access to the global financial system in order to generate revenue for the Kim regime’s nuclear program.” Pursuant to OFAC’s sanctions, all property and interests in property of the designated persons within U.S. jurisdiction must be blocked and reported to OFAC. OFAC notes that its regulations “generally prohibit” U.S. persons from participating in transactions with these individuals and entities.

    Financial Crimes Russia North Korea Sanctions Department of Treasury OFAC

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  • OFAC sanctions Russians for aggression against Ukraine

    Financial Crimes

    On March 15, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced its decision to sanction six Russian individuals and eight entities, pursuant to Executive Order 13661, for “playing a role in Russia’s unjustified attacks on Ukrainian naval vessels in the Kerch Strait, the purported annexation of Crimea, and backing of illegitimate separatist government elections in eastern Ukraine.” The action complements sanctions imposed the same day by the European Union and Canada as part of a coordinated effort “to counter Russia’s continued destabilizing behavior and malign activities.” As a result, all property and interests in property of the sanctioned individuals and entities, as well as any entities owned 50 percent or more by them, are blocked and U.S. persons are generally prohibited from entering into transactions with them.

    Visit here for continuing InfoBytes cover of actions related to Russia and Ukraine.

    Financial Crimes Ukraine Sanctions Russia OFAC Department of Treasury

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  • OFAC sanctions Russian bank for providing assistance to Venezuelan oil company

    Financial Crimes

    On March 11, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against a Moscow-based bank for materially assisting Venezuela’s state-owned oil company, which was sanctioned earlier this year by OFAC pursuant to Executive Order 13850. (See previous InfoBytes coverage here.) The bank, which is jointly owned by Russian and Venezuelan state-owned companies, “materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of,” the previously sanctioned entity. According to OFAC, the bank was also identified as “the primary international financial institution willing to finance” the Venezuelan cryptocurrency, Petro, which was allegedly created to help former President Maduro’s regime circumvent U.S. sanctions. As a result, any assets or interests therein belonging to the bank, as well as any entities directly or indirectly owned 50 percent or more by the bank that are subject to U.S. jurisdiction are blocked and must be reported to OFAC. U.S. persons are also prohibited generally from dealing with any such property or interests.

    Visit here for continuing InfoBytes coverage of actions related to Venezuela.

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  • OFAC lifts sanctions on designated companies linked to Russian oligarch

    Financial Crimes

    On January 27, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) lifted sanctions on three companies identified last April in connection with sanctions imposed against a Russian oligarch. (See previous InfoBytes coverage here on the full list of sanctioned Russian oligarchs and government officials.) Under the terms of removal from OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List), the companies reduced the sanctioned Russian oligarch’s “direct and indirect shareholding stake in these companies and severed his control.” The majority of directors on the companies’ boards going forward will be independent directors and include U.S. and European persons with no ties to identified persons on the SDN List. OFAC reports that the companies “have also agreed to unprecedented transparency for Treasury into their operations by undertaking extensive, ongoing auditing, certification, and reporting requirements.” The sanctions imposed against the Russian oligarch remain in place.

    Visit here for additional InfoBytes coverage on Ukraine/Russian sanctions.

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  • OFAC issues temporary extension of Ukraine-related General Licenses

    Financial Crimes

    On January 16, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the issuance of Ukraine-related General Licenses (GL) 13J, 14E, and 16E, which modify the expiration dates of previous Ukraine-based general licenses for wind-down transactions for certain companies that otherwise would be prohibited by Ukraine-Related Sanctions Regulations.

    GL 13J supersedes GL 13I and authorizes, among other things, activities and transactions “ordinarily incident and necessary” for (i) the divestiture of the holdings of specified blocked persons to a non-U.S. person; and (ii) the facilitation of transfers of debt, equity, or other holdings involving specified blocked persons to a non-U.S. person. GL 14E, which supersedes GL 14D, relates to specific wind-down activities involving a Russian aluminum producer sanctioned last April as previously covered by InfoBytes here. GL 16E supersedes GL 16D and authorizes permissible activities with the designated company and its subsidiaries, and applies to the maintenance and wind-down of operations, contracts, and agreements that were effective prior to April 6.

    Financial Crimes Sanctions OFAC Department of Treasury Ukraine International

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  • OFAC issues continued extension of Ukraine-related General Licenses

    Financial Crimes

    On December 7, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the issuance of Ukraine-related General Licenses (GL) 13H, 14D, 15C, and 16D, which amend previous licenses related to permissible wind-down transactions that otherwise would be prohibited by Ukraine-Related Sanctions Regulations with respect to the subject entities. OFAC extended the expiration dates of the licenses from January 7 to January 21.

    GL 13H supersedes GL 13G and authorizes, among other things, activities “ordinarily incident and necessary” to (i) divest or transfer debt, equity, or other holdings in the specified blocked entities to a non-U.S. person; or (ii) facilitate the transfers of debt, equity, or other holdings in those entities by a non-U.S. person to another non-U.S. person. GL 14D, which supersedes GL 14C, relates to specific wind-down activities involving a Russian aluminum producer sanctioned last April as previously covered by InfoBytes here. GL 15C and GL 16D supersede GL 15B and GL 16C, respectively, and authorize permissible activities relating to the maintenance or wind-down of operations, contracts, and agreements with designated entities and subsidiaries that were effective prior to April 6.

    Visit here for additional InfoBytes coverage on Ukraine sanctions.

    Financial Crimes Department of Treasury OFAC Ukraine Sanctions

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