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  • OFAC designates shipping network for aiding North Korea

    Financial Crimes

    On August 30, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced additions to the Specially Designated Nationals List pursuant to Executive Order 13810. The additions identify two Taiwanese individuals and three entities, as well as one Hong Kong-based vessel identified as blocked property, for allegedly facilitating the delivery of fuel originally intended for the Philippines to North Korean vessels via ship-to-ship transfers. According to OFAC, the additions highlight “North Korea’s continued use of illicit ship-to-ship (STS) transfers to circumvent United Nations . . . sanctions that restrict the import of petroleum products, as well as the U.S. Government’s commitment to implement existing UN Security Council Resolutions.” As a result of the sanctions, “all property and interests in property of these individuals and 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 individuals, they may be subject to U.S. correspondent account or payable-through account sanctions.

    Financial Crimes Department of Treasury OFAC Of Interest to Non-US Persons North Korea 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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  • OFAC announces settlement with trade credit insurer for sanctions violations

    Financial Crimes

    On August 16, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $345,315 settlement with a Maryland-based trade credit insurer for two alleged violations of the Foreign Narcotics Kingpin Sanctions Regulations. The settlement resolves potential civil liability for the company’s receipt of payment from the liquidation of assets belonging to a company that was added to the List of Specially Designated Nationals and Blocked Persons in 2016. According to OFAC, by accepting the assignment to collect debt owed by the designated company and receiving payment, the company violated sanctions regulations.

    In arriving at the settlement amount, OFAC considered various mitigating factors, including (i) the company has not received a penalty or finding of a violation in the five years preceding the transactions at issue; (ii) the company voluntarily conducted a full internal review, cooperated with OFAC during the investigation, and undertook remedial efforts to minimize the risk of similar violations from occurring in the future; and (iii) the company agreed to implement certain compliance commitments to ensure the strength of its sanctions compliance program.

    OFAC also considered various aggravating factors, including that the company did not voluntarily self-disclose the issue to OFAC and the company failed to undertake measures to confirm the assignment of debt and acceptance of payment was permitted under existing authorizations.

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

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  • OFAC amends sanctions regulations targeting Iran’s metal sector

    Financial Crimes

    On August 6, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced that the “Iranian Human Rights Sanctions Regulations” has been renamed as the “Iranian Sector and Human Rights Abuses Sanctions Regulations.” The amended sanctions regulations implement Executive Order (E.O.) 13871 (previously covered by InfoBytes here), which authorizes the imposition of sanctions on persons determined to operate in Iran’s iron, steel, aluminum, and copper sectors. OFAC concurrently amended and published several new FAQs, including a discussion of the relevant 90-day wind-down period for affected transactions as well as sanction exceptions. The amendments take effect August 7.

    Visit here for additional InfoBytes coverage of actions related to Iran.

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

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  • OFAC fines truck manufacturer for Iranian sanctions violations

    Financial Crimes

    On August 6, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a roughly $1.7 million settlement with a Washington-based truck manufacturer for 63 alleged violations of the Iranian Transactions and Sanctions Regulations. The settlement resolves potential civil liability for actions taken by a wholly-owned subsidiary of the company that allegedly sold or supplied trucks with a total transactional value of over $5.4 million to European customers, but knew or had reason to know the trucks were ultimately intended for buyers in Iran.

    In arriving at the settlement amount, OFAC considered various mitigating factors, including that (i) neither the company nor the subsidiary have received a penalty or finding of a violation in the five years prior to the transactions at issue; (ii) the subsidiary had in place at the time of the alleged violations a trade sanctions compliance program with contractual prohibitions on dealers and service partners that were re-selling products in violation of U.S. trade sanctions; and (iii) the company and subsidiary voluntarily self-disclosed the issue to OFAC, cooperated with OFAC during the investigation, and undertook remedial efforts to minimize the risk of similar violations from occurring in the future.

    OFAC also considered various aggravating factors, including that the subsidiary failed to exercise caution when alerted to warning signs regarding the potential sales, and that in each instance, a subsidiary employee was aware of the conduct leading to the alleged violations.

    Visit here for additional InfoBytes coverage of actions related to Iran.

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

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  • President Trump issues Executive Order blocking property of the Government of Venezuela

    Financial Crimes

    On August 5, President Trump issued Executive Order (E.O.) 13884 titled “Blocking Property of the Government of Venezuela,” which, among other things, prevents all property and interest in property of the Government of Venezuela existing within the U.S. or in the possession of a U.S. person from being transferred, paid, exported, withdrawn, or otherwise dealt in. E.O. 13884 is being issued in light of the actions of the Maduro regime, “as well as human rights abuses, including arbitrary or unlawful arrest and detention of Venezuelan citizens, interference with freedom of expression, including for members of the media, and ongoing attempts to undermine Interim President Juan Guaido and the Venezuelan National Assembly's exercise of legitimate authority in Venezuela.”

    In connection with the issuance of the E.O, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued new and revised FAQs, as well as 12 amended general licenses (General Licenses 2A, 3F, 4C, 7C, 8C, 9E, 10A, 13C, 15B, 16B, 18A, 20A) and 13 new general licenses (General Licenses 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33) related to Venezuela.

    Additionally, OFAC issued new guidance highlighting the U.S. government’s “commitment to the unfettered flow of humanitarian aid to the Venezuelan people.” OFAC notes that its regulations and general licenses allow U.S. persons to continue to provide humanitarian support to the Venezuelan people, including via transactions through the U.S. financial system for authorized activities. OFAC sanctions do not prohibit transactions involving the country or people of Venezuela, provided blocked persons or proscribed conduct are not involved.

    For continuing InfoBytes coverage on Venezuela, including more information on blocked persons or actions, click here.

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

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  • Treasury undersecretary delivers remarks on the importance of network sanctions

    Financial Crimes

    On July 31, Department of Treasury Under Secretary for Terrorism and Financial Intelligence (TFI) Sigal Mandelker delivered remarks at the Center for Strategic and International Studies in Washington, D.C. to discuss the use of sanctions in combating critical national security and illicit financial threats. After summarizing several achievements related to the exposure and disruption of global financial schemes, Mandelker discussed TFI’s collaboration with other Treasury agencies, such as the Office of Foreign Assets Control, the Financial Crimes Enforcement Network, the Office of Intelligence and Analysis, and the Office of Terrorist Financing and Financial Crimes, to create an organizational structure that “integrates unparalleled insight into the financing of emerging global threats with powerful economic authorities to counter them.” Mandelker noted that while sanctions can be very powerful tools to cut off both financial and material support to terrorist groups and regimes, a broader strategic approach is necessary, including, among other things, anti-money laundering measures, enforcement actions, foreign engagement, intelligence and analysis, and private-sector partnerships. She noted that one method employed by the agencies to maximize their impact in combating illicit financial threats is through the use of network sanctions, which recognize that “bad actors” rarely act alone, and instead frequently rely upon complicated structures using shell companies, business partners, and facilitators to disguise activities and launder money. “When we focus on these broader networks and their assets, we can more effectively block a bad actor’s ability to access their ill-gotten gains, making it more difficult for them to use the global marketplace or continue in their business arrangements,” Mandelker stated. Mandelker further commented that in 2019 alone, Treasury has “issued nearly $1.3 billion in civil monetary penalties and settlements for financial institutions and corporate actors related to violations of our sanctions programs.” 

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

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  • DOJ announces $3 million SCRA settlement with auto finance company

    Federal Issues

    On August 1, the Department of Justice (DOJ) announced a $3 million settlement with a captive auto finance company, resolving allegations that it violated the Servicemembers Civil Relief Act (SCRA) by repossessing 113 vehicles owned by SCRA-protected servicemembers without first obtaining court orders and failing to refund upfront capitalized cost reduction (CCR) amounts to servicemembers who lawfully terminated vehicle leases early under the SCRA. According to the DOJ’s complaint, when a servicemember terminated their lease early pursuant to the SCRA, the finance company retained the entire CCR amount even though the SCRA requires that it refund all lease amounts paid in advance for a period after the effective date of the termination. The settlement agreement covers all repossessions of servicemembers vehicles and leases terminated by servicemembers since January 2008, and requires the finance company to create an almost $3 million settlement fund to compensate affected servicemembers and pay the U.S. Treasury $62,000. Moreover, the agreement requires the finance company to review and update its SCRA policies and procedures to prevent future violations and to provide SCRA compliance training to specified employees.

    Federal Issues DOJ SCRA Servicemembers Department of Treasury

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  • OFAC sanctions corruption network linked to Venezuela’s food subsidy program; DOJ charges two of same individuals for money laundering related to bribery

    Financial Crimes

    On July 25, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against two Colombian nationals responsible for “orchestrating a vast corruption network,” which has enabled former President Maduro and his regime “to significantly profit from food imports and distribution in Venezuela.” According to OFAC, the Colombian nationals created a network comprised of shell companies, business partners, and family members—all of whom have also been designated for their involvement in the network—that illicitly profited from their involvement in Venezuela’s food subsidy program as well as other contracts with the Venezuelan government. The sanctioned network—which also included Maduro’s three stepsons—allegedly “laundered hundreds of millions of dollars in corruption proceeds around the world.” As a result of the sanctions, “all property and interests in property of the individuals and entities designated today, and of any entities that are owned, directly or indirectly, 50 percent or more by those individuals or entities, that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC.” OFAC noted that its regulations “generally prohibit” U.S. persons from participating in transactions with the designated entities and individuals. OFAC also referred financial institutions to Financial Crimes Enforcement Network advisories FIN-2019-A002FIN-2017-A006, and FIN-2018-A003 for further information concerning the efforts of Venezuelan government agencies and individuals to use the U.S. financial system and real estate market to launder corrupt proceeds, as well as human rights abuses connected to corrupt foreign political figures and their financial facilitators.

    The same day, the DOJ announced charges, pursuant to an indictment filed in the U.S. District Court for the Southern District of Florida, against two of the same sanctioned Colombian nationals for money laundering and conspiracy to commit money laundering. The charges relate to the Colombian nationals’ alleged roles in laundering the proceeds of an illegal bribery scheme from bank accounts located in Venezuela to and through bank accounts located in the United States. The bribery scheme resulted in the transfer of approximately $350 million, and allegedly involved contracts to build low-income housing units and efforts to take advantage of Venezuela’s government-controlled exchange rates through the use of “false and fraudulent import documents for goods and materials.”

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

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