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Terrorist Financing Targeting Center designates ISIS-affiliated financial facilitators and money services businesses
On July 15, the U.S. Treasury Department announced that the seven member nations of the Terrorist Financing Targeting Center (TFTC) have jointly designated six targets affiliated with the Islamic State of Iraq and Syria (ISIS), including three key money services businesses. Four targets are designated for providing “a critical financial and logistical lifeline to ISIS, its branches, and its global facilitation networks,” while two targets are designated for “abus[ing] the goodwill of the international community under the auspices of charitable giving to facilitate the transfer of funds for and to support the activities of ISIS’s branch in Afghanistan, ISIS-Khorasan (ISIS-K).” Since 2017, the participating TFTC members—Saudi Arabia, Bahrain, Kuwait, Oman, Qatar, the United Arab Emirates, and Treasury’s Office of Foreign Assets Control (OFAC)—have issued five rounds of joint designations against 60 terrorist targets globally, in an effort to challenge ISIS’s ability to finance its operations through money service businesses and charities operating under false pretenses.
As a result of the sanctions, “all property and interests in property of these targets that are or come within 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 all dealings by U.S. persons or within the United States that involve any property or interests in property of blocked persons.” OFAC further warned that persons that engage in transactions with one of the designated individuals maybe be exposed to sanctions or subject to an enforcement action. Additionally, foreign financial institutions that knowingly facilitate significant transactions to the designated entities may be subject to prohibitions or strict conditions by OFAC.
On July 15, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Orders 13848, 13694, and 13661 against three individuals and five entities located in Sudan, Hong Kong, and Thailand, for allegedly enabling a Russian financier to evade U.S. sanctions. According to OFAC, the financier supported the Internet Research Agency (IRA), a Russian “troll farm” designated by OFAC in 2018, and is believed to be the financier behind Private Military Company, a “designated Russian Ministry of Defense proxy force.” OFAC alleged that this operation “advocated for the use of social media-enabled disinformation campaigns similar to those deployed by the IRA, and the staging of public executions to distract protestors seeking reforms.” Additionally, OFAC alleged that the individual and Thailand and Hong Kong-based entities “facilitated over 100 transactions exceeding $7.5 million that were sent in the interest of [the financier].” As a result, all property and interests in property belonging to, or owned by, the identified individuals and entities subject to U.S. jurisdiction are blocked, and “any entities that are owned, directly or indirectly, 50 percent or more by the designated entities, are also blocked.” U.S. persons are generally prohibited from dealing with any property or interests in property of blocked or designated persons.
On July 15, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Venezuela General License (GL) 5D, which supersedes GL 5C and authorizes certain transactions otherwise prohibited under Executive Orders 13835 and 13857 related to, or that provide financing for, dealings in the Petróleos de Venezuela, S.A. 2020 8.5 Percent Bond on or after October 20, 2020. Concurrently, OFAC issued a new Venezuela-related frequently asked question regarding GL 5D.
On July 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13818 against a Chinese government entity and four current or former government officials for alleged corruption violations of the Global Magnitsky Human Rights Accountability Act. According to OFAC, the sanctioned persons are connected to serious human rights abuse against ethnic monitories in the Xinjiang region. The sanctions follow an advisory issued by the U.S. Departments of State, Treasury, Commerce, and Homeland Security advising “[b]usinesses with potential exposure in their supply chain to entities that engage in human rights abuses in Xinjiang or to facilities outside Xianjiang. . .[to consider] the reputational, economic, and legal risks of involvement with such entities.” As a result of the 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. The prohibitions also “include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person or the receipt of any contribution or provision of funds, goods or services from any such person.”
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.”
On July 2, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) revoked and archived Venezuela-related General License 37 “Authorizing the Wind Down of Transactions Involving Delos Voyager Shipping Ltd, Romina Maritime Co Inc, and Certain Vessels.” Additionally, OFAC removed eight companies from the Specially Designated Nationals and Blocked Persons list.
On July 6, the Small Business Administration (SBA), in conjunction with the Treasury Department, released the business information of certain Paycheck Protection Program (PPP) loan recipients. For any loan over $150,000, the SBA data release includes business names, addresses, NAICS codes, zip codes, business type, demographic data, non-profit information, name of lender, jobs supported, and a loan amount range. For loans under $150,000, the SBA withheld the business names and addresses in the release. The data release also includes overall statistics regarding dollars lent per state, loan amounts, top lenders, and distribution by industry. According to data, the PPP has approved over $4.8 million loans, with the average loan size of approximately $106,000. Currently, there are 5,460 participating lenders.
On June 24, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced that the captains of five Iranian U.S.-sanctioned tankers have been added to the Specially Designated National and Blocked Persons List (SDN List) for allegedly delivering gasoline and gasoline components to Venezuela. Treasury emphasized it “will target anyone who supports Iranian attempts to evade United States sanctions,” and stated it will use its authority to disrupt the Iranian regime’s support to Venezuela. 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 is blocked and must be reported to OFAC.” OFAC further noted that its regulations “generally prohibit all dealings by U.S. persons or within the United States (including transactions 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 for any of the designated individuals or entities may subject them to U.S. sanctions.
On June 25, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against four steel, aluminum, and iron companies for being directly or indirectly owned or controlled by Iran’s largest steel manufacturer, which was previously designated for operating in Iran’s steel sector and sanctioned by the Terrorist Financing Targeting Center for taking part in Iran’s terror support network. OFAC’s designations also target four foreign sales agents for being owned or controlled by the designated steel manufacturer, which, combined, “generated tens of millions of dollars annually” and provided “significant contributions to the billions of dollars generated overall by Iran’s steel, aluminum, copper, and iron sectors.” OFAC’s actions are taken pursuant to Executive Order 13871 (covered by InfoBytes here), which authorizes the imposition of sanctions on persons determined to operate in Iran’s iron, steel, aluminum, and copper sectors, which OFAC identified as providing “funding and support for the proliferation of weapons of mass destruction, terrorist groups and networks, campaigns of regional aggression, and military expansion.”
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, unless licensed or exempt,” and warned foreign financial institutions that knowingly facilitating significant transactions to the designated entities may subject them to U.S. correspondent account or payable-through sanctions.
On June 18, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against three individuals and eight foreign entities for allegedly engaging in activities in or associated with a network attempting to evade U.S. sanctions on Venezuela’s oil sector. Two vessels owned by two of the designated entities were also identified as blocked property pursuant to Executive Order 13850. OFAC noted that the identified persons participated in a scheme involving involved Venezuela’s state-owned oil company, Petroleos de Venezuela, S.A. (PdVSA), in order to benefit “the illegitimate regime of President Maduro.” Both PdVSA and Maduro were previously designated by OFAC (covered by InfoBytes here and here), and OFAC warned that persons who facilitate activity with designated persons “risk losing access to the U.S. financial system.” As a result, all property and interests in property belonging to the identified individuals and entities subject to U.S. jurisdiction are blocked, and “any entities that are owned, directly or indirectly, 50 percent or more by the designated entities, are also blocked.” U.S. persons are generally prohibited from dealing with any property or interests in property of blocked or designated persons.
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