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Counter ISIS Finance Group wants group isolated from international financial system
On November 18, the U.S. Treasury Department announced the release of a joint statement by the Counter ISIS Finance Group (CIFG) of the Global Coalition to Defeat ISIS, which coordinates efforts to isolate the Islamic State of Iraq and Syria (ISIS) from the international financial system and eliminate revenue sources. CIFG held its seventeenth meeting on November 8-9 to discuss ongoing efforts to combat ISIS financing worldwide. During the meeting, attendees discussed ISIS financing in the Middle East, Europe, Africa, and South and Southeast Asia, as well as “key systemic vulnerabilities in the global anti-money laundering and countering the financing of terrorism (AML/CFT) regime.” CIFG noted that ISIS facilitators prefer informal funds transfer methods, and to a lesser degree, virtual asset service providers most likely “because they offer anonymity, lack oversight across many jurisdictions, charge relatively low service fees, and often conduct quicker transactions than banks and registered money services businesses.” Attendees also exchanged case studies of recent investigations and prosecutions, and discussed other efforts to implement AML/CFT reforms to disrupt ISIS fundraising and financial facilitation networks. With a focus on international cooperation, CIFG members said they will continue to closely work with counterterrorism partners to disrupt ISIS funding sources and methods.
Treasury seeks to mitigate digital asset financial risks
On November 18, Assistant Secretary for Terrorist Financing and Financial Crimes at the U.S. Department of Treasury Elizabeth Rosenberg spoke before the Crypto Council for Innovation. In her prepared remarks, Rosenberg discussed an Action Plan to Mitigate the Illicit Finance Risks of Digital Assets (the “Action Plan”), which, according to Rosenberg, is a roadmap for how the U.S. government, led by Treasury, will bring greater transparency to the digital asset sector. The Action Plan is issued pursuant to President Biden’s Executive Order 14067 “Ensuring Responsible Development of Digital Assets” (covered by InfoBytes here). Rosenburg noted that the Action Plan identifies seven priority actions, including improving global anti-money laundering/countering the financing of terrorism (AML/CFT) regulation and enforcement, strengthening U.S. supervision of the virtual asset service providers sector, and engaging with the private sector. She emphasized that it is “critical” to work with the private sector, and between private sector entities, to detect and counter illicit finance. Rosenberg noted that to deepen Treasury’s insight, the agency released a Request for Comment (RFC) in September, seeking feedback on the Action Plan, the assessment of illicit financing risks, and opportunities to strengthen public-private collaboration.
As previously covered by InfoBytes, the RFC also sought public feedback on AML/CFT regulation and supervision, global implementation of AML/CFT standards, and central bank digital currencies. Rosenberg discussed two issues addressed in the comment letters: (i) a need for regulatory clarity; and (ii) more public-private engagement. Specifically, she noted that “[m]any of the comments acknowledged that in the United States, virtual asset service providers are subject to a regulatory framework for AML/CFT and have sanctions obligations.” She further noted that “industry commenters identified specific areas, such as questions around decentralized finance (DeFi), where they could benefit from additional regulatory clarity or guidance.” Rosenberg also emphasized that Treasury wants to “ensure that safeguards are in place to promote the responsible development of virtual assets to maintain privacy and shield against arbitrary or unlawful surveillance.” She further noted that the goal and intention of Treasury “is not to deter the development of technologies that provide privacy for virtual asset transfers,” and that Treasury “welcome[s] opportunities to further engage with industry on how these technologies can both promote privacy while also mitigating illicit finance risks and complying with regulatory and sanctions obligations.”
OFAC issues guidance on the Russian price cap policy for crude oil; issues Russia-related general licenses
On November 22, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) published a Determination Pursuant to Executive Order (E.O.) 14071 concerning the implementation of a price cap policy for crude oil of Russian Federation origin. The determination states that the prohibitions of E.O. 14071 apply to U.S. persons providing covered services (including (i) trading/commodities brokering; (ii) financing; (iii) shipping; (iv) insurance, including reinsurance and protection and indemnity; (v) flagging; and (vi) customs brokering) as they relate to the maritime transport of Russian Federation crude oil, provided, however, that such covered services are authorized if the Russian oil is purchased at or below the price cap. Additionally, OFAC published guidance on the implementation of a policy for crude oil of Russian Federation origin to provide an overview of the determination and the price cap. OFAC also issued Russia-related General License (GL) 55, GL 56, and GL 57. GL 55 authorizes certain services related to Sakhalin-2; GL 56 authorizes certain services with respect to the European Union; and GL 57 authorizes certain services related to vessel emergencies.
OFAC sanctions Iranian media corporation
On November 16, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13846 against six senior employees of the Iranian state-run media corporation that has broadcast hundreds of forced confessions of Iranian, dual national, and international detainees in Iran. According to OFAC, the corporation was designated in 2013 and does not act “as objective media outlet but rather as a critical tool in the Iranian government’s mass suppression and censorship campaign against its own people.” OFAC also noted that the corporation has “recently broadcast televised interviews of individuals being forced to confess that their relatives were not killed by Iranian authorities during nationwide protests but died due to accidental, unrelated causes.” As a result of the sanctions, all property and interests in property belonging to the sanctioned persons subject to U.S. jurisdiction are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also 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. Persons that engage in certain transactions with the individuals or entities designated today may themselves be exposed to designation. Additionally, OFAC warned that “any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the individuals designated today could be subject to U.S. sanctions.”
Yellen cites crypto market risks
On November 16, Treasury Secretary Janet Yellen issued a statement addressing recent crypto market developments. “The recent failure of a major cryptocurrency exchange and the unfortunate impact that has resulted for holders and investors of crypto assets demonstrate the need for more effective oversight of cryptocurrency markets,” Yellen said, stressing that existing regulations must be rigorously enforced against those who operate in the crypto-asset space. Acknowledging recent actions taken by federal regulators to address crypto risks in response to President Biden’s Executive Order on Digital Assets (covered by InfoBytes here), Yellen cautioned that it is imperative for the federal government, including Congress, to move quickly to address regulatory gaps in this space. She warned that while spillovers from recent events in the crypto markets “have been limited,” the interconnections between the traditional financial system and the crypto markets “could raise broader financial stability concerns.”
OFAC sanctions firms for aiding Russia’s acquisition of UAVs
On November 15, the U.S. Treasury Department’s Office of Foreign Assets Control announced sanctions pursuant to Executive Orders (E.O.) 13382 and 14024 against several firms responsible for the production and transfer of Iranian unmanned aerial vehicles (UAVs) to Russia for use in the country’s war against Ukraine. OFAC also designated two individuals who facilitated the acquisition of UAVs for a previously State Department-designated company. According to the announcement, the designations “implement commitments to target international actors involved in supporting Russia’s war machine, as highlighted by OFAC FAQs 1091 and 1092 and reinforced by an October 14, 2022 meeting of senior officials in Washington representing ministries of finance and other government agencies from 33 countries, in which the participants acknowledged the significance of sanction actions taken so far and discussed additional steps to further impair Russia’s military-industrial complex and critical defense supply chains.” The sanctions follow OFAC’s September designations against several persons involved in the shipment, production, and procurement of UAVs for Russia’s benefit. (Covered by InfoBytes here.) As a result of the sanctions, all property and interests in property belonging to the sanctioned individuals and entities subject to U.S. jurisdiction are blocked and must be reported to OFAC. U.S. persons are also generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons. Additionally, persons that engage in certain transactions with the sanctions individuals or entities may themselves be exposed to sanctions. OFAC further warned that “any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the individuals or entities designated today pursuant to E.O. 13382 could be subject to U.S. sanctions.”
The same day, the Departments of Treasury, Commerce, and State issued a joint alert detailing the impact of international sanctions and export controls on Russia’s military-industrial complex to date.
OFAC issues new counter terrorism GL and FAQ
On November 15, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Counter Terrorism General License (GL) 21, “Authorizing Limited Safety and Environmental Transactions Involving Certain Vessels,” which authorizes limited safety and environmental transactions involving certain persons or vessels that are normally prohibited by the Global Terrorism Sanctions Regulations (GTSR) through 12:01 a.m. EST, December 15, 2022. OFAC explained that such transactions are authorized provided payments to a blocked person are made into a blocked account in accordance with the GTSR. A list of unauthorized transactions are also included. OFAC also issued related FAQ 1097 to provide additional clarification on permitted transactions.
OFAC issues GL and FAQ regarding Russian transactions
On November 10, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the issuance of Russia-related General License (GL) 53 and related FAQ. GL 53 authorizes transactions for diplomatic missions of the Russian Federation prohibited by Directive 4 under Executive Order 14024, under certain circumstances. FAQ 1096 clarifies GL 53, noting that the authorizations in GL 53 apply to transactions related to Russian missions located in or outside the U.S. The FAQ also explains that “GL 53 does not authorize any transactions involving blocked persons, including blocked Russian financial institutions; nor does it authorize debits to the accounts on the books of U.S. financial institutions of entities subject to Directive 4.”
OFAC sanctions individuals and networks supporting Russia’s invasion
On November 14, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order (E.O.) 14024 against a total of 14 individuals and 28 entities, including a transnational network that procures technology in support of Russia’s military-industrial complex, and “a global network of financial facilitators, enablers, and others associated with two key Kremlin-linked elites whose fortunes are intertwined with the West.” OFAC also identified eight aircrafts as blocked property. “The United States will continue to expose and disrupt the Kremlin’s military supply chains and deny Russia the equipment and technology it needs to wage its illegal war against Ukraine,” Treasury Secretary Janet L. Yellen said in the announcement. “Together with our broad coalition of partners, we will continue to use our sanctions and export controls to weaken Russia’s military on the battlefield and cut into the revenue Putin is using to fund his brutal invasion.” As a result of the sanctions, all property and interests in property belonging to the sanctioned persons that are in the U.S. or in the possession or control of U.S. persons are blocked and must be reported to OFAC. Further, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons, unless exempt or authorized by a general or specific OFAC license.
In conjunction with the sanctions, OFAC issued Russia-related General License (GL) 40C related to civil aviation safety. GL 40C authorizes certain transactions normally prohibited by E.O. 14024 that are “ordinarily incident and necessary to the provision, exportation, or reexportation of goods, technology, or services to ensure the safety of civil aviation involving one or more of the blocked entities” provided the “aircraft is registered in a jurisdiction solely outside of the Russian Federation.”
OFAC announces sanctions tied to drug trafficking
On November 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 14059 against three individuals and nine entities for supplying certain drugs to U.S. markets through internet sales and a host of shell companies. OFAC noted that the sanctions would not have been possible without collaboration with the Drug Enforcement Administration and Homeland Security Investigations. As a result of the sanctions, all property and interests in property belonging to the sanctioned persons subject to U.S. jurisdiction are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also 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. Persons that engage in certain transactions with the designated individuals or entities may themselves be exposed to sanctions or enforcement action, OFAC warned.