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  • OFAC sanctions Nigerian nationals involved in business email compromise and romance fraud scheme

    Financial Crimes

    On June 16, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a coordinated action with the DOJ against six Nigerian nationals who allegedly conducted a business email compromise (BEC) scheme and engaged in romance fraud to steal more than $6 million from U.S. businesses and individuals. The designated individuals’ actions included, among other things, allegedly impersonating businesses executives to request and receive wire transfers from legitimate business accounts, and using manipulative tactics to gain access to usernames, passwords, and bank accounts. OFAC designated the individuals pursuant to Executive Order 13694, which “targets malicious cyber-enabled activities, including those related to the significant misappropriation of funds or economic resources for private financial gain.” As a result, all property and interests in property belonging to the designated individuals subject to U.S. jurisdiction are blocked, and “U.S. persons generally are prohibited from dealing with them.”

    OFAC also provided additional information regarding BEC scams and romance fraud and referred to the Financial Crimes Enforcement Network’s July 2019 advisory, which addresses efforts designed to restrict and impede BEC scammers and other illicit actors who profit from email compromise fraud schemes (covered by InfoBytes here).

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

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  • OFAC sanctions investors supporting Syrian government

    Financial Crimes

    On June 17, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against 24 individuals and entities for providing significant investment support to the Syrian government. According to OFAC, the designations include Treasury’s “first implementation of sanctions pursuant to the Caesar Syria Civilian Protection Act of 2019,” and involve actions taken against a holding company, a private sector investment venture, and luxury tourism developments. Concurrent with OFAC’s sanctions, the U.S. State Department also designated 15 persons, including President Bashar al-Assad and his wife, pursuant to Executive Order 13984, which focuses on persons identified as “obstructing, disrupting, or preventing a ceasefire or a political solution to the Syrian conflict.” As a result, all property and interests in property belonging to the designated persons and subject to U.S. jurisdiction are blocked and must be reported to OFAC. OFAC further noted that its regulations “generally prohibit all dealings by U.S. persons or those within (or transiting) the United States that involve any property or interests in property of designated persons,” and warned non-U.S. persons that engage in transactions with the designated persons may expose themselves to designation. OFAC also referenced a previously published Fact Sheet (covered by InfoBytes here), which highlights the most pertinent exemptions, exceptions, and authorizations for humanitarian assistance and trade under the Iran, Venezuela, North Korea, Syria, Cuba, and Ukraine/Russia-related​ sanctions programs to ensure humanitarian-related trade and assistance reaches at-risk populations through legitimate and transparent channels during the global Covid-19 pandemic.

    Financial Crimes OFAC Department of Treasury Sanctions Syria Of Interest to Non-US Persons Covid-19

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  • SBA issues PPP “EZ” loan forgiveness application

    Federal Issues

    On June 16, the Small Business Administration (SBA), in consultation with the U.S. Treasury Department, released the Paycheck Protection Program (PPP) EZ Loan Forgiveness Application. According to the PPP Loan Forgiveness Application Form 3508EZ instructions, a borrower may use the streamlined form if it meets one of three criteria: (i) the borrower is self-employed, an independent contractor, or sole proprietor with no employees at the time of application; (ii) the borrower did not reduce salary or wages of any employee by more than 25 percent during the covered period and did not reduce the number of employees or the average paid hours of employees; or (iii) did not reduce salary or wages of any employee by more than 25 percent during the covered period and was unable to operate during the covered period at the same business activity level as prior to February 15, 2020, due to compliance with certain government requirements. Recently, a group of bipartisan senators urged the SBA to streamline the loan forgiveness form arguing that the “11-page forgiveness application” was “beyond the program’s intent” and that it was unnecessarily onerous (covered by InfoBytes here).

    Additionally, the SBA released additional revisions to the interim final rule implementing Section 1102 of the CARES Act, which establishes the PPP, to reflect changes made by the PPP Flexibility Act of 2020. InfoBytes coverage regarding the PPP Flexibility Act changes can be found here.

    Federal Issues Department of Treasury SBA Covid-19 Small Business Lending Flexibility Act

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  • SBA codifies PPP flexibility guidance

    Federal Issues

    Recently, the Small Business Administration (SBA) released an interim final rule (IFR) to incorporate key revisions made to the Paycheck Protection Program (PPP) by the Paycheck Protection Program Flexibility Act of 2020 (Flexibility Act). The Flexibility Act, as previously covered by InfoBytes, took effect June 5. Many of the Flexibility Act’s provisions, such as those related to loan forgiveness and deferral periods for PPP loans, are retroactive to March 27, 2020. The provision related to the maturity date of PPP loans took effect June 5, 2020, and the remaining provisions will take effect upon publication in the Federal Register.

    The IFR codifies several changes made to the PPP, including the following:

    • Reiterates that the last day a lender can obtain an SBA loan number for a PPP loan is June 30, 2020.
    • Amends the end date of the “covered period” for a PPP loan from June 30, 2020 to December 31, 2020.
    • Provides a minimum maturity of five years for all PPP loans made on or after the enactment of the Flexibility Act, and provides an option for borrowers and lenders to mutually agree to extend maturity from two years to five years for loans made before June 5.
    • Clarifies that if a borrower submits its loan forgiveness application within 10 months of the end of the loan forgiveness period, the borrower will not be required to make any payments on the loan before the date SBA remits the forgiven amount to the lender or notifies the lender that loan forgiveness is not allowed.
    • Extends the deferral period on PPP loans by extending the loan forgiveness period from eight weeks to 24 weeks beginning on the date the loan is disbursed. However, borrowers may opt to keep the forgiveness period at eight weeks for loans made prior to June 5, 2020. 
    • Sets the minimum amount that businesses must spend on payroll at 60 percent in order to receive forgiveness, but provides that—consistent with a safe harbor in the Flexibility Act—the SBA, in consultation with Treasury, will “interpret[] this requirement as a proportional limit on nonpayroll costs as a share of the borrower’s loan forgiveness amount, rather than as a threshold for receiving any loan forgiveness.” Revisions to the SBA’s IFRs on loan forgiveness and loan review procedures addressing these amendments are forthcoming.

    The SBA also released an updated borrower application form, as well as a revised lender application.

    Federal Issues Department of Treasury Small Business Lending SBA CARES Act Covid-19 Flexibility Act

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  • SBA reduces felony look-back to one year for PPP applicants

    Federal Issues

    On June 12, the Small Business Administration (SBA), in consultation with the Treasury Department, released additional revisions to the interim final rule implementing Section 1102 of the CARES Act, which establishes the Paycheck Protection Program (PPP). Specifically, the changes impact the eligibility requirements related to felony convictions of applicants or owners of the applicant. The revisions reduce the look-back period from five years to one year for any felony conviction that does not involve fraud, bribery, embezzlement, or a false statement in a loan application or an application for federal financial assistance. The ineligibility rule applies to any owner of 20 percent or more of equity in the applicant's business. The revisions are effective immediately and reflected in the updated Borrower Application and Lender Application.

    Federal Issues SBA Covid-19 Department of Treasury Small Business Lending CARES Act Flexibility Act

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  • OFAC updates FAQs related to Iranian humanitarian goods manufacturing

    Financial Crimes

    On June 5, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued updated Iran-related FAQs related to Executive Order (E.O.) 13902 concerning the treatment of Iranian manufacturers that provide humanitarian goods. As previously covered by InfoBytes, E.O, 13902 authorizes the Secretary of the Treasury, in conjunction with the Secretary of State, to impose asset blocking sanctions on any person determined to operate in the construction, mining, manufacturing or textile sectors of the Iranian economy, or any additional sector as they may jointly determine. Additionally, EO 13902 authorizes the imposition of certain sanctions on any person determined to have engaged in, or any foreign financial institution determined to have knowingly facilitated, a significant transaction involving one of the aforementioned sectors of the Iranian economy. The FAQs state that OFAC will not target persons in Iran manufacturing humanitarian goods, such as “medicines, medical devices, or products used for sanitation or hygiene” as long as the products are “solely for use in Iran and not for export from Iran.” The FAQs also define Iranian economy sectors, specify what constitutes as “significant goods or services,” and clarify the interpretation of “‘knowingly’ and ‘significantly reduced’” for purposes of E.O. 13902. Additionally, on June 8, OFAC added several Iran-related designations to its Specially Designated Nationals List.

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

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  • OFAC publishes Syria-related sanctions regulations

    Financial Crimes

    On June 4, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the issuance of regulations to implement Executive Order (E.O.) 13894: “Blocking Property and Suspending Entry of Certain Persons Contributing to the Situation in Syria.” E.O. 13894 was issued last October following the determination that the situation in and in relation to Syria “undermines the campaign to defeat [ISIS].” The final rule implementing the regulations, which was published in an abbreviated form to provide immediate guidance to the public, took effect June 5. OFAC states it “intends to supplement these regulations with a more comprehensive set of regulations, which may include additional interpretive and definitional guidance, general licenses, and statements of licensing policy.”

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

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  • SBA, Treasury address PPP amendments, rules and guidance forthcoming

    Federal Issues

    On June 8, Small Business Administration (SBA) Administrator Jovita Carranza and U.S. Treasury Secretary Steven T. Mnuchin issued a joint statement on the enactment of the Paycheck Protection Program Flexibility Act (Flexibility Act). As previously covered by InfoBytes, the Flexibility Act—which took effect June 5—amends provisions of the CARES Act and the Small Business Act to provide Paycheck Protection Program (PPP) borrowers greater flexibility and more time to make qualifying expenditures for loan forgiveness. Among other things, the Flexibility Act (i) extends the maturity period for PPP loans with remaining balances after applying for forgiveness to five years; (ii) extends the covered period from eight weeks to the earlier of 24 weeks after origination or December 31, 2020; (iii) sets the minimum amount that businesses must spend on payroll to receive forgiveness at 60 percent (rather than 75 percent); (iv) allows borrowers to defer principal and interest payments on PPP loans until the SBA remits the amount of determined forgiveness to the lender, instead of the original six-month deferral period; and (v) confirms that June 30, 2020 will be the last date on which a PPP loan application can be approved.

    SBA, in consultation with Treasury, will promptly issue rules and guidance, along with a modified borrower application form and loan forgiveness application to implement the Flexibility Act’s amendments to the PPP. The forthcoming rules and guidance will also establish various safe harbors from reductions in loan forgiveness based on reductions in full-time equivalent employees, as well as for businesses that document their inability to rehire workers employed as of February 15, and their inability to find similarly qualified workers by the end of the year.

    Federal Issues Department of Treasury SBA Small Business Lending CARES Act Flexibility Act Covid-19

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  • OFAC issues Iran nuclear FAQ

    Financial Crimes

    On May 27, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), in response to the Department of State’s announcement of an end to certain Iran nuclear-related waivers, issued a new FAQ and added two individuals to the Specially Designated Nationals and Blocked Persons List (SDN List). FAQ 829 provides a 60-day wind-down period for persons currently engaged in activities permitted by these waivers; however, OFAC cautions that such activities should be wound down by July 27 or persons risk exposure to sanctions under U.S. law absent another waiver or exception. The FAQ notes that the Iran Freedom and Counter-Proliferation Act “provides for sanctions on persons determined to knowingly provide significant financial, material, technological, or other support to, or goods or services in support of any activity or transaction on behalf of or for the benefit of, an Iranian person on OFAC’s SDN List.”

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

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  • CDFIs to exclusively lend $10 billion in PPP funding

    Federal Issues

    On May 28, the SBA, in consultation with the Treasury Department, announced that $10 billion of Round 2 funding for the Paycheck Protection Program (PPP) will be lent exclusively by Community Development Financial Institutions (CDFIs) to ensure that “the PPP reaches all communities in need of relief during the Covid-19 pandemic.” SBA Administrator Jovita Carranza stated, “CDFIs provide critically important capital and technical assistance to small businesses from rural, minority and other underserved communities, especially during this economically challenging time.” The announcement notes that as of May 23, CDFIs have approved more than $7 billion in PPP loans, including $3.2 billion in Round 2 funding, leaving a balance of $6.8 billion in Round 2.

    Federal Issues SBA Department of Treasury Small Business Lending Covid-19

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