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  • OFAC reaches settlement with Puerto Rican bank to resolve Venezuela sanctions violations

    Financial Crimes

    On May 27, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $225,937 settlement with a Puerto Rican bank for allegedly violating the Venezuela Sanctions Regulations. According to OFAC’s web notice, the bank allegedly processed 337 transactions totaling $853,126 on behalf of two low level employees of the Government of Venezuela (GoV). The apparent violations allegedly resulted from the bank’s maintenance of four personal accounts operated by these two employees that should have been blocked by Executive Order (E.O.) 13884 (which blocks property and interests in property of the GoV, including “‘any person owned or controlled, directly or indirectly,’ by the GoV, and ‘any person who has acted or purported to act directly or indirectly for or on behalf of’ any such entity”). OFAC stated that the two GoV individuals also did not meet the criteria for authorized transaction exemptions under General License 34A and found that the bank failed to identify the customers for 14 months following the issuance of E.O. 13884.

    In arriving at the settlement amount, OFAC considered various aggravating factors, including, among other things, that (i) the bank maintained documentation showing that the two individuals were low-level GoV employees but delayed identifying them; and (ii) the bank has more than $61 billion in assets. OFAC also considered various mitigating factors, including that the bank (i) took remedial action to ensure compliance with OFAC sanctions; (ii) created more robust sanctions-related procedures; (iii) developed additional resources and guidance in connection to sanctions alert review and disposition; (iv) added staff to oversee OFAC sanctions matters; (v) reviewed policies and procedures for identifying, reviewing, and reporting transactions that violate OFAC’s regulations; and (vi) enhanced its sanctions screening trainings. The bank also voluntarily self-disclosed the apparent violations to OFAC and cooperated with OFAC’s investigation.

    Providing context for the settlement, OFAC stated that this action “demonstrates the importance of financial institutions conducting timely due diligence…following the issuance of new sanctions prohibitions.”

    Financial Crimes Of Interest to Non-US Persons Department of Treasury OFAC Enforcement Settlement OFAC Sanctions OFAC Designations Puerto Rico Venezuela

  • OFAC sanctions North Koreans and issues Venezuela general license

    Financial Crimes

    On May 27, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order (E.O.) 13382 against one individual, two banks, and a trading company connected to the Democratic People’s Republic of Korea’s (DPRK) development of weapons of mass destruction (WMD) and ballistic missile programs and to the U.S.-designated DPRK national airline. According to OFAC, the U.S. is “committed to seeking dialogue and diplomacy with the DPRK but will continue to address the threat posed by the DPRK’s unlawful WMD and ballistic missile programs to the United States and the international community.” As a result of the sanctions, all property and interests in property of the sanctioned individuals and entities subject to U.S. jurisdiction 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 person, including transactions transiting the U.S. OFAC’s announcement further warned that any foreign financial institution that knowingly facilitates significant transactions or provides significant financial services for any of the designated individuals or entities may be subject to U.S. correspondent account or payable-through account sanctions.

    The same day, OFAC issued Venezuela- related General License 8J, which authorizes certain transactions involving Petróleos de Venezuela, S.A. (PDVSA) that were previously prohibited under prior Executive Orders to the extent such transactions and activities are “necessary for the limited maintenance of essential operations in Venezuela or the wind down of operations in Venezuela for certain entities,” among other things.

    Financial Crimes Department of Treasury OFAC Of Interest to Non-US Persons SDN List OFAC Sanctions OFAC Designations North Korea Venezuela

  • OFAC issues new Russia-related general license, will not renew general license concerning debt or equity dealings with certain Russian financial institutions

    Financial Crimes

    On May 25, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Russia-related General License (GL) 13A, “Authorizing Certain Administrative Transactions Prohibited by Directive 4 under Executive Order 14024.” Specifically, GL 13A permits U.S. persons, or entities owned or controlled, directly or indirectly, by a U.S. person “to pay taxes, fees, or import duties, and purchase or receive permits, licenses, registrations, or certifications” for certain transactions normally prohibited by Directive 4, “provided such transactions are ordinarily incident and necessary to the day-to-day operations in the Russian Federation of such U.S. persons or entities.” GL 13A expires September 30 at 12:01 am EDT.

    The day before, OFAC announced that provisions of GL 9C, issued pursuant to the Russian Harmful Foreign Activities Sanctions Regulations (RuHSR), will not be renewed. As previously covered by InfoBytes, GL 9C was issued last month to authorize transactions “ordinarily incident and necessary to dealings in debt or equity” issued before February 24, 2022 involving certain Russian financial institutions that would otherwise be prohibited by the RuHSR. GL 9C expires on May 25 at 12:01 am EDT.

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

  • OFAC sanctions Hizballah financial facilitator

    Financial Crimes

    On May 19, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13224 against a Lebanese businessman and Hizballah financial facilitator, as well as five of his associates and eight of his companies in Lebanon and Iraq. According to OFAC, the sanctions “illuminate[] Hizballah’s modus operandi of using the cover of seemingly legitimate businesses to generate revenue and leverage commercial investments across a multitude of sectors to secretly fund Hizballah and its terrorist activities.” OFAC also highlighted Hizballah’s practice of building “a web of businesses” with “opaque ownership structures” to “hide its activities and generate funds for its destabilizing activities.” According to Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson, the “designation of this network demonstrates the U.S. government’s commitment to protect Lebanon’s private sector and financial system from Hizballah’s abuse by targeting and exposing the group’s financial activities.”

    As a result of the sanctions, all property and interests in property of the designated individuals and entities within U.S. jurisdiction must be blocked and reported to OFAC. OFAC further noted that its regulations “generally prohibit” U.S. persons or persons within the U.S. from participating in transactions with the designated persons unless exempt or authorized by a general or specific OFAC license. OFAC also warned that the agency “can prohibit or impose strict conditions on the opening or maintaining in the United States of a correspondent account or a payable-through account of a foreign financial institution that knowingly conducted or facilitated any significant transaction on behalf of [a Specially Designated Global Terrorist] or, among other things, knowingly facilitates a significant transaction for Hizballah or certain persons designated for their connection to Hizballah.”

    Financial Crimes OFAC Department of Treasury Of Interest to Non-US Persons OFAC Sanctions OFAC Designations Hizballah Lebanon Iraq SDN List

  • OFAC announces Hamas sanctions

    Financial Crimes

    On May 24, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against a Hamas finance official as well as an expansive network of three Hamas financial facilitators and six companies that have generated revenue for the terrorist group through the management of an international investment portfolio. According to OFAC, Hamas’s Investment Office, whose leadership oversees the sanctioned network, has assets totaling over $500 million, including companies operating in Sudan, Turkey, Saudi Arabia, Algeria, and the United Arab Emirates (UAE). As a result of the sanctions, all property and interests in property belonging to the sanctioned entities 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 person are also blocked. U.S. persons are generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons. The designated entities are also subject to secondary sanctions pursuant to Executive Order 13224, which authorizes OFAC to “prohibit or impose strict conditions on the opening or maintaining in the United States of a correspondent account or a payable-through account of a foreign financial institution that knowingly conducted or facilitated any significant transaction on behalf of a Specially Designated Global Terrorist.”

    Financial Crimes OFAC Department of Treasury Of Interest to Non-US Persons SDN List Hamas OFAC Designations OFAC Sanctions

  • Agencies release risk advisory for businesses operating in Sudan

    Financial Crimes

    On May 23, the U.S. Departments of Treasury, State, Commerce, and Labor issued an advisory, Risks and Considerations for U.S. Businesses Operating in Sudan, highlighting growing risks to American businesses and individuals associated with conducting business with Sudanese State-Owned Enterprises. According to the advisory, the risks outlined come from recent actions undertaken by Sudan’s Sovereign Council and security forces under the military’s control and could adversely impact U.S. businesses, individuals, other persons, and their operations in the country and the region. The advisory also noted that the U.S. recently imposed sanctions on the Central Reserve Police (CRP) for serious human rights abuse under Executive Order 13818. As previously covered by InfoBytes, OFAC noted that, the “CRP has used excessive force against pro-democracy protesters peacefully demonstrating against the military-led overthrow of the civilian-led transitional government in Sudan.” As a result of the sanctions, all property and interests in property belonging to the sanctioned person subject to U.S. jurisdiction are blocked and must be reported to OFAC. OFAC also noted that its regulations generally prohibit all dealings by U.S. persons that involve any property or interests in property of designated persons.

    Financial Crimes Department of Treasury Department of State Department of Commerce Department of Labor Of Interest to Non-US Persons OFAC Sudan

  • Counter ISIS Finance Group continues efforts to isolate ISIS from international financial system

    Financial Crimes

    On May 17, the U.S. Treasury Department announced the release of a joint statement by members of 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 sixteenth meeting on May 9 to discuss ongoing efforts to combat ISIS financing worldwide. According to the statement, the Coalition is focusing “on disrupting international ISIS funds transfers and dismantling ISIS finance networks that support extremist activities, including terrorist attacks, militant recruitment, and promotion of violent ideology.”

    During the meeting, participants discussed that, despite having access to at least 25 million U.S. dollars in reserves, ISIS Core in Syria and Iraq is struggling to meet its financial obligations, as its expenditures exceed its income. CIFG also noted that Africa has emerged as a center of gravity for ISIS, and “the branches and networks in Africa generally have precarious finances and typically rely on local fundraising schemes.” CIFG further stressed the importance to “remain vigilant” to “deepen our understanding of ISIS’s financial operations, emerging financial threats, and activities.”

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

  • Treasury says foreign financial institutions risk sanctions if they provide material support to Russia

    Financial Crimes

    On May 13, Deputy Secretary of the Treasury Wally Adeyemo warned representatives from several foreign financial institutions about the risks of aiding Russia in evading sanctions imposed by the U.S. and its allies following the country’s invasion of Ukraine. Adeyemo emphasized that institutions may face “sanctions exposure for providing material support to a sanctioned entity,” and stressed that the U.S. Treasury Department’s Office of Foreign Assets Control “expects all financial institutions to do their own due diligence to ensure they are not transacting with a sanctioned person.”

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

  • Treasury issues 2022 national illicit finance strategy

    Financial Crimes

    On May 13, the U.S. Treasury Department issued the 2022 National Strategy for Combatting Terrorist and Other Illicit Financing (2022 Strategy). As required by federal law, the 2022 Strategy describes current U.S. government efforts to combat domestic and international illicit finance threats from terrorist financing, proliferation financing, and money laundering, and discusses potential risks, priorities and objectives, as well as areas for improvement. Among other things, the 2022 Strategy reflects challenges posed by the Covid-19 pandemic, the increasing digitization of financial services, and rising levels of corruption and fraud. Specifically, Treasury noted that 2022 risk assessments highlights threats “posed by the abuse of legal entities, the complicity of professionals that misuse their positions or businesses, small-sum funding of domestic violent extremism networks, the effective use of front and shell companies in proliferation finance, and the exploitation of the digital economy.”

    According to Treasury, the 2022 Strategy, along with the agency’s 2022 National Money Laundering Risk Assessment (covered by InfoBytes here), “will assist financial institutions in assessing the illicit finance risk exposure of their businesses and support the construction and maintenance of a risk-based approach to countering illicit finance for government agencies and policymakers.”

    Specifically, to protect the U.S. financial system from corruption and other illicit finance threats, the 2022 Strategy outlined four priorities and 14 supporting actions to address these threats. These include:

    • closing legal and regulatory gaps in the U.S. anti-money laundering/counter the financing of terrorism (AML/CFT) framework that are used to anonymously access the U.S. financial system through shell companies and all-cash real estate purchases;
    • increasing the efficiency of the U.S. AML/CFT regulatory framework “by providing clear compliance guidance, sharing information appropriately, and fully funding supervision and enforcement”;
    • enhancing the operational effectiveness of law enforcement, other U.S. government agencies, and international partnerships to prevent illicit actors from accessing safe havens; and
    • enabling technological innovation while mitigating risk to stay ahead of new avenues for abuse through virtual assets and other new financial products, services, and activities.

    The same day the U.S. and Mexico announced their commitment to establish a working group on anti-corruption, which will primarily focus on high-level strategic responses to public corruption. The announcement follows a recent agreement between delegates from the two countries to continue expanding information-sharing efforts to improve bilateral efforts for countering illicit finance.

    Financial Crimes Of Interest to Non-US Persons Department of Treasury Illicit Finance Risk Management Anti-Money Laundering Combating the Financing of Terrorism Covid-19

  • OFAC updates Syrian sanctions guidance; issues DPRK advisory on information technology workers

    Financial Crimes

    On May 12, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) amended  a Frequently Asked Question (FAQ) and published a new General License (GL) regarding Syrian sanctions. Back in April (covered by InfoBytes here), OFAC published FAQ 884, which relates to non-U.S. persons’ (including nongovernmental organizations and foreign financial institutions) exposure to U.S. secondary sanctions under the Caesar Syrian Civilian Protection act of 2019 (Caesar Act). Specifically, FAQ 884 addresses sanctions exposure for activities authorized under the Syrian Sanctions Regulations. OFAC’s recent update of FAQ 884 clarifies that “OFAC will not consider transactions to be ‘significant’ for the purpose of a sanctions determination under the Caesar Act if U.S. persons would not require a specific license from OFAC to participate in such a transaction.” Additionally, GL 22 now authorizes “activities in certain economic sectors in non-regime held areas of Northeast and Northwest Syria.”

    Later in the week, OFAC announced that Treasury, the Department of State, and the FBI issued an advisory regarding an attempt by the Democratic People’s Republic of Korea (DPRK) and DPRK information technology (IT) workers to obtain employment while posing as non-DPRK nationals. Among other things, the advisory provides information on how DPRK IT workers operate and identifies red flags for companies to avoid hiring DPRK freelance developers. A Fact Sheet was also published to provide information on the advisory.

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

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