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  • SEC proposes climate risk disclosures

    Securities

    On March 21, the SEC announced a proposed rule to require registrants to disclose certain climate-related information in their registration statements and periodic reports. According to the proposed rule, a registrant must disclose, among other things, information regarding its direct and certain indirect emissions of greenhouse gas (GHG). The GHG emissions disclosure proposals “would provide investors with decision-useful information to assess a registrant’s exposure to, and management of, climate-related risks, and in particular transition risks.”

    The proposed rule also establishes that accelerated filers and large accelerated filers would be required to include an attestation report from an independent attestation service provider covering certain emissions disclosures, with a phase-in over time, to promote the reliability of GHG emissions disclosures for investors. The proposed rule further noted additional disclosure requirements for registrants that have made a so-called net-zero commitment or adopted a plan to reduce their GHG footprint or exposures.

    The same day, the SEC released a Fact Sheet on the proposed rule, which summarized the content of the proposed disclosure and presentation and attestation requirements, among other things. According to a statement released by SEC Chair Gary Gensler, the proposed rule will “provide investors with consistent, comparable, and decision-useful information for making their investment decisions and would provide consistent and clear reporting obligations for issuers.” However, a statement released by SEC Commissioner Hester M. Peirce took a different view, stating that the proposed amendments would “turn[] the disclosure regime on its head” and noting that some elements are “missing,” such as “[a] credible rationale for such a prescriptive framework when our existing disclosure requirements already capture material risks relating to climate change;[a] materiality limitation; [and] [a] compelling explanation of how the proposal will generate comparable, consistent, and reliable disclosures.” Treasury Secretary Janet L. Yellen also released a statement commending the proposal and the SEC, calling the effort “an important step to protect investors and strengthen the overall resilience of the financial system.”

    Comments on the proposal are due 30 days after publication in the Federal Register, or 60 days after the date of issuance and publication on sec.gov, whichever period is longer.

    Securities Agency Rule-Making & Guidance SEC Climate-Related Financial Risks Department of Treasury Federal Register Risk Management Disclosures

  • OFAC announces human rights abuse sanctions

    Financial Crimes

    On March 21, the U.S. Treasury Department’s Office of Foreign Assets Control announced sanctions pursuant to Executive Order 13818 against the Republic of the Sudan Central Reserve Police (CRP) for serious human rights abuse. According to OFAC, 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 Of Interest to Non-US Persons Department of Treasury OFAC OFAC Sanctions OFAC Designations SDN List Sudan

  • OFAC sanctions Guatemalan drug trafficking organization connected to Mexican cartels

    Financial Crimes

    On March 18, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 14059 against a drug trafficking organization tied to Mexican cartels, as well as the organization’s leaders, for engaging in actions that threaten the people and security of the U.S. and Guatemala. Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson stated that “Treasury and our U.S. and Guatemalan government partners will continue to use every available resource to dismantle these criminal networks” that have “engaged in, or attempted to engage in, activities or transactions that materially contributed to, or pose a significant risk of materially contributing to, the international proliferation of illicit drugs or their means of production.” As a result of the sanctions, the designated persons’ property located in the U.S. or held by U.S. persons are blocked and must be reported to OFAC. Additionally, OFAC regulations generally prohibit U.S. persons from participating in transactions with the designated persons.

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

  • OFAC issues Ukraine general license and Russian FAQ

    Financial Crimes

    On March 18, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued General License (GL) 24, Blocking Property of Certain Persons and Prohibiting Certain Transactions With Respect to Continued Russian Efforts To Undermine the Sovereignty and Territorial Integrity of Ukraine, which authorizes certain transactions related to the provision of maritime services, provided such services are performed outside the covered regions and services are not performed on behalf of any entity located in, or organized under the laws of, the covered regions. The GL does not authorize “[a]ny new investment in the Covered Regions prohibited by E.O. 14065, unless separately authorized,” or “[a]ny transactions involving any person blocked pursuant to E.O. 14065, unless separately authorized.” OFAC also amended one Frequently Asked Question clarifying that Executive Order 14066 does not prohibit dealing in Kazakh-origin crude oil of the Caspian Pipeline Consortium.

    Find continuing InfoBytes coverage on the U.S. sanctions response to Russia’s invasion of Ukraine here.

    Financial Crimes Department of Treasury OFAC Of Interest to Non-US Persons Ukraine Ukraine Invasion

  • OFAC sanctions persons linked to illicit gold trade in Congo

    Financial Crimes

    On March 17, the U.S. Treasury’ Department's Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order (E.O.) 13413, as amended by E.O. 13671, against an individual who operates an illicit gold trade in Uganda, as well as companies in the UAE, and a network of companies involved in the illicit gold trade from the Democratic Republic of the Congo (DRC). According to OFAC, the illegal gold trading “provides revenue to armed groups that threaten the peace, security, and stability of the DRC.” As a result of the sanctions, all property and interests in property belonging to the sanctioned persons, and “any entities that are owned, directly or indirectly, 50 percent or more” by them that are 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 these individual and entities unless authorized by a general or specific license.

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

  • District Court denies defendants summary judgment over FCA violations

    Courts

    On March 16, the U.S. District Court for the Eastern District of Texas denied a motion for summary judgment by a mortgage servicer relating to False Claims Act (FCA) claims alleging false certifications of compliance to obtain payment under three different government programs: Treasury’s Home Affordable Modification Program (HAMP), FHA HAMP, and VA HAMP. According to the memorandum opinion and order, the relator, a former loss-mitigation specialist at the mortgage servicer, alleged that the mortgage servicer engaged in widespread dual tracking, continuously moving homeowners’ mortgages through the foreclosure process even as the defendants were supposed to be evaluating the mortgages for loss mitigation options and HAMP. The plaintiff further alleged that “the dual tracking led many homeowners to lose their homes in foreclosure when foreclosure should have been suspended during the resolution of modification and other workout processes,” and that the defendants “knowingly lacked adequate HAMP systems, processes, staffing, and training.”

    The defendants argued that, “notwithstanding industrywide difficulties, publicly available service assessments and third-party reviews show that [the mortgage servicer was] one of the highest-rated servicers participating in HAMP []. Further, though Treasury had the power to withhold incentives for HAMP non-compliance, Treasury never did so and consistently paid HAMP incentive payments to [the mortgage servicer] until the program expired.” The mortgage servicer also argued that summary judgment was appropriate for several reasons; (i) the court lacks jurisdiction to consider any of the relator’s claims under the FCA’s first-to-file bar; (ii) the relator’s claims fail because he cannot establish one or more of the required elements as to each claim; and (iii) the relator’s VA claim fails because the he cannot cite to any evidence of a certification by the mortgage servicer to the VA, and thus cannot demonstrate a false statement or fraudulent conduct. The court held that, pursuant to Fifth Circuit precedent, the first-to-file rule is inapplicable here because this case was filed by the same relator in a New York district court. With respect to the remaining claims, the court held that summary judgment is inappropriate where, as here, there exist genuine issues of material fact.

    Courts FCA Mortgages Mortgages Servicing Loss Mitigation Consumer Finance Foreclosure HAMP Department of Treasury FHA Department of Veterans Affairs

  • Multinational efforts target Russian sanctions evasion, illicit assets of Russian oligarchs

    Federal Issues

    On March 16, the U.S. Treasury Department, along with representatives from Australia, Canada, Germany, France, Italy, Japan, the United Kingdom, and the European Commission, announced the first meeting of the Russian Elites, Proxies, and Oligarchs (REPO) multilateral task force, which was formed in February 2022. According to the announcement, the task force (consisting of the Finance Ministry and Justice or Home Ministry in each member jurisdiction) is “committed to using their respective authorities in concert with other appropriate ministries to collect and share information to take concrete actions, including sanctions, asset freezing, and civil and criminal asset seizure, and criminal prosecution.” Topics discussed among the REPO task force included, among other things: (i) ensuring coordination and effective implementation of the group’s collective financial sanctions relating to Russia and assisting other nations with locating and freezing assets found within their jurisdictions; (ii) preserving evidence and determining whether these frozen assets, or other assets linked to these sanctioned individuals or entities, are subject to forfeiture; and (iii) ensuring that enablers and gatekeepers “who have facilitated the movement of sanctioned assets or other illicit funds” are brought to justice. The announcement also noted that it launched the Kleptocracy Asset Recovery Rewards Program, offering monetary awards for information leading to seizure, restraint, or forfeiture of assets linked to foreign government corruption, including the Government of the Russian Federation. Member countries released a joint statement following the launch of the REPO task force encouraging other countries to take action to “hunt down the assets of key Russian elites and proxies and to act against their enablers and facilitators” in order “to isolate them from the international financial system and impose consequences for their actions.”

    In other international efforts, the DOJ launched Task Force KleptoCapture, “an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export restrictions, and economic countermeasures that the United States has imposed, along with allies and partners,” in order to “isolate Russia from global markets.” (Covered previously by InfoBytes here.)

    Also on March 16, the Financial Crimes Enforcement Network (FinCEN) released a statement with counterparts in task force member countries and others stating their intent to increase information sharing.

    Federal Issues Financial Crimes Department of Treasury FinCEN DOJ Of Interest to Non-US Persons Russia Ukraine Ukraine Invasion OFAC Sanctions Bank Secrecy Act SARs

  • OFAC sanctions Russians connected to human rights violations and Belarusian leader engaged in corruption

    Financial Crimes

    On March 15, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to the Russia Magnitsky Act against four individuals and one entity. According to OFAC, the sanctioned individuals and entity were involved in concealing events surrounding the death of renowned Russian whistleblower, Sergei Magnitsky, or were connected to gross violations of human rights against a Russian human rights defender. OFAC also re-designated, pursuant to Executive Order 13405, the head of a corrupt government in Belarus who used his authorities to benefit his inner circle and regime, and newly designated his wife for being a senior level official engaged in public corruption.

    As previously covered by InfoBytes, President Biden issued E.O 13405, “Blocking Property of Additional Persons Contributing to the Situation in Belarus,” which expanded the scope addressing the national emergency declared in E.O. 13405, “finding that the Belarusian regime’s harmful activities and long-standing abuses aimed at suppressing democracy and the exercise of human rights and fundamental freedoms in Belarus—including illicit and oppressive activities stemming from the August 9, 2020, fraudulent Belarusian presidential election and its aftermath, such as the elimination of political opposition and civil society organizations and the regime’s disruption and endangering of international civil air travel—constitute an unusual and extraordinary threat to the national security and foreign policy of the United States.” 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 persons are also blocked.” OFAC noted that U.S. persons are prohibited from participating in transactions with these persons, which includes “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.”

    Financial Crimes Department of Treasury OFAC Biden SDN List Of Interest to Non-US Persons Russia Belarus

  • OFAC sanctions Russians for supporting DPRK’s WMD programs

    Financial Crimes

    On March 11, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13687 against two individuals and three entities based in Russia for allegedly supporting the Democratic People’s Republic of Korea’s (DPRK) “ongoing development of its weapons of mass destruction (WMD) and ballistic missile programs in violation of multiple United Nations Security Council resolutions.” The action specifically “targets a group of foreign individuals and companies that aid a DPRK defense industry-related procurement agent in Russia.” As a result of the sanctions, all property and interests in property of the sanctioned persons 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 persons. 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 may be subject to U.S. correspondent account or payable-through account sanctions, and that persons found to have engaged in certain transactions with the designated persons “may themselves be exposed to designation.”

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

  • OFAC sanctions Russians, issues guidance on sanctions evasion through virtual currency, general licenses, and FAQs

    Financial Crimes

    On March 11, the U.S. Department of the Treasury’s Office of Foreign Assets Control issued guidance, in line with the G7 leaders' statement, to guard against possible attempts to use virtual currency to evade U.S. sanctions imposed on Russia. According to OFAC, the public guidance “further cut[s] off avenues for potential sanctions evasion by Russia” and “continues to make clear that Treasury’s expansive sanctions actions against Russia require all U.S. persons to comply with OFAC regulations, regardless of whether a transaction is denominated in traditional fiat currency or virtual currency.

    Additionally, OFAC announced sanctions against Russian and Kremlin elites, and Russia’s political and national security leaders who have supported Russia’s invasion of Ukraine. As a result of the sanctions, all property and interests in property belonging to the sanctioned individuals and entities that are in the U.S. or in the possession or control of U.S. persons, and “any entities that are owned, directly or indirectly, 50 percent or more” by the targeted individuals and/or entities are blocked and must be reported to OFAC. The sanctions complement an Executive Order (E.O) issued by President Biden that imposes new import and export restrictions on Russia, including the export of U.S. banknotes to Russia. Among other things, this E.O. prohibits the importation into the U.S. of certain products of Russian Federation origin. Additionally, the E.O. bans the exportation, reexportation, sale, or supply, directly or indirectly, from the U.S., or by a U.S. person, wherever located, of U.S. dollar-denominated banknotes to the Russian government or to any person located in the Russian Federation.

    OFAC also issued Russia-related General License 17 to authorize the import of existing purchases of prohibited products that are under pre-existing contract until March 25, 2022, and General License 18 and General License 19 to authorize certain activities regarding U.S. dollar-denominated banknotes as they pertain to personal remittances and U.S. persons, respectively. OFAC also issued Ukraine-related General License 23, “Blocking Property of Certain Persons and Prohibiting Certain Transactions With Respect to Continued Russian Efforts to Undermine the Sovereignty and Territorial Integrity of Ukraine,” “to authorize certain transactions that are ordinarily incident and necessary to nongovernmental organizations’ activities in the so-called Donetsk People’s Republic (DNR) or Luhansk People’s Republic (LNR) regions of Ukraine, including activities related to humanitarian projects to meet basic human needs, democracy building, education, non-commercial developments projects, and environmental and natural resource protection,” and published new Frequently Asked Questions and amended one Frequently Asked Question regarding Russia sanctions.

    Find continuing InfoBytes coverage on the U.S. sanctions response to Russia’s invasion of Ukraine here.

    Financial Crimes Digital Assets Department of Treasury OFAC Of Interest to Non-US Persons Ukraine Ukraine Invasion Russia Virtual Currency

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