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OFAC settles with manufacturer for violating Iranian Transactions and Sanctions Regulations
On March 15, the U.S. Treasury Department’s Office of Foreign Assets Control announced a $216,464 settlement with an Ohio-based manufacturer for alleged violations of the Iranian Transactions and Sanctions Regulations (ITSR). According to OFAC’s web notice, between 2013 and 2017, the company allegedly failed to act on multiple apparent warning signs and exported multiple shipments of goods to two European companies despite having “reason to know that the goods were intended specifically for supply, transshipment, or reexportation to Iran by the two European companies.” OFAC noted that the company voluntarily self-disclosed the apparent violations and acknowledged that it “had actual knowledge” that some of the transactions were intended specifically for reexportation to Iran.
In arriving at the settlement amount, OFAC considered various aggravating factors, including that (i) the company failed to follow up on multiple warning signs that the European companies were reexporting goods to Iran; (ii) senior leadership knew or should have known the goods were being reexported to Iran; and (iii) the company and senior leadership “had actual knowledge” that the two final shipments were to be reexported to an Iranian end-user.
OFAC also considered various mitigating factors, including that the company (i) has had no prior sanctions history with OFAC; (ii) ceased all shipments to the European companies when it made its disclosure and requested that the goods be returned; (iii) cooperated with OFAC’s investigation and entered into tolling agreements; and (iv) strengthened its trade compliance and export policies and procedures to minimize the risk of similar violations from occurring in the future.
California delays implementation of tax treatment law for forgiven PPP loans
On March 12, California Governor Gavin Newsom issued a joint statement along with the California Senate president pro tempore and Assembly speaker related to the tax treatment of Paycheck Protection Program (PPP) loans. California intends to delay those portions of Assembly Bill 1577 that was signed into law on September 9, 2020 relating to forgiven PPP loans, pending detailed guidance from the U.S. Treasury Department regarding certain provisions in the American Rescue Plan Act.
OFAC sanctions additional individuals and entities connected to designated Burmese military coup leader
On March 10, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order (E.O.) 14014 against two individuals along with six of their companies. The individuals are the adult children of a previously designated Commander-in-Chief of the Burmese military forces (covered by InfoBytes here)—an individual OFAC claims is “the leading actor in the overthrow of Burma’s democratically elected government.” Under E.O. 14014, foreign persons may be sanctioned who are the spouses or adult children of a person whose property and interests in property are blocked. As a result of the sanctions, all property and interests in property belonging to the sanctioned individuals and entities, and “any entities that are owned, directly or indirectly, 50 percent or more by them,” subject to U.S. jurisdiction are blocked and must be reported to OFAC. U.S. persons are generally 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 license.
OFAC sanctions Mexican national linked to narcotics trafficking
On March 3, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to the Foreign Narcotics Kingpin Designation Act against a Mexican national “for his high-level role in facilitating drug shipments and money laundering for the Cartel de Jalisco Nueva Generacion (CJNG).” According to OFAC, the individual materially assisted in, provided financial or technological support for or to, or provided goods or services in support of, CJNG activities. The designated individual joins other previously designated businesses and individuals linked to CJNG for playing “critical roles in CJNG’s drug trafficking activities, including money laundering.” As a result of the sanctions, the designated individual’s property located in the U.S. or held by U.S. persons is blocked and must be reported to OFAC. Additionally, OFAC regulations generally prohibit U.S. persons from participating in transactions with the designated individual.
Treasury announces Emergency Capital Investment Program for CDFIs and MDIs
On March 4, the U.S. Treasury Department announced a new initiative to provide access to capital for communities traditionally excluded from the financial system that have significantly struggled during the Covid-19 pandemic. The Emergency Capital Investment Program (ECIP), established by the Consolidated Appropriations Act of 2021, will provide up to $9 billion in capital directly to Community Development Financial Institutions (CDFIs) and minority depository institutions (MDIs) to provide, among other things, “loans, grants, and forbearance for small and minority businesses and consumers in low income communities.” The ECIP will set aside $2 billion for CDFIs and MDIs with less than $500 million in assets, as well as $2 billion for CDFIs and MDIs with less than $2 billion in assets. Treasury notes that the program is intended to incentivize impactful lending, and states it is currently “developing additional ‘deep impact’ metrics to further incentivize targeted investments by participants in those communities most in need of capital.” Institutions seeking to participate in the ECIP can access application instructions and materials along with an application portal here.
To support the implementation of the ECIP, the FDIC, Federal Reserve Board, and the OCC issued an interim final rule to “revis[e] their capital rules to provide that Treasury’s investments under the program qualify as regulatory capital of insured depository institutions and holding companies.” The interim final rule is effective immediately upon publication in the Federal Register. Comments will be accepted for 60 days following publication.
OFAC sanctions Russian officials
On March 2, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order (E.O.) 13661 against seven Russian government officials in connection with the “poisoning and subsequent imprisonment of [a] Russian opposition figure.” One of the designated individuals is also being sanctioned pursuant to E.O. 13382 “for acting or purporting to act for or on behalf of, directly or indirectly, the Federal Security Service.” In conjunction with OFAC’s sanctions, the Department of State also designated several entities and persons pursuant to E.O. 13882 for “having engaged, or attempted to engage, in activities or transactions that have materially contributed to, or pose a risk of materially contributing to, the proliferation of weapons of mass destruction or their means of delivery” by Russia. As a result of the sanctions, all of the property and interests in property of the designated persons that are in the United States or in the possession or control of U.S. persons, as well as any entities that are owned 50 percent or more by the designated 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 unless exempt or otherwise authorized by an OFAC general or specific license. OFAC further warned that “any foreign person who knowingly facilitates a significant transaction or transactions for or on behalf of one of these persons risks being sanctioned.”
OFAC sanctions key Yemeni military leaders
On March 2, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against two individuals associated with the Ansarallah militia. The sanctions are taken pursuant to Executive Order 13611, which authorizes “blocking property of persons threatening the peace, security, or stability of Yemen.” As a result of the sanctions, all of the property and interests in property of the designated individuals that are in the United States or in the possession or control of U.S. persons, as well as any entities that are owned 50 percent or more by the designated individuals, are blocked and must be reported to OFAC. Additionally, OFAC regulations prohibit U.S. persons from participating in transactions with the designated individuals unless exempt or otherwise authorized by an OFAC general or specific license. OFAC specifies that the “prohibitions 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.”
OFAC amends cyber-related general license and related FAQs
On March 2, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued cyber-related General License (GL) 1B, “Authorizing Certain Transactions with the Federal Security Service,” which authorizes certain transactions and activities that are “necessary and ordinarily incident” to the “[r]equesting, receiving, utilizing, paying for, or dealing in licenses, permits, certifications, or notifications issued or registered by the Federal Security Service for the importation, distribution, or use of information technology products in the Russian Federation,” provided certain criteria are met. OFAC also published three amended FAQs related to GL 1B (see 501, 502, and 503). Effective March 2, GL 1B supersedes and replaces GL 1A, which was issued in 2018 and covered by InfoBytes here.
OFAC sanctions Saudis for human rights abuse
On February 26, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against Saudi Arabia’s former Deputy Head of General Intelligence Presidency and Saudi Arabia’s Rapid Intervention Force in connection with the death of a Saudi journalist. The sanctions are taken pursuant to Executive Order 13818, which implements the Global Magnitsky Human Rights Accountability Act and “targets perpetrators of serious human rights abuse and corruption around the world.” As a result of the sanctions, all of the property and interests in property of the designated persons that are in the United States or in the possession or control of U.S. persons, as well as any entities that are owned 50 percent or more by the designated persons, are blocked and must be reported to OFAC. Additionally, OFAC regulations prohibit U.S. persons from participating in transactions with the designated persons unless exempt or otherwise authorized by an OFAC general or specific license.
OFAC updates SDN List
On February 22, the U.S. Treasury Department’s Office of Foreign Assets Control added two entities to its Specially Designated National List pursuant to the Countering America’s Adversaries Through Sanctions Act (CAATSA). One of the added entities has been designated pursuant to CAATSA Section 235, which provides the president with the authority to, among other things, “prohibit any transfers of credit or payments between financial institutions or by, through, or to any financial institution, to the extent that such transfers or payments are subject to the jurisdiction of the United States and involve any interest of the sanctioned person” or “prohibit any United States person from investing in or purchasing significant amounts of equity or debt instruments of the sanctioned person.”