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OFAC announces sanctions against Russia-based organization for malware attacks on financial institutions
On December 5, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13694 against a Russia-based cybercriminal organization for allegedly developing and distributing malware that infected financial institutions and resulted in more than $100 million in theft. OFAC’s action targets 17 individuals and seven entities and is “intended to disrupt the massive phishing campaigns orchestrated by [the organization],” Treasury Secretary Steven T. Mnuchin stated. According to OFAC, the organization used the malware to infect computers and harvest login credentials from roughly 300 banks and financial institutions in over 40 countries, resulting in millions of dollars of damage to U.S. and international financial institutions and their customers. As a result of the sanctions, all property and interests in property of these persons subject to U.S. jurisdiction are blocked, along with “any entities 50 percent or more owned by one or more designated persons.” OFAC noted that its regulations “generally prohibit” U.S. persons from participating in transactions with designated persons, and warned that “foreign persons may be subject to secondary sanctions for knowingly facilitating a significant transaction or transactions with these designated persons.”
In a concurrent action announced the same day, the DOJ unsealed criminal charges—including those related to international computer hacking and bank fraud schemes—against two of the organization’s members. In addition, Treasury’s Financial Crimes Enforcement Network and the Cybersecurity and Infrastructure Security Agency released a report providing a technical analysis of the malware and related variants, emphasizing that because the malware continues to target the financial services sector, financial institutions should review and incorporate the report’s techniques, tactics, and procedures into existing network defense capabilities and planning.
OFAC announces settlement with company that allegedly processed payments for sanctioned entity
On November 25, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $466,912 civil settlement with a California-based technology company to resolve alleged violations of the Foreign Narcotics Kingpin Sanctions Regulations (FNKSR). According to OFAC, the company voluntarily disclosed that it hosted a sanctioned Slovenian software developer on its platform and collected more than $1 million in payments from customers who downloaded the developer’s apps. The company’s actions—which included hosting, selling, and facilitating the transfer of the developer’s software and associated content, as well as processing 47 payments between 2015 and 2017—were in violation of the FNKSR because OFAC’s List of Specially Designated Nationals and Blocked Persons identified the developer as a significant foreign narcotics trafficker (SDNTK).
In arriving at the settlement amount, OFAC considered various mitigating factors, including that (i) the company voluntarily disclosed the violations and continued to cooperate by promptly responding to information requests; (ii) the volume and payment amounts were not significant when compared to the company’s annual total volume of transactions; (iii) OFAC has not issued a violation against the company in the five years preceding the earliest date of the transactions at issue; and (iv) the company has strengthened its compliance program to minimize the risk of recurrence.
OFAC also considered various aggravating factors, including that (i) the alleged conduct demonstrated a “reckless disregard for U.S. sanctions requirements”; (ii) the company’s processing of payments conferred a significant economic benefit to the developer; and (iii) the company failed to timely take corrective actions after identifying the developer as a SDNTK and continued to process payments.
OFAC identifies Venezuelan oil tankers as blocked property
On December 3, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced additions to the Specially Designated Nationals List (SDN List) pursuant to Executive Order 13884, which blocks the property of the Venezuelan government. OFAC identified six tankers of Venezuela’s state-owned oil company as property of the Venezuelan Government and therefore as blocked property, after all the vessels recently transported petroleum to Cuba. A seventh tanker also was identified as a blocked property, pursuant to Executive Order 13850 for operating in the oil sector of the Venezuelan economy, after delivering Venezuelan petroleum to Cuba. According to the press release, the vessel’s name had been changed to circumvent sanctions as it moved Venezuelan oil to Cuba. The SDN List was updated to link the new name of the vessel to its former name. OFAC reiterated that its “regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked or designated persons.”
OFAC updates and issues new Iran-related FAQs
On November 27, the U.S. Treasury Department's of Foreign Assets Control (OFAC) updated two existing Iran-related FAQs: FAQ 303, which discusses insurance, reinsurance, and underwriting activities; and FAQ 804, which discusses whether sanctions on certain shipping tankers apply to their corporate parent and affiliates. Additionally, OFAC issued three new Iran-related FAQs (FAQ 805-807) covering the sanctions exposure of non-U.S. persons, the types of activities considered “maintenance” in General License K, and the processing of transactions involving a specific shipping tanker under General License K.
OFAC amends the Venezuela Sanctions Regulations
On November 21, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced that the Venezuela Sanctions Regulations (Regulations) have been amended to incorporate additional Executive Orders (E.O.s), a new general license, and a new interpretive provision. Specifically, since the Regulations were published in July 2015, six E.O.s have been issued pursuant to E.O. 13692, “Blocking Property and Suspending Entry of Certain Persons Contributing to the Situation in Venezuela.” OFAC is amending the Regulations to specify that the prohibitions include all transactions prohibited by E.O. 13692 or any further E.O issued pursuant to the national emergency declared in E.O. 13692. Moreover, OFAC is amending the Regulations to incorporate a general license, which authorizes the U.S. Government to engage in certain activities related to Venezuela (see previous InfoBytes coverage on actions related to Venezuela, including general licenses here). Lastly, an interpretive provision has been added to clarify that “the entry into a settlement agreement or the enforcement of any lien, judgment, arbitral award, decree, or other order through execution, garnishment, or other judicial process purporting to transfer or otherwise alter or affect property or interests in property blocked pursuant to [the Regulations] is prohibited unless authorized pursuant to a specific license issued by OFAC pursuant to this part.” The amendments were effective November 22.
OFAC sanctions ISIS procurement and financial networks
On November 18, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13224 against two Islamic State of Iraq and Syria (ISIS) procurement agents based in Turkey and four ISIS-linked entities operating in Syria, Turkey, and across the Gulf and Europe for allegedly providing financial and logistical support to ISIS. OFAC also took action against an Afghanistan-based organization, as well as two affiliated senior officials, for “using false charitable pretenses as a cover to facilitate the transfer of funds and support the activities of the terrorist group’s branch in Afghanistan, ISIS – Khorasan.” OFAC noted that these sanctions coincide with the twelfth meeting of the Counter ISIS Finance Group, which coordinates efforts to isolate ISIS from the international financial system and eliminate revenue sources. As a result of the sanctions, all property and interests in property of the designated entities and individuals within U.S. jurisdiction are blocked and must be reported to OFAC. OFAC further noted that its regulations “generally prohibit” U.S. persons from participating in transactions with the designated persons, and warned foreign financial institutions that if they knowingly facilitate significant transactions for any Specially Designated Global Terrorists, they may be subject to U.S. correspondent account or payable-through account sanctions.
OFAC announces settlement with aviation investment company for sanctions violations
On November 7, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $210,600 civil settlement with a U.S. aviation investment company to resolve 12 alleged violations of the Sudanese Sanctions Regulations (SSR), which prohibit U.S. persons from dealing in property and interests in property of the Government of Sudan. The settlement addressed allegations that the company leased three aircraft engines to a United Arab Emirates-incorporated entity, which then subleased the engines to a Ukrainian airline that had the engines installed on an aircraft that was “wet leased” to a Sudanese airline. According to OFAC, the company violated SSR regulations because OFAC’s List of Specially Designated Nationals and Blocked Persons identified the Sudanese airline as meeting the definition of “Government of Sudan” at the time of the alleged transactions.
In arriving at the settlement amount, OFAC considered various mitigating factors, including that (i) company personnel were not aware of the conduct leading to the alleged violations; (ii) OFAC has not issued a violation against the company in the five years preceding the earliest date of the transactions at issue; and (iii) the company cooperated with the investigation. OFAC also noted that the company undertook several remedial measures in response to the alleged violations, including implementing additional compliance processes such as improving its “Know-Your-Customer screen procedures” and employee training, and obtaining “U.S. law export compliance certificates from lessees and sublessees.”
OFAC also considered various aggravating factors, including that the violations harmed U.S. sanctions program objectives, and that the company failed to properly monitor the precise whereabouts of the engines during the life of the leases.
OFAC sanctions additional Venezuelan government officials, amends and adds general licenses
On November 5, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against five current Venezuelan government officials. The sanctions—issued pursuant to Executive Order (E.O.) 13884, which prevents all property and property interests of the Government of Venezuela existing within the U.S. or in the possession of a U.S. person from being transferred, paid, exported, withdrawn, or otherwise dealt in (previous InfoBytes coverage here)—reflects Treasury’s continued efforts against persons who offer support to the Maduro regime.
In conjunction with the sanctions, OFAC also issued amended Venezuelan General License (GL) 34A, which supersedes and replaces GL 34, and authorizes transactions with certain Venezuelan government individuals blocked by E.O. 13884. OFAC also issued GL 35, titled “Authorizing Certain Administrative Transactions with the Government of Venezuela,” which permits certain transactions “necessary and ordinarily incident” to day-to-day operations. New and amended FAQs provide additional guidance.
Visit here for additional InfoBytes coverage of actions related to Venezuela.
OFAC extends two Ukraine-related general licenses
On November 1, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) announced it extended the expiration date to March 31, 2020 of two Ukraine-related general licenses (GLs) by issuing GL 13M, which supersedes GL 13L, and GL 15G, which supersedes GL 15F. OFAC also noted that GL 15G includes an expanded authorization for certain safety-related activity and a new authorization for certain activities to comply with environmental regulatory requirements.
Visit here for continuing InfoBytes coverage of actions related to Ukraine.
OFAC amends Venezuela-related general license
On October 21, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced General License (GL) 8D, titled “Authorizing Transactions Involving Petróleos de Venezuela, S.A. (PdVSA) Necessary for Maintenance of Operations for Certain Entities in Venezuela,” which supersedes GL 8C to extend the expiration date through January 22, 2020.
Visit here for additional InfoBytes coverage of actions related to Venezuela.