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  • OFAC settles Cuban Assets Control Regulation violations

    Financial Crimes

    On May 6, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $257,862 settlement with an animal nutrition company for 44 alleged violations of the Cuban Assets Control Regulations (CACR). According to OFAC, between July 2012 and September 2017, the company and its owned or controlled foreign entities allegedly coordinated agricultural commodity sales to a Cuban company without OFAC authorization by processing Cuba-related business through its foreign affiliates and developing “a transaction structure that it incorrectly determined would be consistent with U.S. sanctions requirements.” OFAC noted that the company “could potentially have availed itself of such authorization” or applied for a specific licenses from OFAC, but “failed to seek appropriate advice or otherwise take the steps necessary to authorize these transactions.” OFAC determined that in light of the fact that the transactions may have been eligible for authorization, as well as the company’s voluntary self-disclosure, compliance enhancements, and other factors, the apparent violations constituted a non-egregious case.

    OFAC advised U.S. companies with a global presence to maintain an appropriate sanctions compliance program and to seek “appropriate advice and guidance” when contemplating business that may be impacted by U.S. sanctions programs. In addition, OFAC referenced enforcement and compliance resources and cautioned that sanctions violations can arise from a misinterpretation or lack of understanding of OFAC’s regulations, including general licenses and authorizations. OFAC advised U.S. persons to “exercise[e] caution when dealing with foreign subsidiaries or affiliates located in regions subject to U.S. sanctions programs” and to understand the full scope and applicability of authorizations related to certain sanctions prohibitions.

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

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  • OFAC issues Finding of Violation to company for issuing prepaid card to SDN

    Financial Crimes

    On April 30, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued a Finding of Violation to a travel-related services company for alleged violations of the Weapons of Mass Destruction Proliferators Sanctions Regulations. According to OFAC, the company allegedly issued a prepaid card to, and processed 42 transactions totaling more than $35,000 on behalf of, a Specially Designated National (SDN) due to human error and screen system defects. When issuing the Finding of Violation, OFAC considered the fact that, among other things, (i) the company did not engage in willful or reckless behavior; (ii) there is no indication that the company was aware that it provided a card to an SDN or that its risk engine could be overridden; (iii) the company took remedial action in response to the violations to prevent similar reoccurrences; (iv) the company cooperated with OFAC and voluntarily disclosed the violations; and (v) OFAC has not issued a penalty notice or Finding of Violation to the company in at least five years prior to the alleged violations. A civil monetary penalty was not issued to the company.

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

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  • OFAC issues amended Venezuela-related general license

    Financial Crimes

    On April 21, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued amended Venezuela General License (GL) 8F, titled “Authorizing Transactions Involving Petróleos de Venezuela, S.A. (PdVSA) Necessary for the Limited Maintenance of Essential Operations in Venezuela or the Wind Down of Operations in Venezuela for Certain Entities.” GL 8F supersedes GL 8E and extends the expiration date for certain authorizations through December 1 that would otherwise be prohibited under Executive Orders 13850, 13857, or 13884.

    Visit here for additional InfoBytes coverage of actions related to Venezuela.

    Financial Crimes Department of Treasury OFAC Sanctions Of Interest to Non-US Persons Venezuela Petroleos de Venezuela

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  • Special Alert: OFAC encourages humanitarian aid, promises consideration of Covid-19 compliance challenges

    Federal Issues

    The Department of the Treasury’s Office of Foreign Assets Control recently took two actions to address the impact of Covid-19. First, OFAC issued a fact sheet that consolidates existing authorizations and guidance permitting humanitarian, agricultural, and medical aid to six jurisdictions subject to sanctions. Second, OFAC encouraged companies facing compliance challenges due to Covid-19 to shift resources to higher-risk areas, noting that it would take this move into consideration if it leads to a violation during the pandemic. Companies facing compliance challenges may wish to consider such a shift, while documenting their risk-based rationale for doing so.

    Humanitarian fact sheet

    Last week, OFAC issued a fact sheet regarding the provision of Covid-19-related assistance under its Iran, Cuba, North Korea, Syria, Ukraine/Russia, and Venezuela sanctions regimes. The fact sheet made no changes to existing laws and guidance, but consolidated existing licenses, exemptions, authorizations, and related FAQs relevant to humanitarian aid and medical equipment for these regimes. The fact sheet should prove to be a valuable resource for financial institutions and other organizations confronting a wave of transactions to provide personal protective equipment to sanctions-targeted jurisdictions wracked by Covid-19, while complying with OFAC regulations. 

    Federal Issues Department of Treasury OFAC Sanctions Covid-19

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  • Multiagency advisory warns of North Korean cyber-threat to international finance system

    Financial Crimes

    On April 15, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), in conjunction with the Departments of State and Homeland Security and the Federal Bureau of Investigation, issued an advisory warning that North Korea’s (DPRK) cyber activities—including cybertheft, money laundering, extortion, and cryptojacking—“pose a significant threat to the integrity and stability of the international finance system.” These activities, the agencies caution, highlight DPRK’s use of cyber-enabled means to generate revenue while mitigating the impact of OFAC-imposed sanctions. In addition to providing examples of cyber activities that target the international financial sector and DPRK state-sponsored cyber incidents, the advisory also outlines recommended measures that governments, industry, civil society, and individuals can take to counter DPRK cyber threats. These include (i) raising awareness; (ii) sharing technical information; (iii) implementing and promoting cybersecurity best practices; (iv) notifying law enforcement; and (v) strengthening anti-money laundering, countering the financing of terrorism, and counter-proliferation financing compliance. The agencies reiterate the consequences of engaging in prohibited and sanctionable conduct, and remind individuals and entities that OFAC has the authority to impose sanctions on any persons found to have engaged in conduct supporting DPRK cyber-related activity. The agencies also point out that foreign financial institutions that knowingly conduct or facilitate significate trade or transactions on behalf of a designated person for DPRK-related activity, may “lose the ability to maintain a correspondent or payable-through account in the [U.S.]”

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

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  • OFAC guidance addresses Covid-19 humanitarian assistance and trade

    Federal Issues

    On April 16, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) published a Fact Sheet providing guidance to ensure humanitarian-related trade and assistance reaches at-risk populations through legitimate and transparent channels during the global Covid-19 pandemic. Specifically, the Fact Sheet highlights the most pertinent exemptions, exceptions, and authorizations for humanitarian assistance and trade under the IranVenezuelaNorth KoreaSyriaCuba, and Ukraine/Russia-related​ sanctions programs. OFAC notes, however, that under certain sanctions program, entities may be required to obtain separate authorization from other U.S. government agencies. The Fact Sheet also provides guidance for persons seeking to export personal protective equipment from the U.S. Additional questions regarding the scope or applicability of any humanitarian-related authorizations can be directed to OFAC’s Sanction Compliance and Evaluation Division.

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

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  • OFAC issues amended Venezuela-related general license and FAQ

    Financial Crimes

    On April 10, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Venezuela General License (GL) 5C, which supersedes GL 5B and authorizes certain transactions otherwise prohibited under Executive Orders 13835 and 13857 related to, or that provide financing for, dealings in the Petróleos de Venezuela, S.A. 2020 8.5 Percent Bond on or after July 22, 2020. Concurrently, OFAC issued a new Venezuela-related frequently asked question regarding GL 5C.

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

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  • OFAC amends North Korea Sanctions Regulations

    Financial Crimes

    On April 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced amendments to the North Korea Sanctions Regulations. The final rule amends the sanctions regulations to incorporate “Treasury-administered provisions of the North Korea Sanctions and Policy Enhancement Act of 2016 [(NKSPEA)], as amended by the Countering America’s Adversaries Through Sanctions Act of 2017 [(CAATSA)] and the National Defense Authorization Act for Fiscal Year 2020 [(NDAA)].”

    Specifically, OFAC is incorporating into the amended regulations prohibitions with respect to the blocking, correspondent, or payable-through accounts sanctions contained within the NKSPEA, CAATSA, and NDAA. The final rule also adds a new section applicable to individuals and entities that are owned or controlled by a U.S. financial institution and established or maintained outside the U.S., which prohibits them from “knowingly engaging in any transaction, directly or indirectly, with the Government of North Korea or any person designated for the imposition of sanctions with respect to North Korea under NKSPEA. . ., an applicable Executive Order, or an applicable United Nations Security Council resolution.” In addition, the final rule amends the definition of luxury goods by creating “a regulatory exception to exclude items approved for import, export, or reexport to or into North Korea by the United Nations Security Council.” The final rule also incorporates new statutory exemptions, makes technical and conforming edits, revises an interpretive provision, and updates the authorities and delegation sections of the regulations, among other things. The amended North Korea Sanctions Regulations take effect April 10.

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

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  • OFAC amends Venezuela-related general license

    Financial Crimes

    On April 3, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued amended Venezuela General License (GL) 13E, which supersedes GL 13D and extends the expiration date through May 14, 2020 for certain transactions involving the identified corporation and any of its subsidiaries that are normally prohibited under Executive Orders (E.O.) 13850, 13857, and 13884. As previously covered by InfoBytes, E.O. 13884, among other things, prevents all property and interest in property of the Government of Venezuela within the U.S. or in the possession of a U.S. person from being transferred, paid, exported, withdrawn, or otherwise dealt in. OFAC notes that the corporation is engaged with OFAC on a proposed corporate restructuring that may result in significant ownership and control changes.

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

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  • District court denies request to lift OFAC sanctions despite EU decision

    Courts

    On March 31, the U.S. District Court for the District of Columbia granted the Treasury Department’s Office of Foreign Assets Control’s (OFAC) motion to dismiss and denied two Iranian corporations’ (plaintiffs) cross-motion for summary judgment. According to the opinion, the plaintiffs requested to be delisted from OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List) following the Court of Justice of the European Union’s decision in 2013 to lift its own sanctions, which were, according to the plaintiffs, “the basis for OFAC including [the plaintiffs] in its SDN list in the first place.” The plaintiffs were added to the SDN List in 2011 after OFAC allegedly determined that they had assisted certain U.S. and United Nations-sanctioned Iranian companies in procuring goods for uranium enrichment activities. OFAC denied the plaintiffs’ request to be delisted in 2018, causing the plaintiffs to file a complaint seeking to remove the sanctions or “cause OFAC to request the information needed to remove [the plaintiffs] from the SDN List,” citing violations of their rights under the U.S. Constitution and the Administrative Procedure Act. Among other things, the plaintiffs argued that OFAC’s decision to reject the request for delisting was based on “undisclosed/secret information,” and further, OFAC “never provided any evidence to substantiate the[] allegations” that the plaintiffs had worked with other OFAC-sanctioned Iranian firms. Moreover, the plaintiffs contended that OFAC violated their “procedural and substantive due process rights because it failed to provide [the plaintiffs] notice and opportunity to be heard before designating [them] as an SDN.”

    The court, however, found among other things that OFAC’s actions were not “arbitrary or capricious,” stating that while OFAC considered classified evidence of the plaintiffs’ involvement, it also provided unclassified summaries to the plaintiffs. “In denying [the plaintiffs’] request for removal, OFAC requested and reviewed information provided by [the plaintiffs], and it responded to [the plaintiffs’] arguments for reconsideration,” the court stated, noting that OFAC ultimately concluded that the plaintiffs failed to submit credible arguments or evidence “establishing that an insufficient basis exists for the company’s designation.” In addition, the court rejected the plaintiffs’ Fifth Amendment argument, stating that the constitutional claims fail because the “Supreme Court has long held that non-resident aliens without substantial connections to the United States are not entitled to Fifth Amendment protections.”

    Courts OFAC Department of Treasury Sanctions Of Interest to Non-US Persons Iran Administrative Procedures Act Due Process

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