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  • OFAC reaches settlement with company for alleged Ukrainian sanctions violations

    Financial Crimes

    On November 27, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $87,507 settlement with an aerospace and defense technology company for three alleged violations by a former subsidiary of the Ukraine-Related Sanctions Regulations (URSR). According to OFAC, the settlement resolves potential civil liability for the former subsidiary’s alleged involvement in the “indirect export of components to be incorporated into commercial air traffic control radar” through Canadian and Russian distributors “to a person owned 50 percent or more, directly or indirectly, by a person identified on OFAC’s List of Specially Designated Nationals and Blocked Persons.”

    In arriving at the settlement amount, OFAC considered the following as aggravating factors: (i) the former subsidiary’s failure to recognize warning signs; (ii) the transactions, which constituted the apparent violations, were reviewed and approved by the Director of Global Trade Compliance, and “resulted in harm to the sanctions program objectives of the URSR”; (iii) the company and former subsidiary are large, sophisticated entities; and (iv) the company and its compliance personnel previously violated Iranian Transaction and Sanctions Regulations, while the former subsidiary was subject to a consent agreement as a result of recurring compliance failures.

    However OFAC also considered mitigating factors, including (i) the former subsidiary has not received a penalty or finding of a violation in the five years prior to the transactions at issue; (ii) the company has cooperated with OFAC and implemented remedial measures, including terminating the violative conduct and implementing steps to minimize the risk of reoccurring conduct; and (iii) the company voluntarily disclosed the alleged violations on behalf of the former subsidiary.

    Visit here for additional InfoBytes coverage on Ukraine sanctions.

    Financial Crimes Department of Treasury OFAC Ukraine Sanctions

  • French bank agrees to $1.3 billion settlement to resolve U.S. sanctions investigations

    Financial Crimes

    On November 19, the Federal Reserve Board, Office of Foreign Assets Control (OFAC), DOJ, Manhattan District Attorney’s Office, and NYDFS announced that a French bank agreed to pay approximately $1.34 billion in total penalties to resolve federal and state investigations into the bank’s allegedly intentional violation of U.S. sanctions laws and other federal and New York state laws from approximately 2003 to 2013.

    The bank entered into a deferred prosecution agreement (DPA) with the U.S. Attorney’s Office for the Southern District of New York to settle charges of conspiring to violate U.S. sanctions against Cuba by “structuring, conducting, and concealing U.S. dollar transactions using the U.S. financial system.” The DPA requires the bank to forfeit more than $717 million. The bank also agreed to “accept responsibility for its conduct by stipulating to the accuracy of an extensive Statement of Facts, pay penalties totaling [$1.34 billion] to federal and state prosecutors and regulators, refrain from all future criminal conduct, and implement remedial measures as required by its regulators.” According to the DOJ, the bank “admitted its willful violations of U.S. sanctions laws—and longtime concealment of those violations—which resulted in billions of dollars of illicit funds flowing through the U.S. financial system.” As factors mitigating the penalty, the DPA acknowledges the bank’s efforts to collect and produce “voluminous evidence located in other countries to the full extent permitted under applicable laws and regulations, and its enhancement of its compliance program and sanctions-related internal controls both before and after it became the subject of a U.S. law enforcement investigation.” Among other factors, the bank’s willingness to enter into the terms of the DPA, outweighed its “failure to self-report all of its violations of [U.S.] sanctions laws in a timely manner.”

    The bank also entered into agreements to pay almost $163 million to the New York County District Attorney’s Office, nearly $54 million to OFAC, approximately $81 million to the Federal Reserve Board, and $325 million to NYDFS. Among other things, NYDFS noted that branch employees “responsible for originating USD transactions outside of the U.S. had a minimal understanding of U.S. sanctions laws and regulations as they related to Sudan, Iran, Cuba, North Korea, or other U.S. sanctions targets.”

    Separate from the resolution of alleged sanctions violations, NYDFS imposed an additional $95 million penalty to resolve findings that the bank’s New York branch allegedly failed to “implement and maintain an effective Bank Secrecy Act/Anti-Money Laundering Law  compliance program and transaction monitoring system.”

    According to a bank statement issued the same day, the bank acknowledges and regrets the identified shortcomings, and “has already taken a number of significant steps in recent years and dedicated substantial resources to enhance its sanctions and AML compliance programs.” 

    Financial Crimes Department of Treasury NYDFS DOJ Federal Reserve International Bank Secrecy Act Anti-Money Laundering Sanctions Settlement Bank Compliance

  • OFAC targets individual accused of offering sanctions evasion advice to North Korean company

    Financial Crimes

    On November 19, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced an addition to the Specially Designated Nationals List pursuant to Executive Order (E.O.) 13722. The addition identifies one individual found to have offered advice on evading U.S. sanctions that ultimately assisted third party companies in the illicit purchase of fuel and gas oil for North Korea. In addition, OFAC also cites to a 2017 DOJ complaint concerning the companies’ alleged participation in laundering millions of dollars connected to North Korea. As a result, all assets belonging to the identified individual that are subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with him.

    See here for previous InfoBytes coverage on North Korean sanctions.

    Financial Crimes OFAC North Korea Sanctions

  • OFAC sanctions individuals connected to Hizballah, IRGC-QF networks in Iraq

    Financial Crimes

    On November 13, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against four Hizballah-affiliated individuals for their alleged leadership roles in the group’s terrorist financial activities in Iraq, including providing support for the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF). According to OFAC, the sanctions were issued pursuant to Executive Order 13224, which “targets terrorists and those providing support to terrorists or acts of terrorism.” OFAC’s designations follow the Hizballah International Financing Prevention Amendments Act of 2018—signed into law October 25—along with the reimposition of Iran-related sanctions on November 5 (see previous InfoBytes coverage here), and reinforces U.S. efforts to “protect the international financial system by targeting Hizballah’s supporters, financial networks, and those that facilitate and enable its destabilizing activities worldwide.” Furthermore, OFAC states that the four Specially Designated Global Terrorists are also subject to secondary sanctions under the Hizballah Financial Sanctions Regulations, which implement the Hizballah International Financing Prevention Act of 2015, and allows OFAC to “prohibit or impose strict conditions on the opening or maintaining in the [U.S.] of a correspondent account or a payable-through account by a foreign financial institution that knowingly facilitates a significant transaction for Hizballah.” As a result, all property and interests in property belonging to the identified individuals subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from entering into transactions with them.

    Visit here for additional InfoBytes coverage on sanctions involving Hizballah networks.

    Financial Crimes Department of Treasury OFAC Russia Ukraine Sanctions

  • OFAC issues extension of Ukraine-related General Licenses

    Financial Crimes

    On November 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the issuance of Ukraine-related General Licenses (GL) 13G, 14C, 15B, and 16C, which amend previous licenses related to permissible wind-down transactions that otherwise would be prohibited by Ukraine-Related Sanctions Regulations with respect to the subject entities. OFAC extended the expiration dates of the licenses from December 12 to January 7, 2019, while reviewing the sanctioned entities’ proposed “substantial corporate governance changes” that may result in significant changes in their control.

    GL 13G supersedes GL 13F and authorizes, among other things, activities “ordinarily incident and necessary” to (i) divest or transfer debt, equity, or other holdings in the specified blocked entities to a non-U.S. person; or (ii) facilitate the transfers of debt, equity, or other holdings in those entities by a non-U.S. person to another non-U.S. person. GL 14C, which supersedes GL 14B, relates to specific wind-down activities involving a Russian aluminum producer sanctioned last April as previously covered by InfoBytes here. GL 15B and GL 16C supersede GL 15A and GL 16B, respectively, and authorize permissible activities relating to the maintenance or wind-down of operations, contracts, and agreements with designated entities and subsidiaries that were effective prior to April 6.

    Visit here for additional InfoBytes coverage on Ukraine sanctions.

    Financial Crimes OFAC Department of Treasury Ukraine Sanctions

  • OFAC sanctions target persons supporting Russia’s “malign activity” in Crimea and eastern Ukraine

    Financial Crimes

    On November 8, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced its decision to sanction an additional three individuals and nine entities, pursuant to the Countering America’s Adversaries Through Sanctions Act of 2017 (CAATSA) and Executive Orders (E.O.) 13685 and 13661, for supporting Russia’s occupation of Crimea and parts of eastern Ukraine and its continued “malign activity and destabilizing behavior.” According to OFAC, two of the individuals and one of the entities placed on the Specially Designated Nationals and Blocked Persons List (SDN List) allegedly engaged in serious human rights abuses in “territories forcibly occupied or otherwise controlled by Russia” under the Support for the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act of 2014, as amended by CAATSA Section 228. Additionally, pursuant to E.O. 13685, OFAC imposed sanctions on eight entities and one individual allegedly responsible for helping Russia advance its interests by operating in the Crimea region of Ukraine. OFAC further noted that one of the eight entities is also designated for being owned or controlled by, directly or indirectly, a sanctioned Russian bank and a Russian national whose property and interests in property are blocked pursuant to E.O. 13661. As a result, all property and interests in property belonging to the identified individuals and entities subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from entering into transactions with them.

    Visit here for additional InfoBytes coverage on Russia sanctions.

    Financial Crimes Department of Treasury OFAC Russia Ukraine Sanctions

  • FFIEC issues joint statement on OFAC Cyber-Related Sanctions Program

    Financial Crimes

    On November 5, the Federal Financial Institutions Examination Council (FFIEC) members issued a joint statement alerting financial institutions to the potential impact that the U.S. Treasury Department’s Office of Foreign Assets Control’s (OFAC) recent actions under its Cyber-Related Sanctions Program may have on financial institutions’ risk management programs. OFAC implemented the Cyber-Related Sanctions Program in response to Executive Order 13694 to address individuals and entities that threaten national security, foreign policy, and the economy of the U.S. by malicious cyber-enabled activities. FFIEC’s press release announcing the joint statement references OFAC’s June action against five Russian entities and three Russian individuals who, through “malign and destabilizing cyber activities,” provided material and technological support to Russia’s Federal Security Service (previously covered by InfoBytes here), noting that these entities may offer services to financial institutions operating in the U.S.

    The joint statement reminds financial institutions to ensure that their compliance and risk management processes address possible interactions with an OFAC sanctioned entity. The statement notes that continued use of products or services from a sanctioned entity may cause the financial institution to violate the OFAC sanctions. Additionally, use of software or technical services from a sanctioned entity may increase a financial institution’s cybersecurity risk. The statement encourages financial institutions to take appropriate corrective action, as well as to ensure their third-party service providers comply with OFAC’s requirements.

    The OCC also released Bulletin 2018-40, which corresponds with the FFIEC’s joint statement.

    Financial Crimes OFAC Sanctions FFIEC OCC Russia International Third-Party Privacy/Cyber Risk & Data Security

  • OFAC announces several actions related to the “snap-back” of sanctions on Iran, effective November 5

    Financial Crimes

    On November 5, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced several actions in conjunction with the full re-imposition of sanctions on Iran effective immediately. As previously covered by InfoBytes, President Trump announced his decision to withdraw from the Joint Comprehensive Plan of Action (JCPOA) on May 8. Following the end of the wind-down period, which authorized certain activities through November 4, OFAC issued FAQs related to the “snap-back” of Iranian sanctions. OFAC also updated its Specially Designated Nationals (SDN) list to add over 700 persons, including persons previously removed from the SDN list during the U.S.’s participation in the JCPOA and persons previously identified on the Executive Order 13599 list. OFAC additionally provided a technical notice containing details related to the SDN list changes.

    OFAC’s announcement also refers to an amendment effective November 5 to the Iranian Transactions and Sanctions Regulations (ITSR), in connection with President Trump’s decision to cease U.S. participation in the JCPOA. The newly issued amendment reflects sanctions re-imposed by Executive Order 13846, as covered by InfoBytes here, in addition to changes to certain sanctions lists maintained by OFAC. OFAC also announced it is “amending an existing general license in the ITSR to authorize U.S. persons to sell personal property in Iran and transfer the proceeds to the [U.S.],” if the personal property was either: (i) acquired before the individual became a U.S. person; or (ii) inherited from persons in Iran.

    See here for continuing InfoBytes coverage on Iranian sanctions.

    Financial Crimes Department of Treasury OFAC Iran Sanctions Executive Order

  • President Trump issues new Venezuela Executive Order targeting gold sector; OFAC publishes related FAQs

    Financial Crimes

    On November 1, President Trump issued Executive Order 13850 (E.O. 13850) authorizing the imposition of sanctions on persons who operate in Venezuela's gold sector “or in any other sector of the Venezuelan economy as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State.” The sanctions come in response to the actions of Venezuelan President Maduro’s regime and associated persons in allegedly “plunder[ing] Venezuela's wealth for their own corrupt purposes.” Among other things, the sanctions specifically block the acquisition or retention of property and interests in the United States by persons who “operate in the gold sector of the Venezuelan economy” or “have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any activity or transaction” involving deceptive practices or corruption in conjunction with the Venezuelan government.

    The same day, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) released a set of FAQs connected to the issuance of E.O. 13850, stating that it “expects to use its discretion to target in particular those who operate corruptly in the gold or other identified sectors of the Venezuela economy, and not those who are operating legitimately in such sectors.”

    E.O. 13850 is issued in conjunction with E.O.s 13692, 13808, 13827, and 13835. See here for continuing InfoBytes coverage of Venezuelan actions and E.O.s.

    Financial Crimes OFAC Executive Order Venezuela Sanctions Trump Department of Treasury

  • OFAC targets Singaporean persons for assisting North Korea in evading U.S. sanctions

    Financial Crimes

    On October 25, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced that it made three additions to the Specially Designated Nationals (SDNs) List pursuant to Executive Order 13551, which empowers the United States to block the property of certain persons with respect to North Korea. OFAC said the decision was designed to reinforce the U.S.’s ongoing “commitment to safeguard the international financial system and implement existing UN Security Council [ ] resolutions.” OFAC’s additions identify one Singaporean individual and two Singapore-based entities found to have helped North Korea evade U.S. sanctions—either directly or indirectly—by allegedly engaging in money laundering, counterfeiting goods or currency, smuggling bulk cash, trafficking narcotics, or engaging in other forms of illicit economic activity involving or supporting the North Korean government or any senior official. As a result, all assets belonging to the identified individual and entities subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with them.

    In a related action, the DOJ unsealed a federal indictment against the Singaporean individual who was charged with fulfilling millions of dollars in commodities contracts for North Korea and defrauding several financial institutions in hiding those illicit transactions using international front companies, including entities previously identified as SDNs for supporting the North Korean regime’s illicit activities. The indictment’s charges include conspiracies to (i) violate international sanctions; (ii) commit bank fraud; (iii) commit money laundering; and (iv) defraud the U.S. The charges also include counts of bank fraud and money laundering.

    See here for previous InfoBytes coverage on North Korean sanctions.

    Financial Crimes Department of Treasury OFAC North Korea Sanctions

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