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  • FinCEN focuses on securities industry BSA/AML information sharing

    Financial Crimes

    On February 6, Financial Crimes Enforcement Network (FinCEN) Deputy Director Jamal El-Hindi delivered remarks at the Securities Industry and Financial Markets Association’s 20th Anti-Money Laundering (AML) and Financial Crimes Conference discussing, among other things, the agency’s focus on the Bank Secrecy Act (BSA). Specifically, El-Hindi stressed the importance of information sharing in the BSA context, remarking that the financial sector is “in an evolutionary state” dealing with “new technologies and new payment systems, such as those that involve virtual currency.” He asserted that innovators in the development of cryptocurrencies and messaging systems “cannot turn a blind eye to illicit transactions that they may be fostering,” and noted that FinCEN will regulate these emerging systems in accordance with existing principles that underlie the BSA and AML rules and regulations for the financial sector. El-Hindi encouraged the securities industry to share information, observing that only 14 percent of eligible securities companies are registered to take part in the 314(b) business-to-business information sharing program. He suggested that the industry needs better communication and cooperation to increase the effectiveness of BSA information collection. El-Hindi also discussed how cooperation has helped FinCEN’s cross-agency coordination and enhanced the agency’s rulemaking and guidance—specifically in the establishment of the Customer Due Diligence and Beneficial Ownership rule, but recognized that the lack of information collected regarding the formation of new corporations can frustrate the agency’s risk assessment abilities. To motivate information sharing, El-Hindi emphasized the importance of BSA information financial companies collect, sharing that SARs filings by securities companies have “increased roughly eight-fold” from 2003 to 2019, and that data provided from BSA filings is used frequently by law enforcement and regulators to inform their investigations and examinations and to “identify trends and focus resources.”

    Financial Crimes Federal Issues FinCEN Anti-Money Laundering Bank Secrecy Act Combating the Financing of Terrorism Supervision Customer Due Diligence SARs Securities

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  • Treasury announces anti-terrorist financing plan

    Financial Crimes

    On February 6, the U.S. Treasury Department announced the 2020 National Strategy for Combating Terrorist and Other Illicit Financing. The report provides an overview of the anti-money laundering/countering the financing of terrorism (AML/CFT) program in the U.S. and details how the program can be updated to be more efficient and effective. Among other things, the report covers the most noteworthy threats to the financial system such as fraud, drug trafficking, and human trafficking, and highlights that one of the greatest vulnerabilities to the U.S. financial system is a failure to collect beneficial ownership information when new companies are formed or when company ownership changes. The report also focuses on ways to make the AML/CFT framework stronger, including through increased transparency and improved financial institution regulation and supervision. Additionally, the report advocates boosting the AML/CFT operational framework through the use of technologies, expanded data analytics, increased information sharing, and promotion of worldwide standards.

    Financial Crimes Federal Issues Department of Treasury Anti-Money Laundering Combating the Financing of Terrorism Bank Regulatory Supervision Of Interest to Non-US Persons

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  • Iranian company employee charged in $115 million international bank fraud scheme

    Financial Crimes

    On January 31, the U.S. Attorney’s Office for the Southern District of New York announced charges against an employee (defendant) of an Iranian company for bank fraud, conspiracy to commit bank fraud, and for making false statements to federal agents regarding financial transactions made through U.S. banks to benefit Iranian entities and individuals. According to the indictment, an agreement between the Iranian government and the Venezuelan government resulted in a construction contract for housing units in Venezuela where an Iranian company would construct the units and be paid with money funneled through U.S. banks by a Venezuelan state-owned company subsidiary. The defendant was purportedly part of a committee formed to guide the project. In coordination with other individuals, the defendant allegedly directed money from the Venezuelan company to the Iranian company through bank accounts—set up to hide the transactions from U.S. banks—in Switzerland. The indictment charges that, among other things, the defendant “knowingly and willfully” conspired with others to commit bank fraud against an FDIC-insured institution by directing the Venezuelan company to route $115 million in payments for the Iranian company to the Swiss bank account through correspondent U.S. banks in New York. Additionally, when the defendant was interviewed by federal agents, he “knowingly and willfully” concealed the scheme and made materially false statements about his knowledge of the applicability of sanctions against Iran. The indictment seeks forfeiture of any proceeds or property obtained by the defendant in the course of the alleged offenses.

    Financial Crimes DOJ Iran Venezuela Combating the Financing of Terrorism Of Interest to Non-US Persons OFAC Sanctions Fraud FDIC

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  • OFAC sanctions network for purchasing Iranian petroleum products

    Financial Crimes

    On January 23, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced that it took action against four petroleum products companies (network) designated pursuant to Executive Order (E.O.) 13846 for making payments to “an entity instrumental in Iran’s petroleum and petrochemical industries, which helps to finance Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and its terrorist proxies.” The Iranian entity is on the List of Specially Designated Nationals and Blocked Persons and its property is blocked in conformance with E.O. 13599. According to OFAC, the network transferred payments to the Iranian entity for petroleum exports and “worked to conceal the Iranian origin of these products.” Among other things, these sanctions prohibit foreign financial institutions from “knowingly facilitat[ing] transactions for, or persons that provide material or certain other support to,” the designated petroleum products broker. See the new Iran-related designations here.

    Financial Crimes Department of Treasury Iran Combating the Financing of Terrorism Of Interest to Non-US Persons OFAC Sanctions

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  • OFAC identifies Venezuelan aircraft as blocked property, issues amended Venezuela-related general licenses

    Financial Crimes

    On January 21, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced amendments to the list of property implicated by the Specially Designated Nationals List (SDN List) pursuant to Executive Order (E.O.) 13884, which blocks the property of the Venezuelan government. OFAC identified 15 aircraft that either transported senior members of the Maduro regime or “operated in an unsafe and unprofessional manner in proximity to U.S. military aircraft, while in international air space.” 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 persons.”

    In connection with the designations, OFAC issued amended Venezuela General License (GL) 20B, titled “Authorizing Official Activities of Certain International Organizations Involving the Government of Venezuela.” GL 20B authorizes certain transactions and activities otherwise prohibited under E.O.s 13850 and 13857 involving Banco Central de Venezuela, and E.O. 13884 involving the Government of Venezuela.

    Earlier, on January 17, OFAC issued two additional amended Venezuela GLs. GL 5B provides that on or after April 22, all transactions related to the financing for, and other dealings in the Petróleos de Venezuela SA 2020 8.5 Percent Bond that would be prohibited under a certain subsection of E.O. 13835, as amended by E.O. 13857, are authorized. GL 8E, titled “Authorizing Transactions Involving Petróleos de Venezuela, S.A. (PdVSA) Necessary for Maintenance of Operations for Certain Entities in Venezuela,” supersedes GL 8D to extend the expiration date for certain authorizations through April 22.

    Financial Crimes Department of Treasury OFAC Iran Combating the Financing of Terrorism Of Interest to Non-US Persons Sanctions

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  • OFAC clarifies wind-down period for Iran transactions

    Financial Crimes

    On January 16, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the issuance of Iran-related Frequently Asked Question (FAQ) 816, which addresses the question, “Is there a wind-down period for Executive Order [(E.O.)] 13902?” (previously covered in InfoBytes here). According to the FAQ, individuals and entities involved in activities that qualify as sanctionable under E.O. 13902, which include activities dealing with the mining, construction, manufacturing and textiles industries in Iran, should wind down those transactions within 90 days after the E.O. was issued. OFAC stresses that new engagements entered into with the specified Iranian sectors on or after January 10 will not be considered wind-down activities. These new engagements may be sanctionable during the wind-down period, even if the new engagements commence prior to the end of the 90-day wind-down period, which expires on April 9.

    Financial Crimes Department of Treasury Iran Combating the Financing of Terrorism Of Interest to Non-US Persons OFAC Sanctions

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  • Trump administration's Executive Order 13902 authorizes Iranian industry sanctions

    Financial Crimes

    On January 10, the Trump administration issued new sanctions intended to deny the Iranian government revenues from the export of key economic products that may be used to fund its nuclear program.  Specifically, newly-issued Executive Order 13902 authorizes the Secretary of the Treasury, in conjunction with the Secretary of State, to impose asset blocking sanctions on any person determined to operate in the construction, mining, manufacturing or textile sectors of the Iranian economy, or any additional sector as they may jointly determine.  Additionally, EO 13902 authorizes the imposition of certain sanctions on any person determined to have engaged in, or any foreign financial institution determined to have knowingly facilitated, a significant transaction involving one of the aforementioned sectors of the Iranian economy. 

    Financial Crimes Department of Treasury OFAC Sanctions Of Interest to Non-US Persons Combating the Financing of Terrorism Executive Order Iran

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  • FATF issues an advisory on jurisdictions with AML/CFT deficiencies

    Financial Crimes

    On November 12, the Financial Crimes Enforcement Network (FinCEN) issued an advisory on the Financial Action Task Force (FATF)-identified jurisdictions with “strategic deficiencies” in their anti-money laundering and combating the financing of terrorism (AML/CFT) regimes. As previously covered by InfoBytes, in October, FATF updated the list of jurisdictions to include the Bahamas, Botswana, Cambodia, Ghana, Iceland, Mongolia, Pakistan, Panama, Syria, Trinidad and Tobago, Yemen, and Zimbabwe. At the time, FATF noted that several jurisdictions had not yet been reviewed, and that it “continues to identify additional jurisdictions, on an ongoing basis, that pose a risk to the international financial system.”

    The FinCEN advisory reminds financial institutions of the FATF October updates and emphasizes that financial institutions should consider both the FATF Public Statement and the Improving Global AML/CFT Compliance: On-going Process documents when reviewing due diligence obligations and risk-based policies, procedures, and practices. Moreover, the advisory includes public statements on the status of, and obligations involving, the Democratic People’s Republic of Korea (DPRK) and Iran, in particular. The advisory reminds jurisdictions of the actions the United Nations and the U.S. have taken with respect to sanctioning the DPRK and Iran and emphasizes that financial institutions must comply “with the extensive U.S. restrictions and prohibitions against opening or maintaining any correspondent accounts, directly or indirectly, with foreign banks licensed by the DPRK or Iran.”

    Financial Crimes FATF Anti-Money Laundering Combating the Financing of Terrorism Of Interest to Non-US Persons Customer Due Diligence

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  • FATF updates jurisdictions with AML/CFT deficiencies

    Financial Crimes

    On October 18, the Financial Action Task Force (FATF) published its updated list of jurisdictions identified as having “strategic deficiencies” in their anti-money laundering and combating the financing of terrorism (AML/CFT) regimes that have also developed action plans with the FATF to address the deficiencies. The list of jurisdictions includes the Bahamas, Botswana, Cambodia, Ghana, Iceland, Mongolia, Pakistan, Panama, Syria, Trinidad and Tobago, Yemen, and Zimbabwe. Notably, Ethiopia, Sri Lanka, and Tunisia have been removed from the list and are no longer subject to the FATF’s AML/CFT compliance process due to making “significant progress” in their regimes, while Iceland, Mongolia, and Zimbabwe have been added since the last update in June (covered by InfoBytes here). The FATF further notes that several jurisdictions have not yet been reviewed, and that it “continues to identify additional jurisdictions, on an ongoing basis, that pose a risk to the international financial system.” While the FATF does not instruct members to apply enhanced due diligence to these jurisdictions, it encourages members to take this information into account when conducting money laundering risk assessments and due diligence.

    Financial Crimes FATF Anti-Money Laundering Combating the Financing of Terrorism Of Interest to Non-US Persons Customer Due Diligence

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  • FinCEN final rule designates Iran a primary money laundering concern; new Treasury and State department mechanism to make humanitarian trade more transparent

    Financial Crimes

    On October 25, the U.S. Treasury Department announced the issuance of a final rule by the Financial Crimes Enforcement Network (FinCEN) to impose a fifth special measure against Iran as a jurisdiction of primary money laundering concern under Section 311 of the USA Patriot Act. The final rule prohibits U.S. financial institutions from opening or maintaining a correspondent account on behalf of an Iranian financial institution, and also prohibits U.S. financial institutions from processing transactions involving Iranian financial institutions. The final rule takes effect ten days after publication in the Federal Register.

    FinCEN stated that its action is based on Iran’s abuse of the international financial system, including providing support for terrorist groups such as Hizballah and HAMAS, and builds upon Treasury’s Office of Foreign Assets Control’s (OFAC) September designation of Iran’s central bank for providing financial support to the Islamic Revolutionary Guards Corps, its Qods Force, and Hizballah (previous InfoBytes coverage here). Additionally, FinCEN determined that the Iranian regime continues to engage in deceptive financial practices through the use of front companies and shell companies, among other things, to facilitate military purchases. These actions, FinCEN noted, are “further compounded by Iran’s continued failure to adequately address its AML/CFT deficiencies, as identified by the Financial Action Task Force,” which recently re-imposed countermeasures and enhanced due diligence strategies on Iran and “called on its members and urged all jurisdictions to advise their financial institutions to apply enhanced due diligence with respect to business relationships and transactions with natural and legal persons from Iran.” (Previous InfoBytes coverage here.) 

    Concurrent with the imposition of the fifth special measure, Treasury and the U.S. Department of State announced a new mechanism to increase the transparency of humanitarian trade with Iran that will establish processes for participating foreign governments and financial institutions when conducting enhanced due diligence designed to mitigate the higher risks associated with Iran-related transactions. OFAC’s guidance outlines due diligence and reporting requirements for participating entities, and stipulates that “[p]rovided that foreign financial institutions commit to implement stringent enhanced due diligence steps, the framework will enable them to seek written confirmation from Treasury that the proposed financial channel will not be exposed to U.S. sanctions.”

    Financial Crimes FinCEN Department of Treasury Anti-Money Laundering Combating the Financing of Terrorism Of Interest to Non-US Persons Patriot Act

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