Skip to main content
Menu Icon Menu Icon
Close

InfoBytes Blog

Financial Services Law Insights and Observations

Filter

Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.

  • OFAC sanctions “mixer” for laundering over $7 billion in virtual currency

    Financial Crimes

    On August 8, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13694 against a virtual currency mixer accused of allegedly laundering more than $7 billion in virtual currency since 2019. According to OFAC, this amount includes more than $455 million stolen by a previously sanctioned Democratic People’s Republic of Korea state-sponsored hacking group (covered by InfoBytes here). OFAC stated that the designations resulted from the company “having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, a cyber-enabled activity originating from, or directed by persons located, in whole or in substantial part, outside the United States that is reasonably likely to result in, or has materially contributed to, a significant threat to the national security, foreign policy, or economic health or financial stability of the United States and that has the purpose or effect of causing a significant misappropriation of funds or economic resources, trade secrets, personal identifiers, or financial information for commercial or competitive advantage or private financial gain.” Under Secretary of the Treasury for Terrorism and Financial Intelligence, Brian E. Nelson, added that the company “repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis,” and stressed that Treasury “will continue to aggressively pursue actions against mixers that launder virtual currency for criminals and those who assist them.” As previously covered by InfoBytes, in 2020, Treasury’s FinCEN penalized a bitcoin mixer $60 million for violating the Bank Secrecy Act.

    As a result of the sanctions, all property and interests in property of the sanctioned entity that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC, as well as “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons.” OFAC noted that its regulations prohibit U.S. persons from participating in transactions with designated persons unless authorized by a general or specific license issued by OFAC or exempt.

    Treasury further stressed that players in the virtual currency industry should take a risk-based approach for assessing risks associated with different virtual currency services, implementing measures to mitigate risks, and addressing the challenges anonymizing features can present to anti-money laundering/countering the financing of terrorism sanctions obligations. “[M]ixers should in general be considered as high-risk by virtual currency firms, which should only process transactions if they have appropriate controls in place to prevent mixers from being used to launder illicit proceeds,” Treasury said.

    Financial Crimes Digital Assets Department of Treasury OFAC Of Interest to Non-US Persons OFAC Sanctions OFAC Designations North Korea Virtual Currency Anti-Money Laundering Combating the Financing of Terrorism SDN List

    Share page with AddThis
  • OFAC sanctions Russian companies and other entities

    Financial Crimes

    On August 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced several new sanctions in response to Russia’s invasion of Ukraine. The new sanctions, issued pursuant to Executive Order 14024, target elites, a major multinational company, a sanctions evasion operation, and a yacht used by a sanctioned individual. The action was taken together with the U.S. Department of State, which imposed additional sanctions on entities and individuals, as well as visa restrictions. As a result of the sanctions, all property and interests in property belonging to the sanctioned persons that are in the U.S. or in the possession or control of U.S. persons, and “any entities that are owned, directly or indirectly, 50 percent or more” by the targeted persons are blocked and must be reported to OFAC. Additionally, U.S. persons are 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 OFAC license.

    The following day, OFAC issued several new Russia-related General Licenses (GLs). OFAC also published three frequently asked questions regarding “Russian Harmful Foreign Sanctions.”

    Financial Crimes Department of Treasury OFAC SDN List Department of State OFAC Designations OFAC Sanctions Russia Ukraine Ukraine Invasion

    Share page with AddThis
  • OFAC sanctions Iranian petrochemical network

    Financial Crimes

    On August 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13846 against companies used by one of Iran’s largest petrochemical brokers to facilitate the sale of Iranian petroleum and petrochemical products from Iran to East Asia. The designations follow OFAC sanctions announced on July 6 against a network of individuals and entities for facilitating the delivery and sale of hundreds of millions of dollars’ worth of Iranian petroleum and petrochemical products from Iranian companies to East Asia through a web of Gulf-based front companies (covered by InfoBytes here). As a result of the sanctions, all property and interests in property of the sanctioned persons subject to U.S. jurisdiction, as well as any entities owned 50 percent or more by such persons, are blocked and must be reported to OFAC. U.S. persons are also generally prohibited from entering into transactions with the sanctioned persons. Additionally, OFAC warned that “any foreign financial institution that knowingly facilitates a significant transaction for any of the individuals or entities designated today could be subject to U.S. sanctions.”

    Financial Crimes Of Interest to Non-US Persons OFAC OFAC Designations SDN List Settlement Department of Treasury

    Share page with AddThis
  • OFAC issues Russia-related sanction, general licenses, and FAQs

    Financial Crimes

    On July 21, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced Russia-related General License (GL) 45 and GL 46. GL 45 authorizes transactions related to the wind down of certain financial contracts prohibited by Executive Order (E.O.) 14071. GL 46 authorizes transactions in support of an auction process to settle certain credit derivative transactions prohibited by E.O. 14071. OFAC also announced that it published two new Frequently Asked Questions (FAQs) and two amended FAQs on “Russian Harmful Foreign Activities Sanctions.” Additionally, OFAC added a name to the SDN list.

    Financial Crimes SDN List Department of Treasury OFAC OFAC Designations Russia

    Share page with AddThis
  • District Court grants preliminary approval in a FCRA case remanded by the 9th Circuit

    Courts

    On July 19, the U.S. District Court for the Northern District of California granted a plaintiff’s motion for preliminary approval in a class action settlement in a FCRA case. In a class action against a credit reporting agency (CRA) for allegedly violating FCRA by erroneously linking class members to criminals and terrorists with similar names in a database maintained by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), the district court ruled that all class members had standing to assert their FCRA claims. The jury returned a verdict for the plaintiffs and awarded punitive damages. As previously covered by InfoBytes, in February 2020, the 9th Circuit reduced the punitive damages award and affirmed the district court’s ruling that all class members had standing due to, among other things, the CRA’s alleged “reckless handling of information from OFAC,” which subjected class members to “a real risk of harm.” As previously covered by InfoBytes, in April 2020, the 9th Circuit granted a joint motion to stay the mandate pending the CRA’s filing of a petition for writ of certiorari with the U.S. Supreme Court. The Supreme Court granted the CRA’s petition for certiorari and reversed the 9th Circuit’s finding on standing, holding that the class members whose credit reports were not provided to third-party businesses did not suffer a concrete harm and thus did not have standing to assert their “reasonable procedures” claims under the FCRA. The Court also held that none of the class members had standing to pursue the disclosure claims under the FCRA because they had not “suffered a concrete harm.” The Ninth Circuit remanded to the district court for further proceedings consistent with the Supreme Court’s ruling.

    The parties participated in a mediation and reached a class-wide settlement. The plaintiff moved for preliminary approval, which the district court granted on July 19. The settlement class is composed of two categories of individuals: (1) the 1,853 class members that the defendant CRA identified in its pre-trial stipulation as individuals for whom the defendant had delivered a credit report containing OFAC data to a third-party, and (2) class members from the remaining group of 6,332 individuals not identified in the stipulation who submit a claim demonstrating publication of OFAC data to a third-party during the class period. The Settlement agreement, among other things, requires the defendant to establish a settlement fund of $9 million, which includes attorney fees and costs.

    Courts FCRA Credit Reporting Agency Class Action OFAC Department of Treasury

    Share page with AddThis
  • Treasury clarifies impact of sanctions on agricultural commodities, agricultural equipment, or medicine relating to Russia

    Financial Crimes

    On July 14, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued a Fact Sheet to clarify that the U.S. has not imposed sanctions on the production, manufacturing, sale, or transport of agricultural commodities, agricultural equipment, or medicine relating to Russia. Additionally, OFAC issued General License (GL) 6B to expand agricultural and medical authorizations to now cover transactions related to agricultural equipment that would normally be prohibited by the Russian Harmful Foreign Activities Sanctions Regulations. OFAC emphasized that U.S. sanctions on Russia issued in response to its war against Ukraine “do not stand in the way of agricultural and medical trade.” OFAC referred to guidance issued in April for more details on authorizations under U.S. sanctions related to agricultural and medical transactions, nongovernmental organization activities, and Covid-19 relief, among others, to support people impacted by Russia’s war (covered by InfoBytes here).

    Financial Crimes Of Interest to Non-US Persons Department of Treasury OFAC OFAC Sanctions OFAC Designations Russia Ukraine Ukraine Invasion

    Share page with AddThis
  • OFAC sanctions Mexican cartel facilitator

    Financial Crimes

    On July 11, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to the Foreign Narcotics Kingpin Designation Act against an individual engaged in the trafficking of high-caliber firearms from the U.S. to a Mexican drug organization. According to OFAC, the designated individual acted for or on behalf of a violent drug trafficking organization based in Mexico, which is responsible for a significant proportion of drugs trafficked into the U.S. OFAC further noted that the designation “is the result of ongoing efforts by U.S. agencies and the Government of Mexico to disrupt Mexican drug trafficking organizations’ procurement of weapons, including those sourced in the United States.” As a result of the sanctions, all property belonging to the sanctioned persons subject to U.S. jurisdiction are blocked and must be reported to OFAC. U.S. persons are also generally prohibited from engaging in any dealings involving the property of blocked or designated persons.

    Financial Crimes OFAC Department of Treasury Of Interest to Non-US Persons SDN List OFAC Sanctions OFAC Designations Mexico

    Share page with AddThis
  • OFAC sanctions Iranian petrochemical network

    Financial Crimes

    On July 6, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13846 against an international network of individuals and entities for facilitating the delivery and sale of hundreds of millions of dollars’ worth of Iranian petroleum and petrochemical products from Iranian companies to East Asia through a web of Gulf-based front companies. The designations follow OFAC sanctions announced June 16 against a network of Iranian petrochemical producers, as well as front companies in the People’s Republic of China and the United Arab Emirates, working to support Iranian petrochemical sales (covered by InfoBytes here). As a result, all property and interests in property of the sanctioned persons subject to U.S. jurisdiction are blocked and must be reported to OFAC, as well as any entities owned 50 percent or more by such persons. U.S. persons are also generally prohibited from entering into transactions with the sanctioned persons. Additionally, OFAC warned that “any foreign financial institution that knowingly facilitates a significant transaction for any of the individuals or entities designated today could be subject to U.S. sanctions.”

    Financial Crimes OFAC Department of Treasury Of Interest to Non-US Persons OFAC Sanctions OFAC Designations Iran China

    Share page with AddThis
  • OFAC amends Venezuela-related general license

    Financial Crimes

    On July 7, the U.S. Treasury Department’s Office of Foreign Assets Control issued Venezuela-related General License (GL) 40A, which authorizes certain transactions involving the exportation or reexportation of liquefied petroleum gas to Venezuela that would otherwise be prohibited by Executive Order (E.O.) 13884, as incorporated into the Venezuela Sanctions Regulations. (Covered by InfoBytes here.) Effective July 7, G.L. 40A replaces G.L. 40, which was issued in July 2021.

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

    Share page with AddThis
  • OFAC issues Notification of Blocked Property to sanctioned Russian oligarch’s trust

    Financial Crimes

    On June 30, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued a Notification of Blocked Property to a Delaware-based trust in which an OFAC-designated Russian oligarch holds a property interest. As previously covered by InfoBytes, in April 2018, OFAC sanctioned seven Russian oligarchs, including the Russian oligarch who holds a property interest, along with 12 companies they own or control, 17 senior Russian government officials, and a state-owned Russian weapons trading company and its Russian bank subsidiary pursuant to the Countering America’s Adversaries Through Sanctions Act of 2017 (CAATSA) and Executive Orders 1366113662, and 13582. According to OFAC, the trust holds assets valued at over $1 billion; therefore, this enforcement action ensures that those assets continue to be blocked and inaccessible to the OFAC-designated Russian oligarch. As a result of the Notification of Blocked Property, the trust is subject to the same prohibitions applicable to the OFAC-designated Russian oligarch. All transactions by U.S. persons or within (or transiting) the U.S. involving any property or interests in property of designated or otherwise blocked persons are prohibited, unless exempt or authorized by a general or specific license issued by OFAC. These prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person and the receipt of any contribution or provision of funds, goods, or services from any such person.

    Financial Crimes Department of Treasury OFAC OFAC Sanctions OFAC Designations Russia Of Interest to Non-US Persons CAATSA

    Share page with AddThis

Pages

Upcoming Events