Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.
OFAC sanctions entity and two individuals for tracking weapons to IRGC and facilitating sanctions evasion
On June 12, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on a resource trading company and its two Iraqi associates, for trafficking “hundreds of millions of dollars’ worth of weapons” to the Iraq-based Islamic Revolutionary Guard Corps (IRGC) and facilitating access to the Iraqi financial system to evade sanctions.
According to OFAC, the sanctions were issued pursuant to Executive Order 13224, which “provides a means by which to disrupt the financial support network for terrorists and terrorist organizations.” As a result, “all property and interests in property of these targets that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC.” OFAC noted that persons who engage in transactions with the designated individuals and entities may be exposed to sanctions themselves or subject to enforcement action. Moreover, OFAC warned foreign financial institutions that, unless an exemption applies, they may be subject to U.S. sanctions if they knowingly facilitate significant transactions for any of the designed individuals or entities.
On June 11, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced additions to the Specially Designated Nationals List pursuant to Executive Orders (E.O.) 13573 and 13582. OFAC’s additions to the list include 13 entities and three individuals associated with an international network benefiting the Assad regime in Syria. According to OFAC, a Syrian business developer and his associated businesses have “leveraged the atrocities of the Syrian conflict into a profit-generating enterprise.” As a result, “all property and interests in property of these individuals and entities that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC.”
See here for continuing InfoBytes coverage of actions related to Syria.
On June 7, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced an approximately $400,000 settlement with a global money services business for alleged violations of the Global Terrorism Sanctions Regulations (GTSR). The settlement resolves potential civil liability for the company’s processing of certain transactions totaling roughly $1.275 million. According to OFAC, the transactions were paid out to third-party, non-designated beneficiaries who collected their remittances from a company sub-agent in The Gambia that OFAC designated pursuant to the GTSR in December 2010. In arriving at the settlement amount, OFAC considered various mitigating and aggravating factors, including the fact that the company voluntarily self-disclosed the issue to OFAC.
On June 7, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against Iran’s largest petrochemical holding group for providing financial support to an engineering conglomerate of the Islamic Revolutionary Guard Corps (IRGC) whose property and interests in property are blocked pursuant to Executive Order 13382. In addition, OFAC designated the holding group’s network of 39 subsidiary petrochemical companies and foreign-based sales agents. According to OFAC, profits derived from the holding group’s activities “support the IRGC’s full range of nefarious activities, including the proliferation of weapons of mass destruction . . . and their means of delivery, support for terrorism, and a variety of human rights abuses, at home and abroad.”
As a result, all property and interests in property belonging to the identified entities subject to U.S. jurisdiction are blocked and must be reported to OFAC, and U.S. persons are generally prohibited from transacting with them. Moreover, OFAC warned foreign financial institutions that they may be subject to U.S. correspondent account or payable-through account sanctions if they knowingly facilitate significant transactions for any of the designated entities. OFAC further issued a reminder that as of November 5, 2018, purchasing, acquiring, selling, transporting, or marketing petrochemical products from Iran is sanctionable under E.O. 13846 (covered by InfoBytes here).
Visit here for additional InfoBytes coverage of actions related to Iran.
OFAC issues Finding of Violation, no penalties, against bank for alleged Iranian sanctions violations
On May 28, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a Finding of Violation against a bank, acting as a trustee for a customer, for violations of the Iranian Transactions and Sanctions Regulations (ITSR). According to the announcement, OFAC’s Finding of Violation was based on the fact that the bank processed at least 45 pension payments totaling over $11,000 to a U.S. citizen with a U.S. bank account, residing in Iran. After learning of and reporting the issue to OFAC, the bank modified its review and reporting process to ensure that retirement payments are screened by the right screening platform and that sanctions alerts are handled through the appropriate process, including review by compliance specialists with expertise in sanctions.
When issuing a Finding of Violation against the bank, as opposed to a civil money penalty, OFAC considered the fact that, among other things, (i) no managers or supervisors appear to have been aware of the conduct that led to the violations; (ii) the payments at issue may not have actually been transferred to Iran; (iii) the bank took remedial action in response to the violations; and (iv) the bank cooperated with OFAC by self-disclosing the alleged violations and agreeing to tolling the matter with extensions.
OFAC imposes additional oil sector sanctions connected to Venezuela’s defense and intelligence sector
On May 10, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against two companies for their alleged involvement in the transportation of oil from Venezuela to Cuba, which provides support to former President Maduro’s defense and intelligence sector. In addition, OFAC identified two vessels as blocked property owned by the identified companies. According to the Treasury Secretary Steven T. Mnuchin, “[OFAC’s] action today puts Venezuela’s military and intelligence services, as well as those who support them, on notice that their continued backing of the illegitimate Maduro regime will be met with serious consequences.” As a result, all property and interests in property of the sanctioned entities or of other entities that are owned at least 50 percent by the sanctioned entities, that are either in the United States or in the possession or control of a U.S. person, are blocked and must be reported to OFAC. U.S. persons are also generally prohibited from entering into transactions with these entities. Furthermore, OFAC also referred financial institutions to Financial Crimes Enforcement Network advisories FIN-2019-A002, FIN-2017-A006, and FIN-2018-A003 for further information concerning the efforts of Venezuelan government agencies and individuals to use the U.S. financial system and real estate market to launder corrupt proceeds, as well as human rights abuses connected to corrupt foreign political figures and their financial facilitators.
Visit here for continuing InfoBytes coverage of actions related to Venezuela.
President Trump issues new Iran Executive Order targeting metal sectors; OFAC publishes related FAQs
On May 8, President Trump issued Executive Order 13871 (E.O. 13871) authorizing the imposition of sanctions on persons who operate in Iran’s iron, steel, aluminum, and copper sectors in order to provide “funding and support for the proliferation of weapons of mass destruction, terrorist groups and networks, campaigns of regional aggression, and military expansion.” Among other things, E.O. 13871 authorizes the Secretaries of Treasury and State to impose sanctions on a foreign financial institution if it is determined that it has knowingly conducted or facilitated any significant financial transactions in these sectors, or for or on behalf of a blocked person. Furthermore, Treasury may prohibit the opening of, or impose strict conditions on maintaining, a correspondent account or payable-through account by such foreign financial institutions in the United States.
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. 13871, including a discussion of the relevant 90-day wind-down period for affected transactions as well as sanction exceptions.
Visit here for additional InfoBytes coverage of actions related to Iran.
On May 7, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced it removed sanctions imposed on a former high-ranking Venezuelan official in the Maduro regime after he broke ties with the regime. As previously covered by InfoBytes, the sanctions were imposed in February of this year pursuant to Executive Order (E.O.) 13692. As a result of the removal, any otherwise lawful transactions involving U.S. persons and the individual are no longer prohibited. OFAC emphasized that the action “demonstrates that U.S. sanctions need not be permanent and are intended to bring about a positive change of behavior,” and further “shows the good faith of the [U.S.] that removal of sanctions may be available for designated persons who take concrete and meaningful actions to restore democratic order, refuse to take part in human rights abuses, speak out against abuses committed by the illegitimate Maduro regime, or combat corruption in Venezuela.”
Buckley Special Alert
The U.S. Department of the Treasury’s Office of Foreign Assets Control last week issued a framework for OFAC Compliance Commitments, which, for the first time, outlines OFAC’s views on essential elements of a risk-based sanctions compliance program in a single document that can serve as a roadmap for organizations as they structure and evaluate these programs. The framework should be considered carefully by U.S. organizations with any significant foreign dealings, and foreign organizations that conduct business with the United States or that utilize U.S. goods, services, or financial systems.
The framework also makes clear that OFAC intends to target individual employees who are culpable for violations. That emphasis follows an action from earlier this year, where OFAC sanctioned an individual it deemed responsible for circumventing his employer’s compliance protocols.
* * *
Click here to read the full special alert.
If you have questions about the OFAC’s new guidance or related issues, please visit our Bank Secrecy Act/Anti-Money Laundering & Sanctions practice page or contact a Buckley attorney with whom you have worked in the past.
On May 2, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $871,837 settlement with a New York global shipping and logistics company, as well as its subsidiaries and affiliates, for five alleged violations of the Weapons of Mass Destruction Proliferators Sanctions Regulations. The settlement resolves potential civil liability for the company’s alleged processing of five electronic funds transfers pertaining to payments associated with blocked vessels identified on OFAC’s Specially Designated Nationals List.
In arriving at the settlement amount, OFAC considered various aggravating factors, such as (i) the alleged violations constitute an egregious case and were not voluntarily self-disclosed; (ii) the company recklessly disregarded its obligations to comply with U.S. economic and trade sanctions; (iii) managers were aware of, and participated in, the conduct leading to the alleged violations; and (iv) the company is a global, commercially sophisticated company operating in a high-risk industry.
OFAC also considered numerous mitigating factors, including that the company has not received a penalty or finding of a violation in the five years prior to the transactions at issue, and the company cooperated with OFAC during the investigation and has undertaken remedial efforts to minimize the risk of similar violations from occurring in the future.
- APPROVED Webcast: Introducing Mogy — APPROVED’s licensing technology solution
- Hank Asbill to discuss "Pay no attention to the man behind the curtain: Addressing prosecutions driven by hidden actors" at the National Association of Criminal Defense Lawyers West Coast White Collar Conference
- Daniel P. Stipano to discuss "Mid-year policy update" at the ACAMS AML Risk Management Conference
- Daniel P. Stipano to discuss "Keep off the grass: Mitigating the risks of banking marijuana-related businesses" at the ACAMS AML Risk Management Conference
- Christopher M. Witeck and Moorari K. Shah to discuss "The latest in vendor management regulations" at a Mortgage Bankers Association webinar
- Buckley Webcast: Hot topics in debt collection — An analysis of recent federal FDCPA litigation
- Jonice Gray Tucker to discuss "How to succeed in law school" at the SEO Law DC Panel Discussions
- Amanda R. Lawrence to discuss "Navigating the challenges of the latest data protection regulations and proven protocols for breach prevention and response" at the ACI National Forum on Consumer Finance Class Actions and Government Enforcement
- Benjamin W. Hutten to discuss "Requirements for banking inherently high-risk relationships" at the Georgia Bankers Association BSA Experience Program
- Brandy A. Hood to discuss "RESPA Section 8/referrals: How do you stay compliant?" at the New England Mortgage Bankers Conference
- Daniel P. Stipano to discuss "Lessons learned from recent enforcement actions and CMPs" at the ACAMS AML & Financial Crime Conference
- Daniel P. Stipano to discuss "Assessing the CDD final rule: A year of transitions" at the ACAMS AML & Financial Crime Conference