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OFAC identifies Venezuelan oil tankers as blocked property
On December 3, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced additions to the Specially Designated Nationals List (SDN List) pursuant to Executive Order 13884, which blocks the property of the Venezuelan government. OFAC identified six tankers of Venezuela’s state-owned oil company as property of the Venezuelan Government and therefore as blocked property, after all the vessels recently transported petroleum to Cuba. A seventh tanker also was identified as a blocked property, pursuant to Executive Order 13850 for operating in the oil sector of the Venezuelan economy, after delivering Venezuelan petroleum to Cuba. According to the press release, the vessel’s name had been changed to circumvent sanctions as it moved Venezuelan oil to Cuba. The SDN List was updated to link the new name of the vessel to its former name. 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 or designated persons.”
OFAC settles with multinational corporation for Cuban sanctions violations
On October 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a settlement of more than $2.7 million with a multinational corporation, on behalf of three subsidiaries, to resolve potential civil liability for 289 alleged violations of the Cuban Assets Control Regulations (CACR). The settlement resolves allegations that between December 2010 and February 2014, the subsidiaries accepted payments on 289 occasions from an entity identified on OFAC’s List of Specially Designated Nationals and Blocked Persons “for goods and services provided to a Canadian customer.” OFAC alleged that although the subsidiaries negotiated and entered into contracts with the Canadian customer—and invoices were sent to the customer—the designated entity was approved as a third-party payer and paid more than 65 percent of the total transactions. OFAC asserted that the subsidiaries failed to undertake sufficient diligence into the activities of the Canadian customer, and noted that the sanctions screening software used by the subsidiaries was set to screen for only one version of the designated entity’s name.
In arriving at the settlement amount, OFAC considered various mitigating factors including that (i) OFAC has not issued a violation against the subsidiaries in the five years preceding the earliest date of the transactions at issue; (ii) the corporation identified the alleged violations by testing and auditing its compliance program, and implemented several remedial measures in response to the alleged violations, which included improvements to its compliance program; and (iii) the corporation entered into, and agreed to extend, multiple statute of limitations tolling agreements.
OFAC also considered various aggravating factors, including that (i) the subsidiaries “failed to take proper or reasonable care with respect to their U.S. economic sanctions obligations”; (ii) the subsidiaries’ actions allowed a large volume of high-value transactions to be conducted with the designated entity, causing “substantial harm” to the CACR objectives; and (iii) the corporation’s submissions to OFAC “leave substantial uncertainty about the totality of the benefits conferred” to the designated entity through the Canadian customer.
OFAC sanctions additional entities and vessels operating in Venezuela’s oil sector
On September 24, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13850 against four entities for their alleged involvement in the transportation of oil from Venezuela to Cuba. According to OFAC, the entities’ actions offer support to the Maduro regime and “enable its repressive security and intelligence apparatus.” In addition, OFAC identified four vessels as blocked property owned by the identified entities. As a result of the sanctions, “all property and interests in property of these entities, and of any entities that are owned, directly or indirectly, 50 percent or more by the designated entities, that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC.” OFAC notes that its regulations “generally prohibit” U.S. persons from participating in transactions with blocked or designated persons.
Additionally, the announcement notes that OFAC is delisting two entities in recognition of their actions to ensure that their vessels are not complicit in supporting the Maduro regime. As a result of the delisting, all property and interest of the entities are now unblocked and lawful transactions involving U.S. persons are no longer prohibited.
Since OFAC’s designation of Venezuela’s state-owned oil company last January, the department has sanctioned several entities and individuals connected to Venezuela’s oil sector. Continuing InfoBytes coverage on these actions can be found here.
OFAC strengthens Cuba sanctions, revokes “U-turn” authorization
On September 6, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) announced amendments effective October 9 to the Cuban Assets Control Regulations (CACR), which implement changes in accordance with President Trump’s 2017 National Security Presidential Memorandum “Strengthening the Policy of the United States Towards Cuba.” Key elements of the changes include:
- Lowering the value of permitted remittances to Cuba. Family remittances will be capped at $1,000 U.S. dollars per quarter that a single remitter can send to an individual Cuban national. Remittances to close family members of prohibited Cuban officials and members of the Cuban Communist Party will be forbidden. While the amendments rescind the authorization for donative remittances, they add a new provision authorizing remittances to certain individuals and independent non-governmental organizations in Cuba “to support the operation of economic activity . . . independent of government control.”
- “U-turn” transactions. The amended sanctions revoke what is commonly referred to as the Cuban “U-turn” authorization. Effective next month, financial institutions subject to U.S. jurisdiction will no longer be authorized to process Cuba-related payments that originate and terminate outside the United States. However, financial institutions subject to U.S. jurisdiction will be permitted to reject such transactions.
An updated list of FAQs related to the CACR has also been published, as well as guidance on recent changes to the sanctions.
The changes will have the greatest impact on U.S. banks offering foreign correspondent banking services and foreign banks utilizing those services, increasing compliance risks for both. They also shut a significant window to the U.S. financial system that foreign persons conducting international trade with Cuba previously enjoyed.
OFAC sanctions Cuban oil company for facilitating Maduro regime
On July 3, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against Cuban state-run oil import and export company for continuing to provide support to the Maduro regime by the importation of oil from Venezuela. The sanctions are pursuant to Executive Order 13850. OFAC alleges that the state-run company has been the recipient of oil from Venezuela and has expanded its operations to include non-traditionally traded oil products. As a result of the sanctions, “all property and interests in property of these individuals, and of any entities that are owned, directly or indirectly, 50 percent or more by such individuals, that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC.” OFAC notes that its regulations “generally prohibit” U.S. persons from participating in transactions with these individuals and entities.
Additionally, the announcement notes that OFAC is delisting an oil tanking company in recognition of the company’s actions to ensure that its vessels are not complicit in supporting the Maduro regime. As a result of the delisting, all property and interest of the company is now unblocked and lawful transactions involving U.S. persons are no longer prohibited.
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 that it had determined that persons operating in Venezuela’s defense and security sector may be subject to sanctions. Additionally, OFAC imposed 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. 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.” 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.
German-headquartered financial institution to pay $1.3 billion for Iran sanctions violations
On April 15, U.S. regulators announced settlements totaling $1.3 billion with several banking units of a German-headquartered financial institution to resolve allegations by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), the DOJ, the Federal Reserve Board, the New York Department of Financial Services (NYDFS), and the New York County District Attorney’s Office of apparent violations of multiple sanctions programs, including those related to Burma, Cuba, Iran, Libya, Sudan, and Syria. According to OFAC’s announcement, between January 2007 and December 2011, the institution’s banking units in Germany, Austria, and Italy processed thousands of payments through U.S. financial institutions on behalf of sanctioned entities “in a manner that did not disclose underlying sanctioned persons or countries to U.S. financial institutions which were acting as financial intermediaries.”
According to the settlement agreements (see here, here, and here), OFAC considered various aggravating factors, and noted, among other things, that the institution’s banking units failed to sufficiently enforce policies addressing OFAC sanctions concerns or restrict the processing of transactions in U.S. dollars involving persons or countries subject to sanctions programs administered by OFAC. Additionally, OFAC asserted that the Austrian banking unit claimed on several occasions that OFAC’s sanctions programs “were not legally binding or relevant to [the bank].” OFAC further stated that while the banking units failed to voluntarily self-disclose the alleged violations, they have each agreed to implement and maintain compliance commitments to minimize the risk of the recurrence of the alleged conduct.
OFAC imposes additional oil sector sanctions against companies connected to Maduro regime
On April 12, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against four companies for their alleged involvement in the transportation of oil from Venezuela to Cuba. According to OFAC, the companies’ actions offer support to former President Maduro’s regime and contribute to the humanitarian crisis in Venezuela. In addition, OFAC identified nine vessels as blocked property owned by the identified companies. As a result, all property belonging to the sanctioned entities, and interests in property of the sanctioned entities (or of any entities owned 50 percent or more by them) subject to U.S. jurisdiction are blocked and must be reported to OFAC. U.S. persons are also generally prohibited from entering into transactions with them. Furthermore, OFAC also referred financial institutions to Financial Crimes Enforcement Network advisories FIN-2017-A006, FIN-2017-A003, 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 foreign political figures and their financial facilitators.
Visit here for continuing InfoBytes coverage of actions related to Venezuela.
U.K. subsea services company and subsidiaries to pay $440,000 for Cuban and Iranian sanctions violations
On April 11, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced two settlements totaling more than $440,000 with a U.K. subsea services company and certain subsidiaries that operate in the oil and gas industry. The first settlement, for $227,500, resolves potential civil liability for seven alleged violations of the Cuban Assets Control Regulations (CACR). According to OFAC, two of the company's Malaysian affiliates produced analytical reports and conducted workshops for oil well drilling projects in Cuban territorial waters related to projects managed by companies including Venezuela’s state-owned oil company, which was previously designated by OFAC in January (see InfoBytes coverage here). OFAC considered various aggravating factors—including that the alleged violations constitute an egregious case—and noted that the company/subsidiaries “willfully violated U.S. sanctions laws and regulations when they knowingly dealt with Cuban interests despite prior notification of their unlawfulness.” OFAC also noted that senior managers “deliberately concealed their dealings with Cuba on multiple occasions.” OFAC considered numerous mitigating factors, including the company/subsidiaries’ voluntarily self-disclosure of the apparent violations and remedial efforts taken to avoid similar violations from occurring in the future.
The same day OFAC announced a second settlement, this time for $213,866, which resolves potential civil liability for 13 alleged CACR violations. The settlement also resolves three alleged violations of the Iranian Transactions and Sanctions Regulations (ITSR) by the company’s U.S.-based parent company. According to OFAC, the company issued sanctions compliance guidance to all of its subsidiaries with instructions that transactions with Cuba and Iran (including indirect third parties) were prohibited. However, certain subsidiaries disregarded the guidance and allegedly engaged in transactions within Cuban and Iranian territorial waters. In reaching the settlement amount, OFAC determined, among other things, that (i) the company voluntarily self-disclosed the apparent violations; (ii) the alleged violations constitute a non-egregious case; (iii) the subsidiaries have confirmed the conduct has been terminated; and (iv) remedial efforts have been undertaken to minimize the risk of similar violations from occurring in the future.
OFAC sanctions companies for transporting Venezuelan oil to Cuba
On April 5, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against two non-U.S. companies for their alleged involvement in the transportation of oil from Venezuela to Cuba. According to OFAC, the companies have engaged in a “barter system,” in which Venezuelan oil supplies are exchanged for Cuban assistance in the form of “political advisors, intelligence and military officials, and medical professionals. . . all of whom” prop up “the illegitimate Maduro regime through oil-for-repression schemes as [an] attempt to keep Maduro in power.”
Visit here for continuing InfoBytes coverage of actions related to Venezuela.