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OFAC sanctions Iranian media corporation
On November 16, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13846 against six senior employees of the Iranian state-run media corporation that has broadcast hundreds of forced confessions of Iranian, dual national, and international detainees in Iran. According to OFAC, the corporation was designated in 2013 and does not act “as objective media outlet but rather as a critical tool in the Iranian government’s mass suppression and censorship campaign against its own people.” OFAC also noted that the corporation has “recently broadcast televised interviews of individuals being forced to confess that their relatives were not killed by Iranian authorities during nationwide protests but died due to accidental, unrelated causes.” As a result of the sanctions, all property and interests in property belonging to the sanctioned persons subject to U.S. jurisdiction are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are also generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons. Persons that engage in certain transactions with the individuals or entities designated today may themselves be exposed to designation. Additionally, OFAC warned that “any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the individuals designated today could be subject to U.S. sanctions.”
OFAC sanctions firms for aiding Russia’s acquisition of UAVs
On November 15, the U.S. Treasury Department’s Office of Foreign Assets Control announced sanctions pursuant to Executive Orders (E.O.) 13382 and 14024 against several firms responsible for the production and transfer of Iranian unmanned aerial vehicles (UAVs) to Russia for use in the country’s war against Ukraine. OFAC also designated two individuals who facilitated the acquisition of UAVs for a previously State Department-designated company. According to the announcement, the designations “implement commitments to target international actors involved in supporting Russia’s war machine, as highlighted by OFAC FAQs 1091 and 1092 and reinforced by an October 14, 2022 meeting of senior officials in Washington representing ministries of finance and other government agencies from 33 countries, in which the participants acknowledged the significance of sanction actions taken so far and discussed additional steps to further impair Russia’s military-industrial complex and critical defense supply chains.” The sanctions follow OFAC’s September designations against several persons involved in the shipment, production, and procurement of UAVs for Russia’s benefit. (Covered by InfoBytes here.) As a result of the sanctions, all property and interests in property belonging to the sanctioned individuals and entities 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 or interests in property of blocked or designated persons. Additionally, persons that engage in certain transactions with the sanctions individuals or entities may themselves be exposed to sanctions. OFAC further warned that “any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the individuals or entities designated today pursuant to E.O. 13382 could be subject to U.S. sanctions.”
The same day, the Departments of Treasury, Commerce, and State issued a joint alert detailing the impact of international sanctions and export controls on Russia’s military-industrial complex to date.
OFAC sanctions oil shipping network connected to IRGC-QF and Hizballah
On November 3, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13224 against members of an international oil smuggling network for allegedly facilitating oil trades and generating revenue for Hizballah and the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF). Included are “several key individuals and numerous front companies and vessels involved in blending oil to conceal the Iranian origins of the shipments and exporting it around the world in support of Hizballah and the IRGC-QF.” According to Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson, the responsible individuals “use a web of shell companies and fraudulent tactics including document falsification to obfuscate the origins of Iranian oil, sell it on the international market, and evade sanctions” in order to generate revenue to enable Hizballah and IRGC-QF terrorist activities. The sanctions follow the designation of another Iranian oil smuggling network earlier in May (covered by InfoBytes here). As a result, all property, and interests in property of the designated persons, “and of any entities that are owned, directly or indirectly, 50 percent or more by them, individually, or with other blocked persons, that are in the United States or in the possession or control of U.S. persons, must be blocked and reported to OFAC.” Unless authorized by general or specific OFAC licenses or otherwise exempt, OFAC regulations generally prohibit all transactions by U.S. persons or within the United States (including transactions transiting the United States) that involve any property or interests in property of designated individuals. OFAC further warned that “engaging in certain transactions with the individuals and entities designated today entails risk of secondary sanctions.” Additionally, OFAC warned that a foreign financial institution that knowingly conducts or facilitates a significant transaction on behalf of a Specially Designated Global Terrorist could be subject to U.S. correspondent or payable-through account sanctions.
FinCEN issues statements on its lists of jurisdictions with AML/CFT/CPF deficiencies
On October 31, FinCEN announced that the Financial Action Task Force (FATF) issued public statements updating its lists of jurisdictions with strategic deficiencies in anti-money laundering (AML), countering the financing of terrorism (CFT), and countering the financing of proliferation of weapons of mass destructions (CPF). FATF’s statements include (i) Jurisdictions under Increased Monitoring, “which publicly identifies jurisdictions with strategic deficiencies in their AML/CFT/CPF regimes that have committed to, or are actively working with, the FATF to address those deficiencies in accordance with an agreed upon timeline,” and (ii) High-Risk Jurisdictions Subject to a Call for Action, “which publicly identifies jurisdictions with significant strategic deficiencies in their AML/CFT/CPF regimes and calls on all FATF members to apply enhanced due diligence, and, in the most serious cases, apply counter-measures to protect the international financial system from the money laundering, terrorist financing, and proliferation financing risks emanating from the identified countries.”
FinCEN’s announcement also informed members that FATF added Burma to the list of High-Risk Jurisdictions Subject to a Call for Action, and advised jurisdictions to apply enhanced due diligence proportionate to the risks. Moreover, U.S. financial institutions should continue to refer to existing FinCEN and Office of Foreign Assets Control guidance on engaging in financial transactions with Burma. Removed from the list of jurisdictions subject to increased monitoring are Nicaragua and Pakistan. With respect to high-risk jurisdictions subject to a call for action — the Democratic People’s Republic of Korea and Iran — “financial institutions must comply with the extensive U.S. restrictions and prohibitions against opening or maintaining any correspondent accounts, directly or indirectly, for North Korean or Iranian financial institutions,” FinCEN said, adding that “[e]xisting U.S. sanctions and FinCEN regulations already prohibit any such correspondent account relationships.”
OFAC sanctions Iranian leaders
On October 26, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13553 against 10 Iranian officials related to the ongoing crackdown on nationwide protests in Iran and internet censorship, as well as two Iranian intelligence actors and two Iranian entities involved in the Iranian government’s efforts to disrupt digital freedom. As previously covered by InfoBytes, on October 6, OFAC sanctioned seven senior leaders within Iran’s government and security apparatus for the shutdown of Iran’s internet access. OFAC also sanctioned Iran’s Morality Police along with seven senior leaders who oversee Iran’s security organizations (covered by InfoBytes here). According to OFAC, the recently announced sanctions “coupled with additional initiatives such as the release of Iran General License D-2, which expands and clarifies the range of U.S. software and internet services available to Iranians under OFAC’s sanctions program, demonstrate the United States’ commitment to support the Iranian people’s call for accountability and justice, as well as their right to freely exchange information, including online.” 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 must be blocked and reported to OFAC. U.S. persons are also prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons, and “persons that engage in certain transactions with the individuals or entities designated today may themselves be exposed to sanctions,” OFAC said. Additionally, OFAC warned that “any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the individuals or entities designated today could be subject to U.S. correspondent or payable-through account sanctions.”
OFAC, FinCEN take action against virtual currency exchange
On October 11, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), together with the Financial Crimes Enforcement Network (FinCEN), announced two settlements for more than $24 million and $29 million, respectively, with a Washington state-based virtual currency exchange. According to OFAC’s announcement, this is the agency’s largest virtual currency enforcement action to date, and represent the first parallel actions taken by FinCEN and OFAC in this space.
OFAC settlement. OFAC’s web notice stated that between March 28, 2014 and December 31, 2017, the exchange operated 1,730 accounts that processed 116,421 virtual currency-related transactions totaling roughly $263,451,600.13, in apparent violation of OFAC sanctions against Cuba, Ukraine, Iran, Sudan, and Syria. Specifically, due to alleged deficiencies in the exchange’s sanctions compliance procedures, the exchange failed to prevent persons located in the sanctioned jurisdictions from using its platform to engage in more than $263,000,000 worth of virtual currency-related transactions. OFAC claimed that while the IP addresses and physical address information collected on each customer at onboarding should have given the exchange reason to know that the persons were located in jurisdictions subject to sanctions, the exchange did not “screen customers or transactions for a nexus to sanctioned jurisdictions.” Rather, the exchange only screened transactions for hits against lists including OFAC’s List of Specially Designated Nationals and Blocked Persons. In arriving at the settlement amount of $24,280,829.20, OFAC considered various aggravating factors, including that the exchange did not exercise due caution or care for its sanctions compliance obligations and conveyed economic benefit to persons located in jurisdictions subject to OFAC sanctions, thus causing harm to the integrity of multiple sanctions programs. OFAC also considered various mitigating factors, including that the exchange provided substantial cooperation throughout the investigation, most of the transactions were for a relatively small amount and represented a small percentage when compared to the exchange’s annual volume of transactions, and the exchange has undertaken remedial measures intended to minimize the risk of recurrence of similar conduct.
FinCEN settlement. According to FinCEN’s press release, an investigation found that from February 2014 through December 2018, the exchange failed to maintain an effective AML program, resulting in its inability to appropriately address risks associated with its products and services, including anonymity-enhanced cryptocurrencies. The exchange also failed to effectively monitor transactions on its trading platform, and relied “on as few as two employees with minimal anti-money laundering training and experience to manually review all of the transactions for suspicious activity, which at times were over 20,000 per day.” FinCEN claimed that the exchange conducted more than 116,000 transactions valued at over $260 million with persons located in jurisdictions subject to OFAC sanctions, including those operating in Iran, Cuba, Sudan, Syria, and the Crimea region of Ukraine, and failed to file suspicious activity reports (SARs) between February 2014 and May 2017. The exchange also “failed to file SARs on a significant number of transactions involving sanctioned jurisdictions, including the processing of over 200 transactions that involved $140,000 worth of virtual assets—nearly 100 times larger than the average withdrawal or deposit on the Bittrex platform—and 22 transactions involving over $1 million worth of virtual assets,” FinCEN said in its announcement. Under the terms of the consent order, the exchange—which admitted to willfully violating the Bank Secrecy Act (BSA) and its implementing regulations—will pay a $29,280,829.20 civil money penalty. FinCEN stated it will credit the $24,280,829.20 the exchange has agreed to pay for the OFAC violations.
During remarks delivered at the Association of Certified Anti-Money Laundering Specialists, Under Secretary for Terrorism and Financial Intelligence Brian Nelson discussed, among other topics, Treasury’s efforts to counter illicit finance. Nelson highlighted the aforementioned settlements, stressing that failing to comply with BSA/AML requirements and SARs filing obligations “are not something that companies focused on growth can simply put off to a later day.” He also emphasized that Treasury will continue to strengthen ties with interagency partners and international counterparts to identify and pursue potential violations.
OFAC sanctions Iranian leaders
On October 6, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions, pursuant to Executive Order 13553, against seven senior leaders within Iran’s government and security apparatus for the shutdown of Iran’s Internet access and the ongoing violence against peaceful protesters following the death of a 22-year old who died in the custody of Iran’s Morality Police. OFAC noted that the designations follow the September 22 sanctions against Iran’s Morality Police along with seven senior leaders who oversee Iran’s security organizations (covered by InfoBytes here). Collectively, and with the release of Iran General License D-2 (covered by InfoBytes here), which authorizes exports of additional tools to assist Iranians in accessing the Internet, these sanctions “show the United States’ commitment to free, peaceful assembly and open communication.” As a result of the sanctions, all property and interests in property belonging to the sanctioned persons subject to U.S. jurisdiction are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are also generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons. Persons that engage in certain transactions with the individuals or entities designated today may themselves be exposed to designation. Additionally, OFAC warned that “any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the individuals designated today could be subject to U.S. sanctions.”
OFAC announces settlement with electronic rewards company
On September 30, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $116,000 settlement with a Washington-based company that supplies and distributes electronic rewards, for allegedly processing transactions in violation of multiple U.S sanctions regulations. According to OFAC’s notice, the company allegedly “transmitted 27,720 merchant gift cards and promotional debit cards, totaling $386,828.65, to individuals with email or IP addresses associated with Cuba, Iran, Syria, North Korea, or the Crimea region of Ukraine.” In arriving at the settlement amount, OFAC considered various aggravating factors, including that the company (i) “failed to impose risk-based geolocation rules using tools at its disposal to identify the location of its reward recipients, despite having reason to know that it was transmitting rewards to recipients in sanctioned jurisdictions”; and (ii) “conferred up to $386,828.65 in economic benefit to jurisdictions and regions subject to sanctions.” OFAC also considered various mitigating factors, including that the company has not received a penalty notice from OFAC in the preceding five years, “represents that it undertook various measures to strengthen its OFAC compliance processes,” voluntarily self-disclosed the alleged violations, and substantially cooperated with the investigation.
OFAC sanctions Iranian entities for petrochemicals and petroleum sales
On September 26, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13846 against an international network of companies involved in the sale of Iranian petrochemicals and petroleum products in South and East Asia. According to OFAC, the designations target Iranian brokers and several front companies in the UAE, Hong Kong, and India that have facilitated financial transfers and shipping of Iranian petroleum and petrochemical products. OFAC also noted that the sanctioned entities have played a critical role in concealing the origin of the Iranian shipments and enabling two sanctioned Iranian brokers to transfer funds and ship Iranian petroleum and petrochemicals to buyers in Asia. In addition to OFAC’s designations, the State Department is designating two entities based in the People’s Republic of China for their involvement in Iran’s petrochemical trade. As a result of the sanctions, all property and interests in property belonging to the sanctioned persons subject to U.S. jurisdiction are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are also generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons unless authorized by an OFAC general or specific license. Persons that engage in certain transactions with the individuals or entities designated today may themselves be exposed to designation. Additionally, OFAC warned that “any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the individuals or entities designated today could be subject to U.S. correspondent or payable-through account sanctions.”
OFAC reports on licensing activities
On September 27, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced its Quarterly Reports of Licensing Activities pursuant to Section 906(b) of the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA), covering activities undertaken by OFAC under Section 906(a)(1) of the TSRA from April 2019 through September 2021. According to OFAC, as required by TSRA-related regulations, OFAC processes license applications requesting authorization to export agricultural commodities, medicine, and medical devices to Iran and Sudan under the specific licensing regime set forth in Section 906 of the TSRA.