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  • OFAC reaches $4.1 million settlement with holding company to resolve Iranian Transactions and Sanctions Regulations violations

    Financial Crimes

    On October 20, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a more than $4.1 million settlement with a Nebraska-based multinational conglomerate holding company to resolve 144 apparent violations of the Iranian Transactions and Sanctions Regulations engaged in by its indirectly wholly owned Turkish subsidiary. According to OFAC’s web notice, the Turkish subsidiary, in violation of the company’s compliance policies, allegedly sold goods to two third-party Turkish distributors knowing that the goods “would be shipped to a distributor in Iran for resale to Iranian end-users, including several entities later identified as meeting the definition of the Government of Iran.” The Turkish subsidiary also purchased goods manufactured by other company subsidiaries, and allegedly took measures “to obfuscate its dealings with Iran” and conceal these activities from the company. Employees of certain other company subsidiaries also allegedly received communications revealing that these orders may have been intended for Iranian end users; however only one of these subsidiaries warned the Turkish subsidiary that such transactions were prohibited.

    In arriving at the settlement amount, OFAC considered various aggravating factors, including that (i) the Turkish subsidiary’s management “willfully engaged” in prohibited transactions, and certain senior management “intentionally concealed its dealings with Iran”; (ii) certain company subsidiaries had knowledge, or reason to know, that some of the products sent to the Turkish subsidiary were intended for Iran; and (iii) the Turkish subsidiary “demonstrated a pattern of conduct by knowingly engaging in prohibited dealings for approximately three years.”

    OFAC also considered various mitigating factors, such as (i) the company voluntarily self-disclosed the apparent violations, and cooperated with the investigation; (ii) the company and its subsidiaries and affiliates signed a tolling agreement; and (iii) the company has undertaken remedial measures, including enhancing its compliance procedures for foreign subsidiaries, to minimize the risk of similar violations from occurring in the future.

    Financial Crimes OFAC Settlement Enforcement Of Interest to Non-US Persons

  • OFAC sanctions 18 major Iranian banks

    Financial Crimes

    On October 8, the U.S. Treasury Department announced that the Secretary of the Treasury, in consultation with the Secretary of State, sanctioned 18 major Iranian banks, consistent with E.O. 13902, which identified Iran’s financial sector “as an additional avenue that funds the Iranian government’s malign activities.” E.O. 13902 provides Treasury with the authority to sanction any Iranian financial institution. The sanctioned banks include 16 banks operating in Iran’s financial sector and one bank that is owned or controlled by a sanctioned Iranian bank. In addition, OFAC sanctioned an Iranian military-affiliated bank under Treasury’s counter-proliferation authority pursuant to E.O. 13382. “Today’s action to identify the financial sector and sanction eighteen major Iranian banks reflects our commitment to stop illicit access to U.S. dollars,” Treasury Secretary Steven T. Mnuchin stated. OFAC noted that the sanctions under E.O. 13902 do not affect existing authorizations and exceptions for humanitarian trade (covered by a Buckley Special Alert), “which remain in full force and effect for these seventeen banks.”

    As a result, all property and interests in property of the designated entities 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 generally prohibited from engaging in transactions with the designated entities. OFAC is providing a 45-day period for non-U.S. persons to wind down non-humanitarian transactions that may become subject to sanctions as a result of the designations. OFAC further warned that “financial institutions and other persons that engage in certain transactions or activities with the sanctioned entities after a 45-day wind-down period may expose themselves to secondary sanctions or be subject to an enforcement action.”

    Concurrent with the action, OFAC issued General License L, which outlines transactions and activities involving the sanctioned entities “that are authorized, exempt, or otherwise not prohibited under the Iranian Transactions and Sanctions Regulations.” Additional guidance is also provided in recently issued FAQs.

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

  • OFAC settles Iranian Transactions and Sanctions Regulations violations

    Financial Crimes

    On September 24, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $473,157 settlement with a California-based equipment and software company for six apparent violations of the Iranian Transactions and Sanctions Regulations (ITSR). According to OFAC’s web notice, from roughly January 2016 to June 2016, the company—through a former subsidiary it had since merged with—allegedly reexported U.S. export-controlled test measurement equipment to Iran. Among other things, OFAC noted that prior to the merger, the subsidiary “committed to cease all existing and future business” with certain sanctioned countries, including Iran. However, after the acquisition, certain subsidiary personnel continued to engage in transactions with Iran, with three employees taking “measures to obfuscate from [the company] their dealings with Iran.”

    In arriving at the settlement amount, OFAC considered various aggravating factors, including that (i) the subsidiary willfully violated the ITSR by shipping products in order to bypass the company’s directive to cease Iran-related business; and (ii) some of the subsidiary’s senior branch and sales managers knowingly participated in the apparent violations.

    OFAC also considered various mitigating factors, including that the company (i) fully cooperated with OFAC’s investigation; (ii) undertook several remedial measures, such as terminating the appropriate employees; (iii) “assess[ed] past and current transactions for compliance with OFAC regulations, implement[ed] mechanisms to halt current transactions, and ensur[ed] that no further transactions involved restricted countries”; and (iv) enhanced its sanctions compliance program to minimize the risk of similar violations from occurring in the future.

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

  • OFAC issues Iran nuclear and ballistic missile program sanctions

    Financial Crimes

    On September 21, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) designated three high-ranking individuals of the Atomic Energy Organization of Iran (AEOI), numerous AEOI subsidiaries, equipment supply companies, and various senior officials working on Iran’s missile programs pursuant to Executive Order (E.O.) 13382, which allows for sanctions for engaging in or supporting the proliferation of weapons of mass destruction (WMD). As a result of the sanctions, all property and interests in property of the designated persons that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. OFAC further warned foreign financial institutions that knowingly facilitating significant transactions or providing significant support to the designated entities may subject them to sanctions and could sever access to the U.S. financial system.

    In addition, the U.S. Department of Treasury announced a new Executive Order titled, "Blocking Property of Certain Persons with Respect to the Conventional Arms Activities of Iran,” which authorizes the Secretary of the Treasury, in conjunction with the Secretary of State, to impose asset blocking sanctions on any person engaged in any activity that materially contributes to the supply, sale, or transfer of destabilizing conventional weapons and acquisition of arms and related materiel by Iran.

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

  • OFAC sanctions Iranian cyber threat group

    Financial Crimes

    On September 17, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned an Iranian cyber threat group, 45 associated individuals, and one additional “front company” for allegedly being involved in a Government of Iran (GOI) malware campaign targeting international travel companies, Iranian dissidents, and journalists. Specifically, OFAC alleges that the front company “advances Iranian national security objectives and the strategic goals of Iran’s Ministry of Intelligence and Security (MOIS) by conducting computer intrusions and malware campaigns against perceived adversaries.” OFAC asserts that the 45 individuals provided support for MOIS cyber intrusions by serving as managers, programmers, and hacking experts. The front company has allegedly targeted hundreds of individuals and entities from more than 30 different countries, including using “malicious cyber intrusion tools” to target approximately 15 U.S. companies primarily in the travel sector.

    As a result, all property and interests in property belonging to, or owned by, the identified individuals subject to U.S. jurisdiction are blocked, and “any entities 50 percent or more owned by one or more designated persons are also blocked.” U.S. persons are also generally prohibited from engaging in transactions with the designated individuals.

    The FBI also issued a Public Intelligence Alert on the Iranian cyber threat group.

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

  • OFAC sanctions entities for providing support to Iranian petrochemical company

    Financial Crimes

    On September 3, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) designated six entities, pursuant to Executive Order 13846, for allegedly providing support to a petrochemical company previously designated for “transfer[ing] the equivalent of hundreds of millions of dollars’ worth of exports from the National Iranian Oil Company (NIOC), which helps to finance Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and its terrorist proxies.” According to OFAC, the designated entities “materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of” the sanctioned petrochemical company by, among other things, (i) selling and purchasing thousands of tons of petrochemicals on behalf of the company; (ii) brokering the sales of petrochemicals for the company; (iii) facilitating the shipment and resale of petrochemical products for the company; and (iv) processing millions of dollars in proceeds of petrochemical sales.

    As a result of the sanctions, all property and interests in property of the designated persons that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. OFAC further warned foreign financial institutions that knowingly facilitating significant transactions or providing significant support to the designated entities may subject them to sanctions and could sever access to the U.S. financial system.

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

  • OFAC sanctions persons for providing support to Iranian airline, DOJ files concurrent criminal charges

    Financial Crimes

    On August 19, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) designated two companies, as well as the owner of one of the companies, pursuant to Executive Order 13224 for allegedly providing material support to an Iranian airline previously “designated under counterterrorism authorities for support to Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF), as well as under a counter proliferation authority that targets weapons of mass destruction proliferators and their supporters.” According to OFAC, the designated persons allegedly provided services to assist the airline sustain its fleet of aircraft and allow it to support the IRGC-QF, as well as transport Iranian technicians and technical equipment to Venezuela to support the Maduro regime. The designations follow a recent OFAC action that targeted a China-based company for allegedly acting as a general sales agent for or on behalf of the Iranian airline (covered by InfoBytes here), and serves as “another warning to the international aviation community of the sanctions risk for individuals and entities that choose to maintain commercial relationships with [the Iranian airline] and other designated airlines.” As a result of the sanctions, all property and interests in property of the designated persons that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. OFAC further noted that its regulations “generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked or designated persons, unless licensed or exempt,” and warned foreign financial institutions that knowingly facilitating significant transactions or providing significant financial services to the designated persons may subject them to U.S. correspondent account or payable-through sanctions.

    On the same day, the DOJ announced criminal charges against the designated individual and one of the companies for allegedly conspiring to violate U.S. export laws, defraud the U.S., and violate the International Emergency Economic Powers Act (IEEPA) and the Iranian Transactions and Sanctions Regulations (ITSRs).

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

  • OFAC settles Iranian sanctions violations

    Financial Crimes

    On July 28, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $824,314 settlement with a Pennsylvania-based cookware coating manufacturer for 74 apparent violations of the Iranian Transactions and Sanctions Regulations. According to OFAC, between November 2012 and December 2015, two of the company’s foreign subsidiaries allegedly sold coatings intended for customers in Iran and engaged in trade-related transactions with Iran, despite changes to OFAC’s Iran sanctions program, which prohibited such transactions. In addition, OFAC stated that in 2013, once the company realized that these sales may be problematic, some of its U.S. employees devised and facilitated a plan to continue sales from the two subsidiaries by using third-party distributers and avoiding referencing Iran on documentation.

    In arriving at the settlement amount, OFAC considered various mitigating factors, including that the apparent violations were non-egregious and (i) the company voluntarily disclosed the violations and cooperated with the investigation; and (ii) the company has undertaken significant remedial efforts to address the deficiencies and minimize the risk of similar violations from occurring in the future, including appointing compliance monitors and outside counsel, making changes to its leadership, and adopting compliance and training policies.

    OFAC also considered various aggravating factors, including that the company (i) failed to implement appropriate compliance policies “commensurate with selling to a high-risk jurisdiction such as Iran”; (ii) took “affirmative steps” to help the foreign subsidiaries continue to sell to Iran through indirect channels even though it knew the sales were problematic; and (iii) senior management, including U.S. employees, had actual knowledge of the conduct leading to the alleged violations and continued to facilitate transactions with Iran.

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

  • OFAC sanctions investors supporting Syrian government

    Financial Crimes

    On July 29, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against one individual and nine entities for providing significant investment support to the Syrian government. OFAC noted that, among other things, the designated individual and his companies knowingly provided “significant financial, material, or technological support to, or knowingly engag[ed] in a significant transaction with, the Government of Syria (including any entity owned or controlled by the Government of Syria) or a senior political figure of the Government of Syria.” As a result, all property and interests in property belonging to the designated persons and subject to U.S. jurisdiction are blocked and must be reported to OFAC. OFAC further noted that its regulations “generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated persons,” and warned that non-U.S. persons that engage in transactions with the designated persons may expose themselves to designation. OFAC also referenced a previously published Fact Sheet (covered by InfoBytes here), which highlights the most pertinent exemptions, exceptions, and authorizations for humanitarian assistance and trade under the Syria, Iran, Venezuela, North Korea, Cuba, and Ukraine/Russia-related​ sanctions programs to ensure humanitarian-related trade and assistance reaches at-risk populations through legitimate and transparent channels during the global Covid-19 pandemic.

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

  • OFAC settles with global e-commerce, digital service provider over multiple sanctions violations

    Financial Crimes

    On July 8, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $134,523 settlement with a Washington-based company that provides retail, e-commerce, and digital services worldwide. According to OFAC, due to deficiencies in the company’s sanctions screening process, between 2011 and 2018, the company provided goods and services to OFAC sanctioned persons; to persons located in the sanctioned region or countries of Crimea, Iran, and Syria; and “for persons located in or employed by the foreign missions of Cuba, Iran, North Korea, Sudan, and Syria.” Additionally, the company allegedly accepted and processed orders that primarily consisted of low-value retail goods and services from persons listed on OFAC’s List of Specially Designated Nationals and Blocked Persons who were blocked pursuant to sanctions regulations involving the Democratic Republic of Congo, Venezuela, Zimbabwe, among others. These apparent violations occurred “primarily because [the company’s] automated sanctions screening processes failed to fully analyze all transaction and customer data relevant to compliance with OFAC’s sanctions regulations,” OFAC stated, claiming the company also “failed to timely report several hundred transactions conducted pursuant to a general license issued by OFAC that included a mandatory reporting requirement, thereby nullifying that authorization with respect to those transactions.”

    In arriving at the settlement amount, OFAC considered various mitigating factors, including that the apparent violations were non-egregious and (i) the company voluntarily disclosed the violations and cooperated with the investigation; and (ii) the company has undertaken significant remedial efforts to address the deficiencies and to minimize the risk of similar violations from occurring in the future.

    OFAC also considered various aggravating factors, including that the company failed to exercise due caution or care to ensure its sanctions screening process was able to properly flag transactions involving blocked persons and sanctioned jurisdictions. “This case demonstrates the importance of implementing and maintaining effective, risk-based sanctions compliance controls,” OFAC stated. “[G]lobal companies that rely heavily on automated sanctions screening processes should take reasonable, risk-based steps to ensure that their processes are appropriately configured to screen relevant customer information and to capture data quality issues.”

    Financial Crimes OFAC Department of Treasury Settlement Sanctions Of Interest to Non-US Persons Compliance

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