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  • Treasury official warns that the cost of doing business with Russia is steep

    Financial Crimes

    On February 21, Deputy Secretary of the Treasury Wally Adeyemo discussed sanctions efforts and export controls taken by a coalition of more than 30 nations over the past year to immobilize the majority of Russia’s sovereign wealth and central bank assets. Adeyemo noted that the breadth of this coalition will enable Russia’s continued isolation, and emphasized that those nations that fail to implement these sanctions and export controls will be forced to choose between their economic ties with the coalition and providing material support to Russia. Recognizing that the Russian government is actively seeking ways to circumvent these sanctions, Adeyemo laid out the coalition’s plan to countering sanctions evasion, as follows: (i) “improve information sharing and coordination among our allies, as well as share additional information with firms in our countries to garner their assistance in preventing countries, companies, and individuals from providing material support to Russia”; (ii) take measures to identify and shut down the specific channels used by Russia to equip and fund its military; and (iii) apply pressure on companies and jurisdictions known to allow or facilitate sanctions evasions. Adeyemo warned that “[o]fficials from the U.S. and the governments of our coalition partners are also engaging with companies and banks in these jurisdictions to tell them directly that if they do not enforce our sanctions and export controls, we will cut them off from access to our markets and financial systems.” He added that the “cost of doing business with Russia in violation of our policies is a steep one, and companies and financial institutions should not wait for their governments to make the decision for them.”

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

  • Treasury roundtable examines effectiveness of Russian sanctions and export controls

    Financial Crimes

    On February 10, Deputy Secretary of the Treasury Wally Adeyemo convened a roundtable to hear from sanctions and U.S. foreign policy experts on the effectiveness of the unprecedented sanctions and export controls imposed on Russia by a coalition of more than 30 countries. Over the past year, the countries have imposed economic restrictions on Russia with the intention of disrupting Russia’s military supply chains and denying the Russian government funding for its war against Ukraine. Adeyemo discussed progress made on these fronts, and said the strain on Russia’s military can be seen through the government’s attempts to backfill equipment and supplies through third parties in permissive jurisdictions or sanctioned countries. Adeyemo said that in the upcoming weeks and months, Treasury intends to increase “its focus on countering sanctions evasion, including by targeting facilitators and third-country providers that may wittingly or unwittingly help Russia replenish the supplies and material it desperately needs to support its military.” 

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

  • Treasury official warns Turkish companies on engaging with Russian entities

    Financial Crimes

    On February 3, Under Secretary of the Treasury for Terrorism and Financial Intelligence, Brian E. Nelson, met with the Banks Association of Turkey to discuss international sanctions actions against Russia for its war against Ukraine. Nelson highlighted global illicit finance challenges and stressed the importance of addressing weaknesses within the financial system “to root out financial crime, shine light on the financial shadows that illicit actors exploit, and work toward a more equitable and inclusive global economy.” Nelson commented on potential areas for cooperation between Turkish banks and the broader international finance community, pointing to opportunities for the U.S. and Turkey to work together to mitigate anti-money laundering vulnerabilities in the real estate sector. He also focused on Russia’s “abuse of the global financial system to fund” its war in Ukraine as a main factor in international cooperation for preventing Russia from circumventing sanctions and financial controls “in dozens of countries, including [Turkey].” While Nelson recognized Turkey’s reliance on Russian energy and agriculture, he said that “the marked rise over the past year in non-essential Turkish exports or re-exports to Russia makes the Turkish private sector particularly vulnerable to reputational and sanctions risks.” Engaging with sanctioned Russian entities puts Turkish banks and businesses “at risk of sanctions and a potential loss of access to G7 markets and correspondent relationships,” Nelson stressed, calling upon Turkish financial institutions to conduct “enhanced due diligence” in all transactions with Russian entities and individuals—especially within vulnerable sectors.

    Financial Crimes Of Interest to Non-US Persons OFAC OFAC Designations OFAC Sanctions Department of Treasury Russia Ukraine Ukraine Invasion Illicit Finance Anti-Money Laundering

  • OFAC, UK announce joint sanctions on Russia-based cybercrime gang

    Financial Crimes

    On February 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), in coordination with the UK, announced sanctions against seven individuals who allegedly are involved in a Russia-based cybercrime gang and are associated with the development or deployment of a range of ransomware strains designed to steal financial data. (See also UK’s announcement here.) The sanctions, taken pursuant to Executive Order (E.O.) 13694 as amended by E.O. 13757, represent the first sanctions of their kind for the UK, and come as a result of a partnership between OFAC and the U.K.’s Foreign, Commonwealth, and Development Office, the UK National Crime Agency, and His Majesty’s Treasury—all of which serve to disrupt Russian cybercrime and ransomware. “Cyber criminals, particularly those based in Russia, seek to attack critical infrastructure, target U.S. businesses, and exploit the international financial system,” Treasury Under Secretary Brian E. Nelson said in the announcement, stressing that “international cooperation is key to addressing Russian cybercrime.” Referring to an action taken by FinCEN last month, which identified a Russia-based virtual currency exchange “as a ‘primary money laundering concern’ in connection with Russian illicit finance” (covered by InfoBytes here), OFAC reiterated that the U.S. and UK are “committed to using all available authorities and tools to defend against cyber threats.” The designations follow other joint sanctions actions taken by the two countries and reflect findings that sanctions are most effective in coordination with international partners, OFAC said.

    As a result of the sanctions, all property and interests in property belonging to the sanctioned individuals that are in the U.S. or in the possession or control of U.S. persons are blocked and must be reported to OFAC. U.S. persons are 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 designated individuals may themselves be exposed to sanctions, and “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.”

    Financial Crimes Of Interest to Non-US Persons OFAC Department of Treasury OFAC Sanctions OFAC Designations SDN List UK Privacy, Cyber Risk & Data Security FinCEN Russia

  • OFAC FAQ clarifies Russia-related investment prohibitions

    Financial Crimes

    On February 8, OFAC published Russia-related FAQ 1113 to clarify whether new investment prohibitions in Executive Order (E.O.) 14066, E.O. 14068, or E.O. 14071 prohibit U.S. persons, including U.S. financial institutions, from transferring securities issued by non-blocked Russian entities from a decedent’s estate to a beneficiary. OFAC explained that securities may be transferred “provided such transfers (i) are part of the ordinary course administration of the decedent’s estate, (ii) do not involve an exchange for value, and (iii) have no other sanctions nexus (including the involvement of blocked persons).” OFAC noted, however, that blocked securities in a decedent’s estate must remain blocked and that transferring blocked securities would require a specific license from OFAC.  

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

  • OFAC offers more guidance on price caps for Russian petroleum

    Financial Crimes

    On February 3, the U.S. Treasury Department’s Office of Foreign Assets Control published additional guidance on the implementation of the price cap policy for crude oil and petroleum products of Russian Federation origin. As previously covered by InfoBytes, last November, OFAC published a Determination Pursuant to Executive Order (E.O.) 14071 stating that the prohibitions of E.O. 14071 apply to U.S. persons providing covered services (including (i) trading/commodities brokering; (ii) financing; (iii) shipping; (iv) insurance, including reinsurance and protection and indemnity; (v) flagging; and (vi) customs brokering) as they relate to the maritime transport of Russian Federation crude oil, provided, however, that such covered services are authorized if the Russian oil is purchased at or below the price cap.

    The new determination—published pursuant to section 1(a)(ii), 1(b), and 5 of E.O. 14071—establishes that, effective February 5, the price cap on discount to crude petroleum products of Russian Federation origin will be $45 per barrel, and the price cap on premium to crude petroleum products of Russian Federation origin will be $ 100 per barrel. OFAC also published another determination, which outlines prohibitions on certain categories of services as they relate to the maritime transportation of petroleum products of Russian Federation origin, including trading/commodities brokering, financing, shipping, insurance, flagging, and customs brokering. Specifically, unless authorized by law or licensed or otherwise authorized by OFAC, “the exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a United States person, wherever located, of any of the Covered Services to any person located in the Russian Federation” are prohibited. These determinations do not authorize transactions otherwise prohibited by the Russian Harmful Foreign Activities Sanctions Regulations.

    In conjunction with these determinations, OFAC also published additional guidance, as well as Russia-related General Licenses 56A and 57A.

    Secretary of the Treasury Janet Yellen applauded the G7’s price cap announcement, stating that the agreement helps limit Russia’s key revenue generator for funding its war against Ukraine, while promoting stable global energy markets.

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

  • OFAC sanctions senior executives of Iranian UAV manufacturer

    Financial Crimes

    On February 3, the U.S. Treasury Department’s Office of Foreign Assets Control announced sanctions pursuant to Executive Order 13382 against eight senior executives of an Iran-based firm that was previously sanctioned by the U.S. and EU for manufacturing unmanned aerial vehicles (UAVs) for Iran’s Islamic Revolutionary Guard Corps (IRGC) Aerospace Force. OFAC also designated two Islamic Republic of Iran Navy vessels as property in which the Government of Iran has an interest. “Iranian entities continue to produce UAVs for Iran’s IRGC and military. More broadly, Iran is supplying UAVs for Russia’s combat operations to target critical infrastructure in Ukraine,” Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson said in the announcement. “The United States will continue to aggressively target all elements of Iran’s UAV program.”

    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 are blocked and must be reported to OFAC. Further, “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 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 designated individuals or entities may themselves be exposed to sanctions, and “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.”

    Financial Crimes Of Interest to Non-US Persons OFAC OFAC Designations OFAC Sanctions SDN List Iran Russia Ukraine Invasion

  • OFAC sanctions evasion network supporting Russia’s military-industrial complex

    Financial Crimes

    On February 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced it is imposing “full blocking sanctions against 22 individuals and entities across multiple countries related to a sanctions evasion network supporting Russia’s military-industrial complex.” The sanctions, taken pursuant to Executive Order 14024, are part of the United States’ strategy to target sanctions evasion efforts around the globe, shut down key backfilling channels, expose facilitators and enablers, and limit Russia’s access to revenue to fund its war against Ukraine. “Targeting proxies is one of many steps that Treasury and our coalition of partners have taken, and continue to take, to tighten sanctions enforcement against Russia’s defense sector, its benefactors, and its supporters,” Deputy Secretary of the Treasury Wally Adeyemo said. The sanctions are part of Treasury’s ongoing commitment to the Russian Elites, Proxies, and Oligarchs Task Force, which identifies, freezes, and seizes assets of sanctioned Russians around the world, and leverages information sharing between international partners as well as key data from the Financial Crimes Enforcement Network.

    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 are blocked and must be reported to OFAC. Further, “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 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. 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 Of Interest to Non-US Persons OFAC Department of Treasury OFAC Sanctions OFAC Designations SDN List Russia Ukraine Ukraine Invasion FinCEN

  • OFAC issues Russia-related general licenses for some transactions

    Financial Crimes

    On January 17, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued several Russia-related General Licenses (GLs), including: (i) General License (GL) 6C, which authorizes transactions related to agricultural commodities, medicine, medical devices, replacement parts and components, or software updates, Covid-19 pandemic, or clinical trials; (ii) GL 54A, which authorizes certain transactions involving certain holdings prohibited by Executive Order 14071; and (iii) GL 28B, which authorizes the wind down and rejection of certain transactions involving a public joint stock company and Afghanistan. OFAC also announced that it is amending four Russia-related Frequently Asked Questions 982, 1054, 1055, and 1059.

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

  • OFAC sanctions suppliers of Iranian UAVs used in Russia’s war against Ukraine

    Financial Crimes

    On January 6, the U.S. Treasury Department’s Office of Foreign Assets Control announced sanctions pursuant to Executive Order 13382 against six executives and board members of a U.S.-designated Iranian defense manufacturer allegedly responsible for designing and producing unmanned aerial vehicles (UAVs) that are being transferred by Iran for use in Russia’s war against Ukraine. The director of a key organization responsible for overseeing Iran’s ballistic missile programs has also been sanctioned. OFAC further announced that it is updating the defense manufacturer’s entry on the Specially Designated Nationals and Blocked Persons List to include its new alias. As a result of the sanctions, all property and interests in property belonging to the sanctioned individuals and entities that are in the U.S. or in the possession or control of U.S. persons are blocked and must be reported to OFAC. Further, “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 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 designated individuals or entities may themselves be exposed to sanctions, and “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.”

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

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