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OFAC releases new Non-SDN sanctions reference tool
On December 14, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) published a new reference tool, the Non-SDN Menu Based Sanctions List (NS-MBS List), which “identities persons subject to certain non-blocking menu-based sanctions that have been imposed under statutory or other authorities, including certain sanctions described in Section 235 of the Countering America’s Adversaries Through Sanctions Act (CAATSA), as implemented by Executive Order 13849, and the Ukraine Freedom Support Act of 2014, as amended by CAATSA.” OFAC noted that the NS-MBS List is distinct from its List of Foreign Financial Institutions Subject to Correspondent Account or Payable-Through Account Sanctions, which identifies foreign financial institutions subject to correspondent or payable-through account sanctions.
OFAC reaches $583,000 settlement to resolve Ukrainian sanctions violations
On September 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced two settlements totaling $583,100 with the U.S.-based subsidiary of a global financial institution for apparent violations of the Ukraine-Related Sanctions Regulations. According to OFAC, the financial institution allegedly agreed to process a funds transfer exceeding $28 million through the U.S. related to a series of purchases of fuel oil involving a property interest of an oil company in Cyprus that was previously designated by OFAC. OFAC alleged that at the time the payment was processed, the bank “had reason to know of the designated oil company’s potential interest, but did not conduct sufficient due diligence to determine whether the designated oil company’s interest in the payment had been extinguished.” The bank agreed to pay $157,500 to resolve the apparent violation.
Additionally, OFAC stated the bank also agreed to separately remit $425,600 for apparent violations stemming from the processing of 61 transactions “destined for accounts at a designated financial institution.” The bank allegedly failed to stop these payments because its sanctions screening tool did not include a specific business identifier code assigned to the designated financial institution, OFAC claimed, and its screening tool “was calibrated so that only an exact match to a designated entity would trigger further manual review.”
In arriving at the settlement amount, OFAC considered various mitigating factors, including that (i) the apparent violations were non-egregious; (ii) the bank had in place “an OFAC compliance program at the time of the apparent violations”; and (iii) the bank has undertaken remedial efforts to address the deficiencies, including reviewing the circumstances of the apparent violations with its U.S. sanctions compliance unit, and agreeing to conduct additional training and implement changes to internal procedures as necessary.
OFAC also considered various aggravating factors, including that “several senior managers within the bank’s anti-financial crime division, as well as a representative from its counsel’s office, failed to exercise a minimal degree of caution or care in connection with the conduct that led to the apparent violation,” and had actual knowledge of the alleged conduct.
OFAC sanctions investors supporting Syrian government
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.
OFAC issues amended Ukraine-/Russia-related FAQs
On July 22, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) published nine amended Ukraine-/Russia-related Frequently Asked Questions in response to the issuance of Ukraine-related General Licenses (GL) 13O and 15I. As previously covered by InfoBytes, the newly issued GLs extend the expiration date to January 22, 2021 for the authorization of certain transactions necessary to divest or transfer debt, equity, or other holdings, or wind down operations or existing contracts with a Russian manufacturer previously sanctioned by OFAC in April 2018 (covered by InfoBytes here). Among other things, the FAQs discuss specific permitted activities, transactions, and uses of blocked funds. The FAQs also state that foreign persons will not be subject to sanctions for engaging in activity with the Russian manufacturer or any entities in which the manufacturer owns, directly or indirectly, a 50 percent or greater interest, provided the activity is authorized by GL 15I and occurs within the authorized time period.
OFAC sanctions persons connected to Nicaragua President Ortega; amends Nicaragua sanctions regulations and Ukraine-related general licenses
On July 17, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13851 against one of Nicaraguan President Ortega’s sons, as well as a second individual and two companies used to allegedly “distribute regime propaganda and launder money.” According to OFAC, the second sanctioned individual created shell companies to launder money from businesses that he operated on behalf of another one of the president’s sons previously designated by OFAC. OFAC also cited to the individual’s alleged involvement on behalf of a chain of sanctioned gas stations controlled by the Ortega family, designating the individual “for being responsible for or complicit in, or for having directly or indirectly engaged or attempted to engage in, a transaction or series of transactions involving deceptive practices or corruption by, on behalf of, or otherwise related to the [Government of Nicaragua (GoN)] or a current or former official of the GoN.” As a result, all property and interests in property of the sanctioned individuals and entities, and of any entities owned 50 percent or more by such persons 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 the sanctioned persons.
Separately, on July 16, OFAC announced amendments (effective July 17) to the Nicaragua Sanctions Regulations, which incorporate the Nicaragua Human Rights and Anticorruption Act of 2018, and, among other things, update the authority citation as well as the prohibited transactions and delegation sections. A general license previously posted on OFAC’s website authorizing certain U.S. government activities related to Nicaragua also has been incorporated. The final rule is effective July 17.
The announcement also extends the expiration date of two Ukraine-related general licenses (GLs). Both GL 13O, which supersedes GL 13N, and GL 15I, which supersedes GL 15H, now expire January 22, 2021, and authorize certain transactions necessary to divest or transfer debt, equity, or other holdings, or wind down operations or existing contracts with a Russian manufacturer previously sanctioned by OFAC in April 2018 (covered by InfoBytes here).
OFAC sanctions investors supporting Syrian government
On June 17, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against 24 individuals and entities for providing significant investment support to the Syrian government. According to OFAC, the designations include Treasury’s “first implementation of sanctions pursuant to the Caesar Syria Civilian Protection Act of 2019,” and involve actions taken against a holding company, a private sector investment venture, and luxury tourism developments. Concurrent with OFAC’s sanctions, the U.S. State Department also designated 15 persons, including President Bashar al-Assad and his wife, pursuant to Executive Order 13984, which focuses on persons identified as “obstructing, disrupting, or preventing a ceasefire or a political solution to the Syrian conflict.” 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 those within (or transiting) the United States that involve any property or interests in property of designated persons,” and warned 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 Iran, Venezuela, North Korea, Syria, 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.
Special Alert: OFAC encourages humanitarian aid, promises consideration of Covid-19 compliance challenges
The Department of the Treasury’s Office of Foreign Assets Control recently took two actions to address the impact of Covid-19. First, OFAC issued a fact sheet that consolidates existing authorizations and guidance permitting humanitarian, agricultural, and medical aid to six jurisdictions subject to sanctions. Second, OFAC encouraged companies facing compliance challenges due to Covid-19 to shift resources to higher-risk areas, noting that it would take this move into consideration if it leads to a violation during the pandemic. Companies facing compliance challenges may wish to consider such a shift, while documenting their risk-based rationale for doing so.
Humanitarian fact sheet
Last week, OFAC issued a fact sheet regarding the provision of Covid-19-related assistance under its Iran, Cuba, North Korea, Syria, Ukraine/Russia, and Venezuela sanctions regimes. The fact sheet made no changes to existing laws and guidance, but consolidated existing licenses, exemptions, authorizations, and related FAQs relevant to humanitarian aid and medical equipment for these regimes. The fact sheet should prove to be a valuable resource for financial institutions and other organizations confronting a wave of transactions to provide personal protective equipment to sanctions-targeted jurisdictions wracked by Covid-19, while complying with OFAC regulations.
OFAC guidance addresses Covid-19 humanitarian assistance and trade
On April 16, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) published a Fact Sheet providing guidance to ensure humanitarian-related trade and assistance reaches at-risk populations through legitimate and transparent channels during the global Covid-19 pandemic. Specifically, the Fact Sheet highlights the most pertinent exemptions, exceptions, and authorizations for humanitarian assistance and trade under the Iran, Venezuela, North Korea, Syria, Cuba, and Ukraine/Russia-related sanctions programs. OFAC notes, however, that under certain sanctions program, entities may be required to obtain separate authorization from other U.S. government agencies. The Fact Sheet also provides guidance for persons seeking to export personal protective equipment from the U.S. Additional questions regarding the scope or applicability of any humanitarian-related authorizations can be directed to OFAC’s Sanction Compliance and Evaluation Division.
OFAC extends two Ukraine-related general licenses
On March 20, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced it extended the expiration dates of two Ukraine-related general licenses (GLs) by issuing GL 13N, which supersedes GL 13M, and GL 15H, which supersedes GL 15G. Both GLs—which now expire July 22—authorize certain transactions necessary to divest or transfer debt, equity, or other holdings, or wind down operations or existing contracts with a Russian manufacturer previously sanctioned by OFAC in April 2018 (covered by InfoBytes here).
Visit here for continuing InfoBytes coverage of actions related to Ukraine.
OFAC, Canada, and the EU sanction Russian-backed officials for Crimean incursion
On January 29, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced that it took action against seven “Crimean Officials” backed by Russia, and a Russian railway company and its CEO. The announcement states that the officials unilaterally assumed governmental control of the Crimean Peninsula. OFAC designated the officials under Executive Order (E.O.) 13660, in partnership with Canada and the European Union (EU), which both also designated the officials “in a strong demonstration of the international community’s continued condemnation of Russia’s interference in Crimean politics.” According to the announcement, Secretary of the Treasury, Steven T. Mnuchin, asserts that he believes the coordinated designations by OFAC and the two nations may prevent the “illegitimate officials” from doing business internationally. The OFAC designations of the railway company and its CEO for operating in the Crimea Region of Ukraine under E.O. 13685, come shortly after the railway started a passenger route from Russia to the Crimean Peninsula in late December. As a result of the sanctions, “all property and interests in property of these individuals and entity 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 its regulations “generally prohibit” U.S. persons from participating in transactions with the designated persons, and warned foreign persons that if they knowingly facilitate significant transactions for any of the designated persons, they may be designated themselves.