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OFAC sanctions ISIS facilitators
On May 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13224 against five Islamic State of Iraq and Syria (ISIS) financial facilitators operating across Indonesia, Syria, and Turkey for allegedly supporting financial transfers connected to ISIS efforts in Syria-based displaced persons camps by collecting funds in Indonesia and Turkey. As a result of the sanctions, all property and interests in property of the designated individuals within U.S. jurisdiction must be blocked and reported to OFAC. OFAC further noted that its regulations “generally prohibit” U.S. persons or persons within the United States from participating in transactions with the designated persons and warned foreign financial institutions that if they knowingly facilitate significant transactions for any of the designated individuals, OFAC may prohibit or impose strict conditions on the opening or maintaining of a U.S. correspondent account or payable-through account.
OFAC reaches $6 million settlement with logistics company
On April 25, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a roughly $6 million settlement with a freight forwarding and logistics company for allegedly processing transactions in violation of Iran-Related Sanctions Regulations, among others. According to OFAC’s web notice, between approximately January 2013 and February 2019, the company processed payments through the U.S. financial system in connection with sea, air, and rail shipments to the Democratic People’s Republic of Korea (DPRK), Iran, and Syria, involving the property or interests in property of an entity on OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List) in apparent violation of OFAC sanctions. Specifically, in processing such payments, the company allegedly “failed to adopt or implement policies and controls that prevented it from conducting transactions that involved designated parties or persons in sanctioned jurisdictions.”
In arriving at the settlement amount, OFAC considered various aggravating factors, including, among other things, that (i) the company “acted with reckless disregard for U.S. economic sanctions laws when, over the period of six years, it caused at least 2,958 payments involving shipments from, to, or through sanctioned jurisdictions or the blocked property or an interest in blocked property of entities on the SDN List to be routed through U.S. financial institutions”; (ii) the company had knowledge “of the apparent violations”; and (iii) nearly “14 percent of the apparent violations were for transactions involving entities blocked by OFAC for terrorism or [weapons of mass destruction (WMD)] concerns.” OFAC also considered various mitigating factors, including that the company (i) has not received a penalty notice from OFAC in the preceding five years; (ii) “voluntarily self-disclosed the apparent violations to OFAC and cooperated with OFAC’s investigation”; and (iii) “ultimately took extensive actions to remedy its compliance gaps.”
Providing context for the settlement, OFAC stated that this “action highlights the importance of instituting strong internal controls and procedures to govern payments involving affiliates, subsidiaries, agents, or other counterparties when any of them conduct business with sanctioned jurisdictions or persons.”
OFAC sanctions ISIS facilitators
On March 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13224 against four Islamic State of Iraq and Syria (ISIS) and ISIS-Mozambique financial facilitators based in South Africa for allegedly supporting the transfer of funds from the top of the ISIS hierarchy to branches across Africa or for serving as leaders of ISIS cells. As a result of the sanctions, all property and interests in property of the designated individuals within U.S. jurisdiction must be blocked and reported to OFAC. OFAC further noted that its regulations “generally prohibit” U.S. persons or persons within the United States from participating in transactions with the designated persons and warned foreign financial institutions that if they knowingly facilitate significant transactions for any of the designated individuals, OFAC may prohibit or impose strict conditions on the opening or maintaining of a U.S. correspondent account or payable-through account.
OFAC sanctions Indonesian NGO
On February 3, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13224 against a non-governmental organization established by an Indonesia-based designated terrorist group for the purpose of providing financial support to extremists in Syria under the cover of humanitarian aid. According to Under Secretary of the Treasury for Terrorism and Financial Intelligence, Brian E. Nelson, “[t]he United States is taking this action to expose and disrupt [the terrorist group’s] deceptive efforts to use a purported ‘humanitarian organization’ for illicit purposes as a front for collecting and transferring funds.” Nelson added that “Treasury will continue to work with foreign partners to protect the non-profit sector from abuse by terrorist groups that disguise illicit finance flows as humanitarian activity.” As a result of the sanctions, all property and interests in property of the sanctioned entity subject to U.S. jurisdiction 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, unless exempt or authorized by a general or specific OFAC license. OFAC further warned that the agency “can prohibit or impose strict conditions on the opening or maintaining in the United States of a correspondent account or a payable-through account of a foreign financial institution that knowingly conducted or facilitated any significant transaction on behalf of a Specially Designated Global Terrorist.”
Counter ISIS Finance Group continues efforts to isolate ISIS from international financial system
On December 14, the U.S. Treasury Department announced the release of a joint statement by the Counter ISIS Finance Group (CIFG) of the Global Coalition to Defeat ISIS, which coordinates efforts to isolate the Islamic State of Iraq and Syria (ISIS) from the international financial system and eliminate revenue sources. CIFG held its fifteenth meeting on December 6-7 to discuss ongoing efforts to combat ISIS financing worldwide. According to the statement, the “Coalition is deepening and expanding cooperation to identify and disrupt ISIS finance networks around the world, while taking steps to strengthen oversight of financial systems and non-profit sectors in vulnerable jurisdictions to prevent their abuse by terrorist groups and their supporters.” During the meeting, participants discussed ISIS financing in Africa, the Middle East, and South Asia, as well as recent judicial and administrative enforcement actions. CIFG noted that while ISIS continues to rely on the use of informal money service businesses (e.g., cash couriers and charitable appeals made through internet platforms) to move funds across borders, authorities in several key countries have coordinated measures to disrupt these activities. CIFG noted that local virtual asset service providers’ compliance with anti-money laundering and countering the financing of terrorism standards have helped as well. CIFG further stressed the importance of “ongoing vigilance” to prevent ISIS’ abuse of non-profit organizations, and “encourage[d] counterterrorism partners to share their knowledge and experiences to strengthen our fight against ISIS financing and defend the international financial system from abuse by terrorists.”
OFAC amends Syrian Sanctions Regulations
On November 24, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced an amendment to the Syrian Sanctions Regulations, 31 CFR part 542, which expands an existing authorization related to certain activities of nongovernmental organizations (NGOs) in Syria. The final rule permits NGOs to engage in additional transactions and activities in support of the not-for-profit activities. Additionally, OFAC published two new FAQs (see 937 and 938), which provide further information on Syrian sanctions. The final rule takes effect November 26.
OFAC issues new Syria sanctions FAQ
On November 8, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) published new Syria FAQ 934, which relates to the United Nations and the U.S. government's stabilization and early recovery-related activities and transactions involving Syria. According to OFAC, the Syrian Sanctions Regulations (SySR) § 542.513 permit, under certain conditions, “the United Nations, its Specialized Agencies, Programmes, Funds, and Related Organizations and their employees, contractors, or grantees to engage in all transactions and activities in support of their official business in Syria, including any stabilization and early recovery-related activities and transactions in support of their official business.” This authorization applies to all United Nations employees, grantees, and contractors carrying out the official business of the United Nations, specialized agencies, programmes, funds, and related organizations. This includes nongovernmental organizations and private sector entities that act as grantees or contractors.
FAQ 934 also reiterates advice from FAQ 884 that non-U.S. persons, including nongovernmental organizations and foreign financial institutions “do not risk exposure to U.S. secondary sanctions pursuant to the Caesar Syria Civilian Protection Act of 2019” for activities that would be authorized for U.S. persons under the SySR. (Covered by InfoBytes here.)
OFAC settles with Romanian bank for Iranian and Syrian sanctions violations
On August 27, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $862,318 settlement with a Romania-based bank and its U.S. parent company to resolve 98 apparent violations of OFAC’s Iran and Syria sanctions programs. According to OFAC’s web notice, the bank processed 98 commercial transactions totaling more than $3.5 million through U.S. banks on behalf of parties located in Iran and Syria. OFAC considered various aggravating factors in arriving at the settlement amount, including that the bank (i) demonstrated “a reckless disregard for U.S. sanctions regulations by failing to implement appropriate controls to comply with applicable U.S. regulations with respect to payments it processed” that had a “sanctions nexus that transited the U.S. financial system” or “after the bank became a foreign subsidiary of a U.S. person”; (ii) knew, or had reason to know, “it was processing payments on behalf of persons in Iran and Syria because of underlying finance and trade documents in its possession that referenced those countries”; and (iii) conveyed more than $3.5 million in economic benefit to Iranian and Syrian persons, thus causing harm to the integrity of U.S. sanctions programs and their associated policy objectives.
OFAC also considered various mitigating factors, including that the bank voluntarily self-disclosed the apparent violations and the apparent violations constitute a non-egregious case. OFAC also determined that the bank (i) has not received a penalty notice from OFAC in the preceding five years; (ii) cooperated with OFAC’s investigation, conducted a lookback, and entered into a tolling agreement; and (iii) has undertaken remedial measures to ensure sanctions compliance. As such, OFAC noted that under its Economic Sanctions Enforcement Guidelines, the base civil money penalty amount is applicable in this matter with the final settlement amount reflecting OFAC’s consideration of general factors.
OFAC sanctions Syrian officials and entities
On July 28, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Orders 13894 and 13572 against eight Syrian prisons run by the Assad regime’s intelligence apparatus, as well as five senior security officials of regime entities that control these detention facilities. A Syrian armed group and two of the group’s leaders were also sanctioned. “Today’s designations promote accountability for abuses committed against the Syrian people and deny rogue actors access to the international financial system,” OFAC Director Andrea M. Gacki stated. “This action demonstrates the United States’ strong commitment to targeting human rights abuses in Syria, regardless of the perpetrator.” As a result of the sanctions, all property and interests in property belonging to the sanctioned persons are blocked, and “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” OFAC’s announcement further noted that OFAC regulations “generally prohibit” U.S. persons from participating in transactions with the designated persons unless exempt or otherwise authorized by a general or specific license.
OFAC sanctions al-Qa’ida-linked financial facilitators
On July 28, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13224 against one Turkey-based al-Qa’ida financial facilitator for providing material assistance to al-Qa’ida and one Syria-based terrorist fundraiser and recruiter for providing material support to Hay’et Tahrir Al-Sham (HTS). According to OFAC, the designations “expose the continued efforts by al-Qa’ida and HTS to use the global formal financial system and highlight the need for continued vigilance against terrorist fundraising and recruitment on the internet.” As a result of the sanctions, all property and interests in property belonging to the sanctioned individuals, and “any entities that are owned, directly or indirectly, 50 percent or more by them, individually, or with other blocked persons,” that are subject to U.S. jurisdiction must be blocked and reported to OFAC. OFAC noted that OFAC regulations “generally prohibit” U.S. persons from participating in transactions with the designated persons unless exempt or otherwise authorized by a general or specific license. Furthermore, OFAC cautioned that “engaging in certain transactions with the individuals designated today entails risk of secondary sanctions,” and warned foreign financial institutions that if they knowingly facilitate significant transactions on behalf of a Specially Designated Global Terrorist, OFAC may prohibit or impose strict conditions on their opening or maintaining of correspondent accounts or payable-through accounts in the U.S.