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  • Treasury sanctions Russian company for doing business with Venezuela

    Financial Crimes

    On February 18, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order (E.O.) 13850, as amended, against a Swiss-incorporated, Russian-controlled oil brokerage and its board chairman and president for operating in the oil sector of the Venezuelan economy. According to the press release, the company assisted Venezuela state-owned Petroleos de Venezuela, S.A., in brokering, selling, and transporting Venezuelan petroleum products.

    In connection with the designations, OFAC issued Venezuela General License (GL) 36, titled “Authorizing Certain Activities Necessary to the Wind Down of Transactions Involving [company].” GL 36, which expires on May 20, authorizes certain transactions and activities otherwise prohibited under E.O.s 13850 and 13857 that are required in order to wind down business with the company. Concurrently, OFAC issued a new Venezuela-related frequently asked question regarding GL 36, addressing the significance of OFAC’s designation of the company, and whether the E.O. 13850 blocking sanctions on the company apply to its corporate parent and affiliates. In its press release, OFAC added that “all property and interests in property of [the company] and [its president] that are in the United States or in the possession or control of U.S. persons, and of any entities that are owned, directly or indirectly, 50 percent or more by the designated individual and entity, are blocked and must be reported to OFAC.”

    Financial Crimes Venezuela Petroleos de Venezuela Department of Treasury OFAC Combating the Financing of Terrorism Of Interest to Non-US Persons Sanctions

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  • Venezuela’s state-owned airline subject to OFAC sanctions

    Financial Crimes

    On February 7, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced that it identified a previously blocked state-owned Venezuelan airline and its fleet of aircraft pursuant to Executive Order (E.O.) 13884. The entities—subject to sanctions under E.O. 13884, which blocks property of the Venezuelan government—have been added to OFAC’s Specially Designated Nationals (SDN) List. According to OFAC’s press release, the commercial airline and its fleet have been used by Venezuela’s illegitimate government “to promote its own political agenda, including shuttling regime officials to countries such as North Korea, Cuba, and Iran.” OFAC observed that Venezuelan citizens may still travel by air on a number of other airlines that provide domestic service as well as service to and from Venezuela. OFAC also reiterated that its “regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked persons.”

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

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  • NYDFS to take action against check cashing companies for BSA/AML violations

    State Issues

    On February 3, NYDFS announced it intends to take enforcement action through an administrative proceeding against several check cashing entities for alleged violations of New York Banking Law and federal laws and regulations related to the business of check cashing. According to NYDFS, examinations revealed multiple concerns related to the entities’ Bank Secrecy Act/anti-money laundering (BSA/AML) program and transaction monitoring, including (i) inaccurate books and records; (ii) cashing post-dated checks; (iii) insufficient BSA/AML compliance; and (iv) inadequate risk-assessment procedures and customer identification and Know Your Customer programs. NYDFS also stated that management at the identified entities failed to implement effective controls to mitigate and manage BSA/AML compliance programs and Office of Foreign Assets Control risks despite “repeated criticism of the entities’ performance.”

    NYDFS conducted a subsequent investigation, which found additional alleged violations that circumvented Federal and state banking laws, such as (i) hiring undisclosed employees who were paid “off the books”; (ii) conducting an unlicensed mobile check-cashing business; and (iii) and engaging in an illegal check-cashing scheme that structured transactions and falsified business records to give the appearance that checks were cashed on multiple dates, when in fact they were all cashed on a single date. The administrative proceeding to revoke the entities’ licenses and seek civil penalties will begin February 24.

    State Issues State Regulators NYDFS Enforcement Compliance Anti-Money Laundering Bank Secrecy Act OFAC

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  • Iranian company employee charged in $115 million international bank fraud scheme

    Financial Crimes

    On January 31, the U.S. Attorney’s Office for the Southern District of New York announced charges against an employee (defendant) of an Iranian company for bank fraud, conspiracy to commit bank fraud, and for making false statements to federal agents regarding financial transactions made through U.S. banks to benefit Iranian entities and individuals. According to the indictment, an agreement between the Iranian government and the Venezuelan government resulted in a construction contract for housing units in Venezuela where an Iranian company would construct the units and be paid with money funneled through U.S. banks by a Venezuelan state-owned company subsidiary. The defendant was purportedly part of a committee formed to guide the project. In coordination with other individuals, the defendant allegedly directed money from the Venezuelan company to the Iranian company through bank accounts—set up to hide the transactions from U.S. banks—in Switzerland. The indictment charges that, among other things, the defendant “knowingly and willfully” conspired with others to commit bank fraud against an FDIC-insured institution by directing the Venezuelan company to route $115 million in payments for the Iranian company to the Swiss bank account through correspondent U.S. banks in New York. Additionally, when the defendant was interviewed by federal agents, he “knowingly and willfully” concealed the scheme and made materially false statements about his knowledge of the applicability of sanctions against Iran. The indictment seeks forfeiture of any proceeds or property obtained by the defendant in the course of the alleged offenses.

    Financial Crimes DOJ Iran Venezuela Combating the Financing of Terrorism Of Interest to Non-US Persons OFAC Sanctions Fraud FDIC

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  • OFAC, Canada, and the EU sanction Russian-backed officials for Crimean incursion

    Financial Crimes

    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.

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

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  • OFAC, shipping company settle sanctions violations for $1.1 million

    Financial Crimes

    On January 27, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $1,125,000 civil settlement with a Marshall Islands shipping company (respondent) with headquarters in the U.S. for 36 apparent violations of the Burmese Sanctions Regulations (BSR). According to OFAC, between 2011 and 2014, the respondent had dealings in the property of a Burma-related company (company) that is included on the Specially Designated Nationals (SDN List), and provided shipping services that benefited the designated company, which were apparent violations of the BSR.

    According to the settlement agreement, OFAC considered various aggravating factors in reaching the settlement amount, including that (i) the apparent violations “conferred significant economic benefits to Burma’s military regime”; (ii) the respondent “demonstrated reckless disregard for U.S. sanctions requirements by ignoring” the license denial letters it received from OFAC; (iii) the respondent’s former president knew about and participated in the transactions that comprise the apparent violations; and (iv) the respondent is a “commercially sophisticated shipping company” that is familiar with international shipping transactions. OFAC determined that the apparent violations represent an egregious case.

    OFAC also considered various mitigating factors, including that (i) the respondent is under new management, which self-disclosed the apparent violations and cooperated with the investigation; (ii) OFAC has not issued a violation against the respondent in the five years preceding the earliest date of the transactions at issue; and (iii) the respondent undertook extensive remedial measures in response to the alleged violations, including implementing a formal compliance program.

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

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  • OFAC settles with lobbying firm over sanctions violations

    Financial Crimes

    On January 21, U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a settlement with a New York-based lobbying firm for alleged violations of the Global Terrorism Sanctions Regulations (GTSR). According to OFAC, between August 2017 and November 2017, the firm allegedly dealt in the property or interests in property of a Somalian organization designated as a Specially Designated Global Terrorist (SDGT), when it signed a contract with the organization and received payment for its lobbying services that were “outside the scope of generally authorized activities under the GTSR, including the GTSR general license for legal services.” In arriving at the settlement amount, OFAC considered various mitigating factors, including the fact that the firm voluntarily self-disclosed the issue to OFAC, and the firm implemented remedial measures, including adopting new screening procedures before entering into contracts with potential clients. OFAC also considered various aggravating factors, including that the firm’s executives had actual knowledge of the organization’s SDGT status and actively participated in signing the contract.

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

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  • OFAC sanctions network for purchasing Iranian petroleum products

    Financial Crimes

    On January 23, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced that it took action against four petroleum products companies (network) designated pursuant to Executive Order (E.O.) 13846 for making payments to “an entity instrumental in Iran’s petroleum and petrochemical industries, which helps to finance Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and its terrorist proxies.” The Iranian entity is on the List of Specially Designated Nationals and Blocked Persons and its property is blocked in conformance with E.O. 13599. According to OFAC, the network transferred payments to the Iranian entity for petroleum exports and “worked to conceal the Iranian origin of these products.” Among other things, these sanctions prohibit foreign financial institutions from “knowingly facilitat[ing] transactions for, or persons that provide material or certain other support to,” the designated petroleum products broker. See the new Iran-related designations here.

    Financial Crimes Department of Treasury Iran Combating the Financing of Terrorism Of Interest to Non-US Persons OFAC Sanctions

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  • OFAC identifies Venezuelan aircraft as blocked property, issues amended Venezuela-related general licenses

    Financial Crimes

    On January 21, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced amendments to the list of property implicated by the Specially Designated Nationals List (SDN List) pursuant to Executive Order (E.O.) 13884, which blocks the property of the Venezuelan government. OFAC identified 15 aircraft that either transported senior members of the Maduro regime or “operated in an unsafe and unprofessional manner in proximity to U.S. military aircraft, while in international air space.” OFAC reiterated that its “regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked persons.”

    In connection with the designations, OFAC issued amended Venezuela General License (GL) 20B, titled “Authorizing Official Activities of Certain International Organizations Involving the Government of Venezuela.” GL 20B authorizes certain transactions and activities otherwise prohibited under E.O.s 13850 and 13857 involving Banco Central de Venezuela, and E.O. 13884 involving the Government of Venezuela.

    Earlier, on January 17, OFAC issued two additional amended Venezuela GLs. GL 5B provides that on or after April 22, all transactions related to the financing for, and other dealings in the Petróleos de Venezuela SA 2020 8.5 Percent Bond that would be prohibited under a certain subsection of E.O. 13835, as amended by E.O. 13857, are authorized. GL 8E, titled “Authorizing Transactions Involving Petróleos de Venezuela, S.A. (PdVSA) Necessary for Maintenance of Operations for Certain Entities in Venezuela,” supersedes GL 8D to extend the expiration date for certain authorizations through April 22.

    Financial Crimes Department of Treasury OFAC Iran Combating the Financing of Terrorism Of Interest to Non-US Persons Sanctions

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  • OFAC clarifies wind-down period for Iran transactions

    Financial Crimes

    On January 16, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the issuance of Iran-related Frequently Asked Question (FAQ) 816, which addresses the question, “Is there a wind-down period for Executive Order [(E.O.)] 13902?” (previously covered in InfoBytes here). According to the FAQ, individuals and entities involved in activities that qualify as sanctionable under E.O. 13902, which include activities dealing with the mining, construction, manufacturing and textiles industries in Iran, should wind down those transactions within 90 days after the E.O. was issued. OFAC stresses that new engagements entered into with the specified Iranian sectors on or after January 10 will not be considered wind-down activities. These new engagements may be sanctionable during the wind-down period, even if the new engagements commence prior to the end of the 90-day wind-down period, which expires on April 9.

    Financial Crimes Department of Treasury Iran Combating the Financing of Terrorism Of Interest to Non-US Persons OFAC Sanctions

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