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OFAC announces several actions related to the “snap-back” of sanctions on Iran, effective November 5
On November 5, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced several actions in conjunction with the full re-imposition of sanctions on Iran effective immediately. As previously covered by InfoBytes, President Trump announced his decision to withdraw from the Joint Comprehensive Plan of Action (JCPOA) on May 8. Following the end of the wind-down period, which authorized certain activities through November 4, OFAC issued FAQs related to the “snap-back” of Iranian sanctions. OFAC also updated its Specially Designated Nationals (SDN) list to add over 700 persons, including persons previously removed from the SDN list during the U.S.’s participation in the JCPOA and persons previously identified on the Executive Order 13599 list. OFAC additionally provided a technical notice containing details related to the SDN list changes.
OFAC’s announcement also refers to an amendment effective November 5 to the Iranian Transactions and Sanctions Regulations (ITSR), in connection with President Trump’s decision to cease U.S. participation in the JCPOA. The newly issued amendment reflects sanctions re-imposed by Executive Order 13846, as covered by InfoBytes here, in addition to changes to certain sanctions lists maintained by OFAC. OFAC also announced it is “amending an existing general license in the ITSR to authorize U.S. persons to sell personal property in Iran and transfer the proceeds to the [U.S.],” if the personal property was either: (i) acquired before the individual became a U.S. person; or (ii) inherited from persons in Iran.
See here for continuing InfoBytes coverage on Iranian sanctions.
President Trump issues new Venezuela Executive Order targeting gold sector; OFAC publishes related FAQs
On November 1, President Trump issued Executive Order 13850 (E.O. 13850) authorizing the imposition of sanctions on persons who operate in Venezuela's gold sector “or in any other sector of the Venezuelan economy as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State.” The sanctions come in response to the actions of Venezuelan President Maduro’s regime and associated persons in allegedly “plunder[ing] Venezuela's wealth for their own corrupt purposes.” Among other things, the sanctions specifically block the acquisition or retention of property and interests in the United States by persons who “operate in the gold sector of the Venezuelan economy” or “have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any activity or transaction” involving deceptive practices or corruption in conjunction with the Venezuelan government.
The same day, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) released a set of FAQs connected to the issuance of E.O. 13850, stating that it “expects to use its discretion to target in particular those who operate corruptly in the gold or other identified sectors of the Venezuela economy, and not those who are operating legitimately in such sectors.”
E.O. 13850 is issued in conjunction with E.O.s 13692, 13808, 13827, and 13835. See here for continuing InfoBytes coverage of Venezuelan actions and E.O.s.
OFAC targets Singaporean persons for assisting North Korea in evading U.S. sanctions
On October 25, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced that it made three additions to the Specially Designated Nationals (SDNs) List pursuant to Executive Order 13551, which empowers the United States to block the property of certain persons with respect to North Korea. OFAC said the decision was designed to reinforce the U.S.’s ongoing “commitment to safeguard the international financial system and implement existing UN Security Council [ ] resolutions.” OFAC’s additions identify one Singaporean individual and two Singapore-based entities found to have helped North Korea evade U.S. sanctions—either directly or indirectly—by allegedly engaging in money laundering, counterfeiting goods or currency, smuggling bulk cash, trafficking narcotics, or engaging in other forms of illicit economic activity involving or supporting the North Korean government or any senior official. As a result, all assets belonging to the identified individual and entities subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with them.
In a related action, the DOJ unsealed a federal indictment against the Singaporean individual who was charged with fulfilling millions of dollars in commodities contracts for North Korea and defrauding several financial institutions in hiding those illicit transactions using international front companies, including entities previously identified as SDNs for supporting the North Korean regime’s illicit activities. The indictment’s charges include conspiracies to (i) violate international sanctions; (ii) commit bank fraud; (iii) commit money laundering; and (iv) defraud the U.S. The charges also include counts of bank fraud and money laundering.
See here for previous InfoBytes coverage on North Korean sanctions.
OFAC issues temporary extension of Ukraine-related General Licenses
On October 19, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the issuance of Ukraine-related General Licenses (GL) 13F and 15A, which extend the expiration date of previous Ukrainian-based general licenses to December 12 for wind-down transactions for certain companies that otherwise would be prohibited by Ukraine-Related Sanctions Regulations.
GL 13F supersedes GL 13E and authorizes, among other things, activities “ordinarily incident and necessary” for (i) the divestiture of the holdings of specific blocked persons to a non-U.S. person; and (ii) the facilitation of transfers of debt, equity, or other holdings involving specified blocked persons to a non-U.S. person. GL 15A, which supersedes GL 15, relates to permissible activities with the designated company and its subsidiaries, and applies to the maintenance and wind-down of operations, contracts, and agreements that were effective prior to April 6.
Visit here for additional InfoBytes coverage on Ukraine sanctions.
OFAC amends Ukraine-related General Licenses to extend expiration dates
On October 12, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the issuance of Ukraine-related General Licenses (GL) 13E, 14B, and 16B, which amend previous licenses and extend the expiration date of those licenses from November 12 to December 12 for wind-down transactions relating to a specific list of companies and subsidiaries that otherwise would be prohibited by Ukraine-Related Sanctions Regulations.
GL 13E supersedes GL 13D and authorizes, among other things, (i) the divestiture of the holdings of specific blocked persons to a non-U.S. person; and (ii) the facilitation of transfers of debt, equity, or other holdings involving specified blocked persons to a non-U.S. person. GL 14B, which supersedes GL 14A, relates to specific wind-down activities involving a Russian aluminum producer sanctioned last April (see previous InfoBytes coverage here). Finally, GL 16B supersedes GL 16A and authorizes the maintenance or wind-down of operations, contracts, or other agreements that were in effect prior to April 6 and that involve a specific list of entities.
Visit here for additional InfoBytes coverage on Ukraine sanctions.
OFAC reaches settlement with national bank to resolve alleged non-egregious sanctions violations
On October 5, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced an approximate $5.3 million settlement with a national bank for alleged violations of the Cuban Assets Control Regulations, the Iranian Transactions and Sanctions Regulations, and the Weapons of Mass Destruction Proliferators Sanctions Regulations. According to OFAC, the settlement resolves the bank’s potential civil liability for, among other things, allegedly processing net settlement payments for bank clients between January 2008 and February 2012, for which only 0.14 percent were attributable to interests of non-U.S. person entity members that were at various times identified on OFAC’s Specially Designated Nationals List, sanctioned, or located in countries subject to OFAC’s sanctions programs.
In arriving at the settlement amount, OFAC considered factors such as (i) prior to January 2012, the bank did not appear to have in place a process to independently assess participating member entities of the non-U.S. person entity for OFAC sanctions risk, despite allegedly receiving red flag notifications regarding OFAC-sanctioned members; (ii) staff members processing the net settlement transactions may have had actual knowledge of the members; and (iii) the bank is a large, commercially sophisticated financial institution.
OFAC also considered numerous mitigating factors, including (i) managers and supervisors were not aware of the conduct; (ii) the total harm caused was “significantly less than the total value of the transactions”; (iii) the bank cooperated with the investigation and entered into a retroactive agreement to toll the statutes of limitations; and (iv) the bank has implemented several steps as part of its risk-based compliance program to prevent future violations. OFAC also noted that the bank voluntary disclosed the violations, and that the violations constitute a non-egregious case.
NYDFS orders United Arab Emirates-based bank to pay $40 million for BSA/AML violations
On October 10, NYDFS entered into a consent order with a United Arab Emirates-based bank and its New York branch to resolve alleged violations of the Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) laws related to the branch’s U.S. dollar clearing operations for foreign customers located in high risk jurisdictions. The alleged violations were discovered during examinations conducted in 2016 by the NYDFS and 2017 by the NYDFS and Federal Reserve Bank of New York. During this time, NYDFS downgraded the bank’s score due to certain alleged deficiencies identified in the branch’s BSA/AML programs and policies designed to ensure compliance with OFAC regulations. According to the consent order, among other things, the branch (i) failed to maintain adequate transaction monitoring and had deficient recordkeeping practices; (iii) “maintained insufficient documentation concerning its dispositions of OFAC alerts and cases”; (iv) failed to substantiate its rationales for waiving specific alerts and cases; and (v) failed to sufficiently oversee the third-party auditor who conducted the branch’s 2017 BSA/AML audit and remedial work evaluation.
The United Arab Emirates-based bank and its New York branch are required to pay a $40 million civil money penalty, and must also engage an independent third party to assist the branch in addressing its BSA/AML compliance deficiencies and develop (i) a BSA/AML compliance program; (ii) a suspicious activity monitoring and reporting program; (iii) a customer due-diligence program; and (iv) a plan to enhance oversight of the branch’s BSA/AML corporate governance and management oversight.
OFAC adds members of Venezuelan President Maduro’s inner circle to Specially Designated Nationals List
On September 25, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) made additions to the Specially Designated Nationals List pursuant to Executive Order 13692. OFAC’s additions to the list include four members of Venezuelan President Maduro’s inner circle, along with a “front network” identified as acting for or on behalf of a sanctioned member of the Maduro regime. According to OFAC, the additional sanctions are issued in response to the Maduro regime's continued “corruption and gross mismanagement.” As a result, all assets belonging to the identified individuals and entities subject to U.S. jurisdiction are blocked, and U.S. persons generally are prohibited from dealing with them.
OFAC also referenced FinCEN advisories issued August and September 2017 (see previous InfoBytes coverage here and here) as a source for additional information on “the methods that Venezuelan senior political figures, their associates, and front persons use to move and hide corrupt proceeds,” including the potential for exploitation within the U.S. financial system and real estate market.
See here for continuing InfoBytes coverage of actions related to Venezuela.
OFAC issues temporary extensions of Ukraine-related General Licenses
On September 21, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the issuance of Ukraine-related General Licenses (GL) 13D, 14A, and 16A, which amend previous licenses and extend the expiration date of those licenses from October 23 to November 12 for wind-down transactions relating to a specific list of companies and subsidiaries that otherwise would be prohibited by Ukraine-Related Sanctions Regulations. GL 13D supersedes GL 13C (see previous InfoBytes coverage here) and authorizes, among other things, (i) the divestiture of the holdings of specific blocked persons to a non-U.S. person; and (ii) the facilitation of transfers of debt, equity, or other holdings involving specified blocked persons to a non-U.S. person. GL 14A, which supersedes GL 14, relates to specific wind-down activities involving a Russian aluminum producer sanctioned last April (see previous InfoBytes coverage here). Finally, GL 16A supersedes GL 16 and authorizes, as previously covered by InfoBytes, the maintenance or wind down of operations, contracts, or other agreements that were in effect prior to April 6, 2018 and that involve a specific list of entities.
Visit here for additional InfoBytes coverage on Ukraine sanctions.
President Trump issues Executive Order delegating sanctions implementation authority; OFAC issues new CAATSA - Russia-related FAQ
On September 20, President Trump announced the issuance of Executive Order 13849 (E.O. 13849), “Authorizing the Implementation of Certain Sanctions Set Forth in the Countering America’s Adversaries Through Sanctions Act (CAATSA),” pursuant to national emergencies previously declared in Executive Orders 13660, 13694, and 13757. E.O. 13849 grants authority to the Secretary of the Treasury to take certain actions to implement the sanctions against identified persons, including the promulgation of regulations. Among other things, E.O. 13849 prohibits: (i) any U.S. financial institution from making loans or extending credits to sanctioned persons “totaling more than $10,000,000 in any 12-month period, unless the person is engaged in activities to relieve human suffering and the loans or credits are provided for such activities”; (ii) any foreign exchange transactions, subject to U.S. jurisdiction, in which the sanctioned person has any interest; and (iii) transfers of credit or payments between, by, or through financial institutions for the benefit of a sanctioned person subject to U.S. jurisdiction. E.O. 13849 further describes the actions that can be taken to implement the sanctions.
In response to E.O. 13849, the U.S. Treasury Department’s Office of Foreign Assets Control published a new CAATSA - Russia-related FAQ providing additional clarifying information.
Find continuing InfoBytes covered on CAATSA-related sanctions here.