Skip to main content
Menu Icon Menu Icon
Close

InfoBytes Blog

Financial Services Law Insights and Observations

Filter

Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.

  • U.S. imposes denial of export privileges on Chinese telecom giant for violating prior settlement agreement

    Financial Crimes

    On April 16, the U.S. Department of Commerce imposed a denial of export privileges on Chinese telecommunications equipment corporation for violating a previous settlement relating to illegally shipping telecommunications equipment to Iran and North Korea. As previously covered in InfoBytes, in March 2017, the company agreed to a combined civil and criminal penalty and to forfeiture of over $1.1 billion for shipping the equipment, making false statements, and obstructing justice. As part of the settlement, the company agreed to a seven-year suspended denial of export privileges, which would trigger if the agreement was not met or if the company committee further violations.

    The Department imposed the denial after determining that the company made false statements during the 2016 settlement negotiations and again during the probationary period in 2017 related to disciplinary actions against senior employees that the company said it was taking or had already taken. The false statements covered up the fact that the company had actually failed to issue letters of reprimand and paid full bonuses to the employees who had engaged in illegal conduct.

    Financial Crimes Settlement Department of Commerce North Korea China International

    Share page with AddThis
  • OFAC Sanctions North Korean Officials, Amends Global Terrorism Sanctions Regulations

    Financial Crimes

    On October 26, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions on an additional seven individuals (pursuant to Executive Order 13687) and three entities (pursuant to Executive Order 13722) connected to the North Korean government for ongoing human rights abuses. According to Treasury Secretary Steven T. Mnuchin, the sanctions target “financial facilitators who attempt to keep the regime afloat with foreign currency earned through forced labor operations.” The sanctions freeze all property or interests in property within U.S. jurisdiction, and transactions by U.S. persons involving these individuals and entities are also “generally prohibited.” Please see here for previous InfoBytes coverage on North Korean sanctions.

    Separately, on October 30, OFAC released amendments to its Global Terrorism Sanctions Regulations to include recently identified officials, agents, and affiliates connected to Iran’s Islamic Revolutionary Guard Corps. The amendments take effect upon publication in the Federal Register on October 31 and are issued pursuant to the Countering America's Adversaries Through Sanctions Act of 2017 (CAATSA). See previous InfoBytes coverage on CAATSA here.

    Financial Crimes OFAC Sanctions CAATSA North Korea Iran

    Share page with AddThis
  • OFAC Imposes Additional North Korean Sanctions; Senate Banking Committee Hearing Discusses Multi-Department Efforts

    Financial Crimes

    On September 26, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced it was imposing sanctions on an additional eight North Korean banks and 26 individuals connected to North Korean financial networks across the globe. The individuals sanctioned are North Korean nationals who represent North Korean banks operating in China, Russia, Libya, and the UAE, and have been designated “in response to North Korea’s ongoing development of weapons of mass destruction and continued violations of United Nations Security Council Resolutions.” OFAC’s action complements the United Nations Security Council’s resolution UNSCR 2375, adopted September 11, 2017. As a result, property or interests in property of the designated persons within U.S. jurisdictions are blocked.

    These actions closely follow President Trump’s recent issuance of sanctions targeting individuals, companies, and financial institutions that finance or facilitate trade with North Korea. (See previous InfoBytes coverage here.)

    Additionally, the Senate Committee on Banking, Housing, and Urban Affairs (Committee) held an open session hearing on September 28 entitled “Evaluating Sanction Enforcement and Policy Options on North Korea: Administration Perspectives.” Committee Chairman Mike Crapo (R-Idaho) opened the hearing to stress that “[m]any Members of Congress, including on this committee, have a keen interest in knowing more about how and when enforcement of these new measures will occur, wondering if last week’s executive order and earlier UN sanctions will be sufficient to achieve U.S. policy goals.” Sen. Crapo also mentioned the Committee’s legislative efforts to “maximize pressure against North Korea.”

    The September 28 hearing—a video of which can be accessed here—included testimony from the following witnesses concerning North Korea’s nuclear and ballistic missile program and the need to curtail the country’s access to revenue, trade, and financial systems.

    • The Honorable Sigal Madelker, Under Secretary for Terrorism and Financial Crimes, U.S. Department of the Treasury (testimony)
    • Ms. Susan A. Thornton, Acting Assistant Secretary, Bureau of East Asian and Pacific Affairs, U.S. Department of State (testimony)

    Financial Crimes Sanctions OFAC Department of Treasury Senate Banking Committee Department of State North Korea

    Share page with AddThis
  • President Trump’s Executive Order Imposes New Sanctions Against North Korea

    Financial Crimes

    On September 21, President Trump announced the issuance of new sanctions targeting individuals, companies, and financial institutions that finance or facilitate trade with North Korea, in addition to tightening trade restrictions. The Executive Order approves broad limitations on any foreign financial institution that knowingly conducts “significant” transactions involving North Korea. This includes transactions that “originate from, are destined for, or pass through a foreign bank account that has been determined by the Secretary of the Treasury to be owned or controlled by a North Korean person, or to have been used to transfer funds in which any North Korean person has an interest.” These funds “are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in.” The restrictions also prohibit dealing with persons involved in North Korea’s “construction, energy, financial services, fishing, information technology, manufacturing, medical, mining, textiles, or transportation industries,” and further authorizes the Secretary of the Treasury to restrict U.S.-based correspondent and payable-through accounts.

    These sanctions are in addition to those previously passed by President Trump in August. (See previous InfoBytes coverage here.) Separately, as previously covered in InfoBytes, last month the Treasury Department’s Office of Foreign Assets Control (OFAC) imposed sanctions against certain Chinese and Russian entities and individuals, among others, for allegedly aiding North Korea’s efforts to develop weapons of mass destruction.

    In response to President Trump’s latest sanctions, OFAC released updates to its FAQs concerning the additional sanctions. OFAC also issued General License 10 concerning the authorization restrictions to certain vessels and aircraft, and General License 3-A, which addresses permitted “normal service charges.”

    Financial Crimes Trump Sanctions Executive Order OFAC Department of Treasury North Korea China Russia

    Share page with AddThis
  • OFAC Imposes Sanctions on Chinese and Russian Entities and Individuals for Aiding North Korea

    Financial Crimes

    On August 22, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced it was imposing sanctions on ten entities and six individuals from China, Russia, Singapore, and Namibia for their roles in supporting North Korea’s efforts to develop weapons of mass destruction, violations of United Nations Security Council Resolutions, and attempted evasion of U.S. sanctions. The sanctions prohibit any U.S. individual from dealing with the designated entities and individuals, and further states that “any property or interests in property of the designated persons in the possession or control of U.S. persons or within the United States must be blocked, and U.S. persons are generally prohibited from dealing with them.” OFAC’s notice identified entities and individuals that (i) assisted already-designated persons supporting North Korea’s nuclear and ballistic missile programs; (ii) dealt in the North Korean energy trade; (iii) facilitated overseas labor to North Korea; and (iv) enabled sanctioned North Korean entities to access the U.S. and international financial systems. Targets include three Chinese coal companies allegedly responsible for importing nearly half a billion dollars' worth of North Korean coal, as well as three Russians individuals and two Singapore-based companies OFAC claimed were involved in providing oil to North Korea.

    Financial Crimes Sanctions Department of Treasury OFAC China Russia North Korea

    Share page with AddThis
  • President Trump Signs Into Law New Sanctions Against North Korea, Iran, and Russia

    Federal Issues

    On August 2, President Trump signed into law a bipartisan bill placing new sanctions on Iran, Russia, and North Korea. The House passed the sanctions by a vote of 419-3, while the Senate cleared it 98-2. The Countering America's Adversaries Through Sanctions Act (H.R. 3364) is comprised of three bills:

    • Korean Interdiction and Modernization of Sanctions Act. The sanctions modify and increase President Trump’s authority to impose sanctions on persons in violation of certain United Nations Security Council resolutions regarding North Korea. Specifically, U.S. financial institutions shall not “knowingly, directly or indirectly,” facilitate or maintain correspondent accounts with North Korean or other foreign financial institutions that provide services to North Korea, or execute a transfer of funds or property “that materially contributes to any violation of an applicable United National Security Council resolution.” A foreign government that provides to or receives from North Korea a defense article or service is prohibited from receiving certain types of U.S. foreign assistance. The sanctions concern: (i) shipping and cargo restrictions; (ii) cooperation between North Korea and Iran pertaining to the countries’ weapon programs; (iii) forced labor and trafficking victims, including goods produced by forced labor; and (iv) foreign persons that employ North Korean forced laborers. Furthermore, the Secretary of State is directed to submit a determination regarding whether North Korea meets the criteria for designation as a state sponsor of terrorism no later than 90 days after the Act has been enacted.
    • Countering Iran's Destabilizing Activities Act of 2017. The sanctions—intended to deter Iranian activities and threats affecting the U.S. and key allies—include: (i) assessments of Iran’s conventional force capabilities such as its ballistic missile or weapons of mass destruction programs; (ii) prohibitions on the sale or transfer of military equipment and sanctions against Iran’s Islamic Revolutionary Guard Corps and any affiliated foreign persons; (iii) programs to be undertaken by the U.S. and other foreign governments to counter destabilizing activities; and (iv) prohibitions on any activity that provides “financial, material, technological, or other support for goods or services in support” of the identified programs or persons. The sanctions also block any property or interests in property of any designated person “if such property and interests in property are in the [U.S.], come within the [U.S.], or are or come within the possession or control of a [U.S.] person.” The law allows President Trump to impose sanctions against persons committing human rights violations against Iranian citizens, and also grants him the ability to “temporarily waive the imposition or continuation of sanctions under specified circumstances.”
    • Countering Russian Influence in Europe and Eurasia Act of 2017. Under the new sanctions, notwithstanding sanctions passed under President Obama’s administration, Congress will review President Trump’s proposed actions to terminate or waive sanctions with respect to Russia and determine whether the actions will or will not “significantly alter [U.S.] foreign policy with regard to the Russian federation.” Additionally, the President may, at his discretion, waive specified cyber- and Ukraine-related sanctions if submitted to the appropriate congressional committees and “is in the vital national security interests of the [U.S.].” The sanctions concern the following: (i) cybersecurity; (ii) crude oil projects; (iii) Russian and foreign financial institutions; (iv) corruption; (v) human rights abuses; (vi) evasion of sanctions; (vii) transactions with Russian intelligence or defense sectors; (viii) pipeline developments; (ix) privatization of state-owned assets by the Russian federation; and (v) arms and related material transfers to Syria. The sanctions further detail financial transaction loan and credit restrictions between U.S. and international financial institutions and sanctioned persons—including directives related to financing new debt—and place prohibitions on sanctioned financial institutions. Among other things, the sanctions direct the development of a national strategy for combating the financing of terrorism and other types of illicit financing.

    Federal Issues Sanctions Combating the Financing of Terrorism Financial Crimes North Korea Iran Russia

    Share page with AddThis
  • OFAC Updates: New Sanction Designations and Additions to Specially Designated Nationals List

    Financial Crimes

    Recently, OFAC announced implementation of sanctions against several entities and individuals designated for, among others, materially assisting, sponsoring, or providing financial support to certain foreign entities. In addition, OFAC updated its list of Specially Designed Nations (SDN) and announced a settlement agreement with a Canadian-based motor vehicle finance company.

    North Korea Suppliers of Weapons Proliferation Programs. On June 1, OFAC announced it was taking action against six entities and three individuals in response to their involvement in North Korea’s continued efforts to develop weapons of mass destruction (WMD). The announcement targets the country’s military, nuclear, and WMD programs, in addition to its overseas financial operations. The sanctions prohibit any U.S. individual from dealing with the designees, and further states that “any property or interests in property of the designated persons in the possession or control of U.S. persons or within the United States must be blocked.” John E. Smith, the Director of OFAC, stated, “Treasury is working with our allies to counter networks that enable North Korea’s destabilizing activities, and we urge our partners to take parallel steps to cut off their funding sources.” These sanctions are in addition to those imposed earlier in April on eleven North Koreans and one associated entity (see previous InfoBytes coverage here).

    Iraq-Based Chemical Weapons Developers. On June 12, OFAC announced, for the first time, designations against individuals involved in the development of ISIS’ chemical weapons. The sanctions were pursuant to Executive Order 13224, which “provides a means by which to disrupt the financial support network for terrorists and terrorist organizations by authorizing the U.S. government to designate and block the assets of foreign individuals and entities that commit, or pose a significant risk of committing, acts of terrorism.” The property and interests in property of the two individuals identified in the designations, subject to U.S. jurisdiction, are blocked, and “U.S. persons are generally prohibited from engaging in transactions with them.”

    Settlement Agreement with Motor Vehicle Finance Company. On June 8, OFAC announced it had reached a settlement with a motor vehicle finance company as a result of transactions by its Canadian based subsidiary. The enforcement action claims the majority-owned subsidiary, which “specializes in various forms of financing in the [U.S.] for purchasers, lessees, and authorized independent [auto] dealers,”—between 2011 and 2014—allegedly violated 13 Cuban Assets Control Regulations by leasing vehicles to the Cuban Embassy in violation of OFAC’s Blocked Persons and SDN list, which prohibited transactions with Cuban government entities. The company voluntarily self-disclosed the alleged violations and agreed to remit $87,255 to settle its potential civil liability.

    Foreign Narcotics Kingpin Sanctions. On May 24 and 25, OFAC made additions to the SDN list, which designates individuals and companies who are prohibited from dealing with the U.S. and whose assets are blocked. Transactions are prohibited if they involve transferring, paying, exporting, or otherwise dealing in the property or interest in property of an entity or individual on the SDN list. Additions to the list were made under the Foreign Narcotics Kingpin Sanctions Regulations against several Mexican and Colombian individuals and entities.

    Financial Crimes Sanctions OFAC Department of Treasury Enforcement Auto Finance North Korea Iraq Cuba

    Share page with AddThis

Pages