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  • FFIEC updates BSA/AML examination manual

    Agency Rule-Making & Guidance

    On April 15, the FFIEC published the updated Bank Secrecy Act/Anti-Money Laundering Examination Manual (Manual). According to an interagency statement, revisions were made throughout the updated sections to incorporate regulatory changes since the Manual was last updated in 2014 and “to ensure language clearly distinguishes between mandatory regulatory requirements and supervisory expectations.” The revisions can be identified by a 2020 date in the table of contents and include:

    • Examiners should tailor Bank Secrecy Act/anti-money laundering (BSA/AML) examinations to a bank’s risk profile.
    • Examiners should assess the adequacy of an institution’s BSA/AML compliance program and risk assessment processes. This includes identifying specific risk categories unique to a bank and analyzing the identified information to asses risks within these categories. The Manual notes, however, that there is no particular format or method for a bank to use for its risk assessment process, and reiterates that risk categories may vary based on a bank’s size, complexity, and organizational structure and that “updates may occur as necessary to align the risk assessment with a significant change in a bank’s risk profile.”
    • Examiners should be mindful that banks have flexibility when designing a BSA/AML compliance program and that “minor weaknesses, deficiencies, and technical violations alone are not indicative of an inadequate program.”

    The agencies acknowledge that they “are aware of the uncertainty faced by financial institutions during this unprecedented time” and emphasize that the updated Manual, “which supports tailored examination work, has been in process for an extended period and should not be interpreted as new instructions or as a new or increased focus.” Additional updates to the remaining Manual sections will be released in phases at a later date.

    Agency Rule-Making & Guidance Financial Crimes Bank Secrecy Act Anti-Money Laundering FFIEC Of Interest to Non-US Persons

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  • Multiagency advisory warns of North Korean cyber-threat to international finance system

    Financial Crimes

    On April 15, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), in conjunction with the Departments of State and Homeland Security and the Federal Bureau of Investigation, issued an advisory warning that North Korea’s (DPRK) cyber activities—including cybertheft, money laundering, extortion, and cryptojacking—“pose a significant threat to the integrity and stability of the international finance system.” These activities, the agencies caution, highlight DPRK’s use of cyber-enabled means to generate revenue while mitigating the impact of OFAC-imposed sanctions. In addition to providing examples of cyber activities that target the international financial sector and DPRK state-sponsored cyber incidents, the advisory also outlines recommended measures that governments, industry, civil society, and individuals can take to counter DPRK cyber threats. These include (i) raising awareness; (ii) sharing technical information; (iii) implementing and promoting cybersecurity best practices; (iv) notifying law enforcement; and (v) strengthening anti-money laundering, countering the financing of terrorism, and counter-proliferation financing compliance. The agencies reiterate the consequences of engaging in prohibited and sanctionable conduct, and remind individuals and entities that OFAC has the authority to impose sanctions on any persons found to have engaged in conduct supporting DPRK cyber-related activity. The agencies also point out that foreign financial institutions that knowingly conduct or facilitate significate trade or transactions on behalf of a designated person for DPRK-related activity, may “lose the ability to maintain a correspondent or payable-through account in the [U.S.]”

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

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  • OFAC guidance addresses Covid-19 humanitarian assistance and trade

    Federal Issues

    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 IranVenezuelaNorth KoreaSyriaCuba, 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.

    Federal Issues Financial Crimes Department of Treasury OFAC Covid-19 Of Interest to Non-US Persons Sanctions

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  • OFAC issues amended Venezuela-related general license and FAQ

    Financial Crimes

    On April 10, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Venezuela General License (GL) 5C, which supersedes GL 5B and authorizes certain transactions otherwise prohibited under Executive Orders 13835 and 13857 related to, or that provide financing for, dealings in the Petróleos de Venezuela, S.A. 2020 8.5 Percent Bond on or after July 22, 2020. Concurrently, OFAC issued a new Venezuela-related frequently asked question regarding GL 5C.

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

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  • OFAC amends North Korea Sanctions Regulations

    Financial Crimes

    On April 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced amendments to the North Korea Sanctions Regulations. The final rule amends the sanctions regulations to incorporate “Treasury-administered provisions of the North Korea Sanctions and Policy Enhancement Act of 2016 [(NKSPEA)], as amended by the Countering America’s Adversaries Through Sanctions Act of 2017 [(CAATSA)] and the National Defense Authorization Act for Fiscal Year 2020 [(NDAA)].”

    Specifically, OFAC is incorporating into the amended regulations prohibitions with respect to the blocking, correspondent, or payable-through accounts sanctions contained within the NKSPEA, CAATSA, and NDAA. The final rule also adds a new section applicable to individuals and entities that are owned or controlled by a U.S. financial institution and established or maintained outside the U.S., which prohibits them from “knowingly engaging in any transaction, directly or indirectly, with the Government of North Korea or any person designated for the imposition of sanctions with respect to North Korea under NKSPEA. . ., an applicable Executive Order, or an applicable United Nations Security Council resolution.” In addition, the final rule amends the definition of luxury goods by creating “a regulatory exception to exclude items approved for import, export, or reexport to or into North Korea by the United Nations Security Council.” The final rule also incorporates new statutory exemptions, makes technical and conforming edits, revises an interpretive provision, and updates the authorities and delegation sections of the regulations, among other things. The amended North Korea Sanctions Regulations take effect April 10.

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

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  • OFAC amends Venezuela-related general license

    Financial Crimes

    On April 3, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued amended Venezuela General License (GL) 13E, which supersedes GL 13D and extends the expiration date through May 14, 2020 for certain transactions involving the identified corporation and any of its subsidiaries that are normally prohibited under Executive Orders (E.O.) 13850, 13857, and 13884. As previously covered by InfoBytes, E.O. 13884, among other things, prevents all property and interest in property of the Government of Venezuela within the U.S. or in the possession of a U.S. person from being transferred, paid, exported, withdrawn, or otherwise dealt in. OFAC notes that the corporation is engaged with OFAC on a proposed corporate restructuring that may result in significant ownership and control changes.

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

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  • District court denies request to lift OFAC sanctions despite EU decision

    Courts

    On March 31, the U.S. District Court for the District of Columbia granted the Treasury Department’s Office of Foreign Assets Control’s (OFAC) motion to dismiss and denied two Iranian corporations’ (plaintiffs) cross-motion for summary judgment. According to the opinion, the plaintiffs requested to be delisted from OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List) following the Court of Justice of the European Union’s decision in 2013 to lift its own sanctions, which were, according to the plaintiffs, “the basis for OFAC including [the plaintiffs] in its SDN list in the first place.” The plaintiffs were added to the SDN List in 2011 after OFAC allegedly determined that they had assisted certain U.S. and United Nations-sanctioned Iranian companies in procuring goods for uranium enrichment activities. OFAC denied the plaintiffs’ request to be delisted in 2018, causing the plaintiffs to file a complaint seeking to remove the sanctions or “cause OFAC to request the information needed to remove [the plaintiffs] from the SDN List,” citing violations of their rights under the U.S. Constitution and the Administrative Procedure Act. Among other things, the plaintiffs argued that OFAC’s decision to reject the request for delisting was based on “undisclosed/secret information,” and further, OFAC “never provided any evidence to substantiate the[] allegations” that the plaintiffs had worked with other OFAC-sanctioned Iranian firms. Moreover, the plaintiffs contended that OFAC violated their “procedural and substantive due process rights because it failed to provide [the plaintiffs] notice and opportunity to be heard before designating [them] as an SDN.”

    The court, however, found among other things that OFAC’s actions were not “arbitrary or capricious,” stating that while OFAC considered classified evidence of the plaintiffs’ involvement, it also provided unclassified summaries to the plaintiffs. “In denying [the plaintiffs’] request for removal, OFAC requested and reviewed information provided by [the plaintiffs], and it responded to [the plaintiffs’] arguments for reconsideration,” the court stated, noting that OFAC ultimately concluded that the plaintiffs failed to submit credible arguments or evidence “establishing that an insufficient basis exists for the company’s designation.” In addition, the court rejected the plaintiffs’ Fifth Amendment argument, stating that the constitutional claims fail because the “Supreme Court has long held that non-resident aliens without substantial connections to the United States are not entitled to Fifth Amendment protections.”

    Courts OFAC Department of Treasury Sanctions Of Interest to Non-US Persons Iran Administrative Procedures Act Due Process

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  • Federal agencies extend Volcker Rule comment period

    Agency Rule-Making & Guidance

    On April 2, the Federal Reserve Board, CFTC, FDIC, OCC, and SEC (agencies) jointly announced that they would extend the comment period to May 1 on their proposal to modify and streamline the “covered funds” requirements under Section 13 of the Bank Holding Company Act, commonly known as the Volcker Rule. As previously covered by InfoBytes, the proposed amendments would, among other things, clarify the regulations concerning covered funds and address certain related issues, including permitting the activities of qualifying foreign excluded funds. The comment period originally was scheduled to end April 1. However, due to potential disruptions as a result of the Covid-19 pandemic, the agencies agreed to extend the comment deadline to May 1.

    Agency Rule-Making & Guidance Federal Issues FDIC Federal Reserve OCC CFTC SEC Volcker Rule Covid-19 Of Interest to Non-US Persons

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  • Fed establishes temporary repurchase agreement facility

    Federal Issues

    On March 31, the Federal Reserve announced the establishment of a temporary repurchase agreement facility (FIMA Repo Facility) to be available to foreign and international monetary authorities.  The FIMA Repo Facility will allow central banks and other international monetary authorities with accounts at the Federal Reserve Bank of New York to enter into repurchase agreements with the Federal Reserve to temporarily exchange their U.S. Treasury securities held with the Federal Reserve for U.S. dollars, which can then be made available to institutions in their jurisdictions. The facility is intended to provide an alternative temporary source of U.S. dollars other than sales of securities in the open market. The Federal Reserve also issued FAQs that answer question about, among other things, the purpose of the facility, eligibility to participate in the facility, and how the facility is structured. 

    Federal Issues Federal Reserve Federal Reserve Bank of New York Covid-19 Of Interest to Non-US Persons

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  • FinCEN updates FATF-identified jurisdictions with AML/CFT deficiencies

    Financial Crimes

    On March 26, the Financial Crimes Enforcement Network (FinCEN) issued an advisory on Financial Action Task Force (FATF)-identified jurisdictions with “strategic deficiencies” in their anti-money laundering and combating the financing of terrorism (AML/CFT) regimes. As previously covered by InfoBytes, in February the FATF updated the list of identified jurisdictions to include Albania, Barbados, Burma, Jamaica, Nicaragua, Mauritius, and Uganda, and removed Trinidad and Tobago from the list.

    The FinCEN advisory reminds financial institutions of the February updates and emphasizes that financial institutions should consider both the High-Risk Jurisdictions Subject to a Call for Action and the Jurisdictions under Increased Monitoring documents when reviewing due diligence obligations and risk-based policies, procedures, and practices. Moreover, the advisory includes public statements on the status of, and obligations involving, the Democratic People’s Republic of Korea (DPRK) and Iran. The advisory reminds jurisdictions of the actions the United Nations and the U.S. have taken with respect to sanctioning the DPRK and Iran and emphasizes that “[f]inancial institutions must comply with the extensive U.S. restrictions and prohibitions against opening or maintaining any correspondent accounts, directly or indirectly, for North Korean or Iranian financial institutions.”

    Financial Crimes FinCEN FATF Anti-Money Laundering Of Interest to Non-US Persons

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