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  • OFAC sanctions entities for aiding North Korea’s exportation of workers

    Financial Crimes

    On January 14, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced it was imposing sanctions on a North Korean trading corporation and a China-based North Korean lodging facility for facilitating North Korea’s practice of sending laborers abroad. According to OFAC, North Korea’s continued practice of exporting North Koreans as illicit laborers is an ongoing attempt to undermine and evade United Nations Security Council Resolutions. The designated companies’ exportation of workers on behalf of the country, OFAC stated, has generated revenue for the North Korean government or the Workers’ Party of Korea. As a result of the sanctions, “all property and interests in property of these targets 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 financial institutions that if they knowingly facilitate significant transactions for any of the designated individuals, they may be subject to U.S. secondary sanctions.

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

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  • OFAC settles with travel insurance companies

    Financial Crimes

    On December 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a settlement with a U.S.-based property and casualty company for 6,474 alleged violations of the Cuban Assets Control Regulations (CACR). According to OFAC, between August 2010 and January 2015, the company’s Canadian branch provided travel insurance policies to Canadian citizens traveling to Cuba, and continued to do so even though the company knew early on that that policies were being issued related to travel to Cuba but did not investigate it until 2014. In arriving at the settlement amount, OFAC considered various mitigating factors, including the fact that the company voluntarily self-disclosed the issue to OFAC, and that the company enhanced its OFAC compliance. OFAC also considered various aggravating factors, including that the company had knowledge of the violations as early as 2010, and that the travel policies “provided economic benefit to Cuba.”

    Also on December 9, OFAC announced another settlement, this time with a Swiss worldwide insurance and reinsurance company, which formerly was a subsidiary of a U.S. company. The settlement resolves potential civil liability for 20,291 alleged violations of the CACR between January 2010 and December 2014 for issuing insurance policies for Cuba-related travel, because the policies, though global in scope, did not include an exclusionary clause “for risks that would violate U.S. sanctions law.” OFAC considered a number of mitigating factors in determining the settlement amount, including the fact that the company voluntarily self-disclosed the alleged violations and represented that it conducted a risk assessment of its offices and developed compliance policies and procedures. Additionally, OFAC considered several aggravating factors, including that the company issued global policies that did not contain exclusionary clauses, the activity resulted from a pattern or practice spanning several years, and the company is a large and commercially sophisticated financial institution.

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

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  • OFAC settles with multinational corporation for Cuban sanctions violations

    Financial Crimes

    On October 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a settlement of more than $2.7 million with a multinational corporation, on behalf of three subsidiaries, to resolve potential civil liability for 289 alleged violations of the Cuban Assets Control Regulations (CACR). The settlement resolves allegations that between December 2010 and February 2014, the subsidiaries accepted payments on 289 occasions from an entity identified on OFAC’s List of Specially Designated Nationals and Blocked Persons “for goods and services provided to a Canadian customer.” OFAC alleged that although the subsidiaries negotiated and entered into contracts with the Canadian customer—and invoices were sent to the customer—the designated entity was approved as a third-party payer and paid more than 65 percent of the total transactions. OFAC asserted that the subsidiaries failed to undertake sufficient diligence into the activities of the Canadian customer, and noted that the sanctions screening software used by the subsidiaries was set to screen for only one version of the designated entity’s name.

    In arriving at the settlement amount, OFAC considered various mitigating factors including that (i) OFAC has not issued a violation against the subsidiaries in the five years preceding the earliest date of the transactions at issue; (ii) the corporation identified the alleged violations by testing and auditing its compliance program, and implemented several remedial measures in response to the alleged violations, which included improvements to its compliance program; and (iii) the corporation entered into, and agreed to extend, multiple statute of limitations tolling agreements.

    OFAC also considered various aggravating factors, including that (i) the subsidiaries “failed to take proper or reasonable care with respect to their U.S. economic sanctions obligations”; (ii) the subsidiaries’ actions allowed a large volume of high-value transactions to be conducted with the designated entity, causing “substantial harm” to the CACR objectives; and (iii) the corporation’s submissions to OFAC “leave substantial uncertainty about the totality of the benefits conferred” to the designated entity through the Canadian customer.

    Financial Crimes OFAC Settlement Cuba Of Interest to Non-US Persons

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  • OFAC strengthens Cuba sanctions, revokes “U-turn” authorization

    Financial Crimes

    On September 6, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced amendments effective October 9 to the Cuban Assets Control Regulations (CACR), which implement changes in accordance with President Trump’s 2017 National Security Presidential Memorandum “Strengthening the Policy of the United States Towards Cuba.” Key elements of the changes include:

    • Lowering the value of permitted remittances to Cuba. Family remittances will be capped at $1,000 U.S. dollars per quarter that a single remitter can send to an individual Cuban national. Remittances to close family members of prohibited Cuban officials and members of the Cuban Communist Party will be forbidden. While the amendments rescind the authorization for donative remittances, they add a new provision authorizing remittances to certain individuals and independent non-governmental organizations in Cuba “to support the operation of economic activity . . . independent of government control.”
    • “U-turn” transactions. The amended sanctions revoke what is commonly referred to as the Cuban “U-turn” authorization. Effective next month, financial institutions subject to U.S. jurisdiction will no longer be authorized to process Cuba-related payments that originate and terminate outside the United States. However, financial institutions subject to U.S. jurisdiction will be permitted to reject such transactions.

    An updated list of FAQs related to the CACR has also been published, as well as guidance on recent changes to the sanctions.

    The changes will have the greatest impact on U.S. banks offering foreign correspondent banking services and foreign banks utilizing those services, increasing compliance risks for both. They also shut a significant window to the U.S. financial system that foreign persons conducting international trade with Cuba previously enjoyed.

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

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  • OFAC sanctions Cuban oil company for facilitating Maduro regime

    Financial Crimes

    On July 3, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against Cuban state-run oil import and export company for continuing to provide support to the Maduro regime by the importation of oil from Venezuela. The sanctions are pursuant to Executive Order 13850. OFAC alleges that the state-run company has been the recipient of oil from Venezuela and has expanded its operations to include non-traditionally traded oil products. As a result of the sanctions, “all property and interests in property of these individuals, and of any entities that are owned, directly or indirectly, 50 percent or more by such individuals, that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC.” OFAC notes that its regulations “generally prohibit” U.S. persons from participating in transactions with these individuals and entities.

    Additionally, the announcement notes that OFAC is delisting an oil tanking company in recognition of the company’s actions to ensure that its vessels are not complicit in supporting the Maduro regime. As a result of the delisting, all property and interest of the company is now unblocked and lawful transactions involving U.S. persons are no longer prohibited.

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

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  • OFAC imposes additional oil sector sanctions against companies connected to Maduro regime

    Financial Crimes

    On April 12, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against four companies for their alleged involvement in the transportation of oil from Venezuela to Cuba. According to OFAC, the companies’ actions offer support to former President Maduro’s regime and contribute to the humanitarian crisis in Venezuela. In addition, OFAC identified nine vessels as blocked property owned by the identified companies. As a result, all property belonging to the sanctioned entities, and interests in property of the sanctioned entities (or of any entities owned 50 percent or more by them) subject to U.S. jurisdiction are blocked and must be reported to OFAC. U.S. persons are also generally prohibited from entering into transactions with them. Furthermore, OFAC also referred financial institutions to Financial Crimes Enforcement Network advisories FIN-2017-A006FIN-2017-A003, and FIN-2018-A003 for further information concerning the efforts of Venezuelan government agencies and individuals to use the U.S. financial system and real estate market to launder corrupt proceeds, as well as human rights abuses connected to foreign political figures and their financial facilitators.

    Visit here for continuing InfoBytes coverage of actions related to Venezuela.

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  • U.K. subsea services company and subsidiaries to pay $440,000 for Cuban and Iranian sanctions violations

    Financial Crimes

    On April 11, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced two settlements totaling more than $440,000 with a U.K. subsea services company and certain subsidiaries that operate in the oil and gas industry. The first settlement, for $227,500, resolves potential civil liability for seven alleged violations of the Cuban Assets Control Regulations (CACR). According to OFAC, two of the company's Malaysian affiliates produced analytical reports and conducted workshops for oil well drilling projects in Cuban territorial waters related to projects managed by companies including Venezuela’s state-owned oil company, which was previously designated by OFAC in January (see InfoBytes coverage here). OFAC considered various aggravating factors—including that the alleged violations constitute an egregious case—and noted that the company/subsidiaries “willfully violated U.S. sanctions laws and regulations when they knowingly dealt with Cuban interests despite prior notification of their unlawfulness.” OFAC also noted that senior managers “deliberately concealed their dealings with Cuba on multiple occasions.” OFAC considered numerous mitigating factors, including the company/subsidiaries’ voluntarily self-disclosure of the apparent violations and remedial efforts taken to avoid similar violations from occurring in the future.

    The same day OFAC announced a second settlement, this time for $213,866, which resolves potential civil liability for 13 alleged CACR violations. The settlement also resolves three alleged violations of the Iranian Transactions and Sanctions Regulations (ITSR) by the company’s U.S.-based parent company. According to OFAC, the company issued sanctions compliance guidance to all of its subsidiaries with instructions that transactions with Cuba and Iran (including indirect third parties) were prohibited. However, certain subsidiaries disregarded the guidance and allegedly engaged in transactions within Cuban and Iranian territorial waters. In reaching the settlement amount, OFAC determined, among other things, that (i) the company voluntarily self-disclosed the apparent violations; (ii) the alleged violations constitute a non-egregious case; (iii) the subsidiaries have confirmed the conduct has been terminated; and (iv) remedial efforts have been undertaken to minimize the risk of similar violations from occurring in the future.

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

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  • OFAC reaches settlement with non-U.S. chemical manufacturer resolving Cuban sanctions violations

    Financial Crimes

    On February 14, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $5.5 million settlement with a German chemical manufacturer for 304 alleged violations of the Cuban Assets Control Regulations (CACR). According to OFAC, the settlement resolves the manufacturer’s alleged involvement in fulfilling Cuban orders for chemical reagents on 304 invoices. Prior to and upon acquiring the manufacturer, an Illinois-based company sent warnings to the manufacturer that all Cuban transactions must be ceased, along with guidelines for complying with U.S. sanctions. OFAC noted, however, that the manufacturer designed and implemented a system to conceal its on-going transactions, engaged an external logistics company to handle shipping documents and declarations, and conducted training sessions for staff to ensure the system was concealed from the Illinois company.

    In arriving at the settlement amount, OFAC considered the following as aggravating factors: (i) the willful conduct of the manufacturer’s management; (ii) the utilization of written procedures to “engage in a pattern of conduct in violation of the CACR”; (iii) the number of transactions over an extended period of time “caused significant harm to the sanctions program objective of maintaining a comprehensive embargo on Cuba”; and (iv) the sophistication and revenue stream of the manufacturer, and the fact that it is a subsidiary of a large, international company.

    OFAC also considered several mitigating factors, including the Illinois company’s cooperation with OFAC, voluntary self-disclosure, and execution of a tolling agreement on behalf of the manufacturer. OFAC further stressed the importance of implementing risk-based controls and due-diligence procedures to ensure subsidiaries comply with OFAC sanction obligations.

    Visit here for additional InfoBytes coverage on Cuban sanctions.

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

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  • OFAC reaches settlement with national bank to resolve alleged non-egregious sanctions violations

    Financial Crimes

    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.

    Financial Crimes OFAC Sanctions Iran Settlement Cuba

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  • OFAC Penalizes Credit Card Issuer for Violations of Cuban Assets Control Regulations

    Financial Crimes

    On November 17, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced that it had reached a $204,277 settlement with a U.S. financial institution for alleged violations of the Cuban Assets Control Regulations (CACR). The settlement involves actions taken by an international credit card company which, at the time of the apparent violations, was a wholly owned subsidiary of an entity that was itself 50 percent owned by the U.S. financial institution. According to the announcement, between 2009 and 2014, credit cards that the company issued to over 100 corporate customers were used to make purchases in Cuba or otherwise involved Cuba. OFAC asserts that the company failed to implement controls to prevent this even though it had policies and procedures in place to review transactions for compliance with CACR.

    In determining the settlement amount, OFAC considered that (i) employees within the company had reason to know of the conduct that led to the alleged violations; (ii) none of the entities involved appeared to appreciate the risk that the credit cards might be used in Cuba; (iii) at the time they occurred, the actions resulted in harm to the US sanctions program objectives; (iv) the U.S. financial institution is a large and sophisticated financial entity; and (v) during the investigation, the entities provided “verifiably inaccurate or incomplete, including material omissions.” OFAC also considered the fact that the entities voluntarily self-disclosed the alleged violations and the U.S. financial institution took “swift and appropriate remedial action” upon discovery.

    OFAC recently announced updates to CACR, covered by InfoBytes here.

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