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  • OFAC designates Iran’s interior minister and senior law enforcement officials for human rights abuses

    Financial Crimes

    On May 20, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC), pursuant to Executive Order 13553, sanctioned Iran’s interior minister, in addition to seven senior officials of Iran’s Law Enforcement Forces (LEF), a provincial commander of Iran’s Islamic Revolutionary Guard Corps, and a foundation along with its director and members of the board of trustees, for serious human rights abuses against Iranians. According to OFAC, the foundation is controlled by LEF and plays an active role in Iran’s energy, construction, services, technology, and banking industries. As a result of the sanctions, “all property and interests in property of these persons that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC.” OFAC further noted that its regulations “generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked or designated persons,” and warned foreign financial institutions that knowingly facilitating significant transactions or providing significant financial services to the designated individuals may subject them to U.S. correspondent account or payable-through sanctions.

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

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  • Treasury designates Chinese GSA for providing support to Iranian airline

    Financial Crimes

    On May 19, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) designated a China-based company pursuant to Executive Order (E.O.) 13224 for allegedly acting as a general sales agent (GSA) for or on behalf of an Iranian airline. According to OFAC, this is the seventh time a GSA has been designated to the airline since 2018, which was previously designated under E.O.s 13224 and E.O, 13382 for providing support to Iran’s Islamic Revolutionary Guard Corps-Qods Force. OFAC emphasized that entities operating in the airline industry “should conduct due diligence to avoid performing services, including GSA services, for or on behalf of a designated person, which may be sanctionable,” and referred the industry to a 2019 advisory that outlined potential civil and criminal consequences for providing unauthorized support to or for designated Iranian airlines.

    As a result of the sanctions, “all property and interests in property of [the GSA] that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC.” OFAC further noted that its regulations “generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve property or interests in property of blocked or designated persons,” and warned foreign financial institutions that knowingly facilitating significant transactions or providing significant financial services to designated individuals may subject them to U.S. correspondent account or payable-through sanctions.

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

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  • Global advisory addresses illicit shipping and sanctions evasion practices

    Financial Crimes

    On May 14, the U.S. Departments of State and Treasury, along with the U.S. Coast Guard, issued a global advisory warning the maritime industry of deceptive shipping practices used by Iran, North Korea, and Syria to evade economic sanctions. The “Sanctions Advisory for the Maritime Industry, Energy and Metals Sectors, and Related Communities” expands upon previously issued advisories and discusses due diligence approaches that entities, including financial institutions, should employ to monitor illicit activity and mitigate the risk of potentially engaging in prohibited activities or transactions. Among other things, the advisory provides a list of general compliance practices that may help entities “in more effectively identifying potential sanctions evasion.” These include: (i) institutionalizing sanctions compliance programs; (ii) establishing Automatic Identification System (AIS) best practices and contractual requirements to monitor for manipulations and disruptions, which may be an indication of potential illicit or sanctionable activity; (iii) monitoring ships throughout the entire transaction lifecycle, including those leased to third parties; (iv) knowing your customers and counterparties; (v) exercising supply chain due diligence; (vi) incorporating these best practices into contractual language; and (vii) engaging in industry information sharing of challenges, threats, and risk mitigation measures.

    See here for previous InfoBytes coverage on global shipping advisories.

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

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  • FinCEN advisory warns of Covid-19 medical scams, provides guidance on reporting suspicious activity

    Federal Issues

    On May 18, the Financial Crimes Enforcement Network (FinCEN) issued an advisory and companion notice on medical scams related to the Covid-19 pandemic that provide detailed instructions for financial institutions filing reports of Covid-19-related suspicious activities. The advisory outlines numerous red flag indicators and case studies addressing Covid-19 medical-related fraudulent activity to assist financial institutions in detecting, preventing, and reporting suspicious transactions. FinCEN also encourages financial institutions to consider additional contextual information, such as a customer’s historical financial activity and whether a customer exhibits multiple indicators, before making a determination that a transaction is suspicious. FinCEN further advises financial institutions—when taking a risk-based approach to Bank Secrecy Act compliance—to perform additional inquiries and conduct investigations as necessary.

    The companion notice provides, among other things, that suspicious activity reports (SAR) should only include Covid-19 statements tied to suspicious activity and that statements related to Covid-19’s impact on SAR filing abilities should not be included. However, FinCEN states that filers who previously included these references are not required to file corrected reports. For fraud schemes, including those that exploit the Covid-19 pandemic, FinCEN reiterates that full details related to SAR filings and supporting documentation should be submitted as quickly as possible. The notice also addresses information sharing among financial institutions and provides contact information for reporting Covid-19-related criminal activity to other agencies.

    Federal Issues FinCEN Covid-19 Financial Crimes Bank Secrecy Act SARs Of Interest to Non-US Persons

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  • OFAC clarifies North Korea SDNs

    Financial Crimes

    On May 13, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) provided clarifying text related to the modified North Korea Sanctions and Policy Enforcement Act (covered by InfoBytes here), which bars foreign subsidiaries of U.S. financial institutions from knowingly engaging in transactions with Specially Designated Nationals (SDNs) identified under North Korea-related authorities. OFAC added the following text to 490 SDN records to assist the private sector in identifying persons that have been so designated: “Transactions Prohibited For Persons Owned or Controlled by U.S. Financial Institutions: North Korea Sanctions Regulations section 510.214.”

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

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  • OFAC issues new Venezuela-related general licenses, revokes other

    Financial Crimes

    On May 12, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued two new General Licenses (GL) Venezuela GL 3H, “Authorizing Transactions Related to, Provision of Financing for, and Other Dealings in Certain Bonds,” and GL 9G, “Authorizing Transactions Related to Dealings in Certain Securities.” OFAC removed and revoked GL13E. The changes reflect the need to remove Nynas AB. According to the announcement, Nynas AB “has undertaken a corporate restructuring that has resulted in Nynas AB no longer being blocked pursuant to the Venezuela Sanctions Regulations.” Therefore, U.S. persons can engage in transactions or activities with Nynas AB, “provided such activities do not involve blocked persons or otherwise prohibited activities.” OFAC also made conforming technical updates to two FAQs to reflect the issuance of the new GLs.

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

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  • FinCEN renews GTOs covering 12 metropolitan areas

    Financial Crimes

    On May 8, the Financial Crimes Enforcement Network (FinCEN) reissued the renewal of its Geographic Targeting Orders (GTOs). The GTOs require U.S. title insurance companies to identify the natural persons behind shell companies that pay “all cash” (i.e., the transaction does not involve external financing) for residential real estate in the 12 major metropolitan areas covered by the orders. The renewed GTOs are identical to the November 2019 GTOs (covered by InfoBytes here). The purchase amount threshold for the beneficial ownership reporting requirement remains set at $300,000 for residential real estate purchased in the covered areas. The GTOs do not require reporting for purchases made by legal entities that are U.S. publicly-traded companies.

    The renewed GTOs take effect May 10, will extend until November 5, 2020, and cover certain counties within the following areas: Boston; Chicago; Dallas-Fort Worth; Honolulu; Las Vegas; Los Angeles; Miami; New York City; San Antonio; San Diego; San Francisco; and Seattle. 

    FinCEN FAQs regarding GTOs are available here.

    Financial Crimes FinCEN GTO Of Interest to Non-US Persons

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  • OFAC settles Cuban Assets Control Regulation violations

    Financial Crimes

    On May 6, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $257,862 settlement with an animal nutrition company for 44 alleged violations of the Cuban Assets Control Regulations (CACR). According to OFAC, between July 2012 and September 2017, the company and its owned or controlled foreign entities allegedly coordinated agricultural commodity sales to a Cuban company without OFAC authorization by processing Cuba-related business through its foreign affiliates and developing “a transaction structure that it incorrectly determined would be consistent with U.S. sanctions requirements.” OFAC noted that the company “could potentially have availed itself of such authorization” or applied for a specific licenses from OFAC, but “failed to seek appropriate advice or otherwise take the steps necessary to authorize these transactions.” OFAC determined that in light of the fact that the transactions may have been eligible for authorization, as well as the company’s voluntary self-disclosure, compliance enhancements, and other factors, the apparent violations constituted a non-egregious case.

    OFAC advised U.S. companies with a global presence to maintain an appropriate sanctions compliance program and to seek “appropriate advice and guidance” when contemplating business that may be impacted by U.S. sanctions programs. In addition, OFAC referenced enforcement and compliance resources and cautioned that sanctions violations can arise from a misinterpretation or lack of understanding of OFAC’s regulations, including general licenses and authorizations. OFAC advised U.S. persons to “exercise[e] caution when dealing with foreign subsidiaries or affiliates located in regions subject to U.S. sanctions programs” and to understand the full scope and applicability of authorizations related to certain sanctions prohibitions.

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

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  • OFAC issues Finding of Violation to company for issuing prepaid card to SDN

    Financial Crimes

    On April 30, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued a Finding of Violation to a travel-related services company for alleged violations of the Weapons of Mass Destruction Proliferators Sanctions Regulations. According to OFAC, the company allegedly issued a prepaid card to, and processed 42 transactions totaling more than $35,000 on behalf of, a Specially Designated National (SDN) due to human error and screen system defects. When issuing the Finding of Violation, OFAC considered the fact that, among other things, (i) the company did not engage in willful or reckless behavior; (ii) there is no indication that the company was aware that it provided a card to an SDN or that its risk engine could be overridden; (iii) the company took remedial action in response to the violations to prevent similar reoccurrences; (iv) the company cooperated with OFAC and voluntarily disclosed the violations; and (v) OFAC has not issued a penalty notice or Finding of Violation to the company in at least five years prior to the alleged violations. A civil monetary penalty was not issued to the company.

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

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  • OFAC designates Iranian front company and owner; DOJ files concurrent criminal charges and related civil forfeiture action

    Financial Crimes

    On May 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) designated a dual Iranian and Iraqi national and a company owned, controlled, or directed by the designated individual for their alleged involvement with Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF). According to OFAC, the designated individual allegedly provided support for several years to IRGC-QF’s smuggling operations by securing entry to vessels carrying IRGC-QF shipments, using business connections to facilitate logistics, and developing revenue generating illicit business opportunities. As a result of the sanctions, “all property and interests in property of these persons that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC.” OFAC further noted that its regulations “generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked or designated persons,” and warned foreign financial institutions that knowingly facilitating significant transactions or providing significant financial services to the designated individuals may subject them to U.S. correspondent account or payable-through sanctions.

    On the same day, the DOJ announced a two-count criminal complaint against the designated individual and another Iranian national for allegedly conspiring to provide U.S. financial services to help several Iranian entities and their front companies purchase a petroleum tanker. The defendants allegedly concealed that the sale of the vessel was destined for Iran, and attempted to evade the regulations, prohibitions, and licensing requirements of the International Emergency Economic Powers Act and the Iranian Transactions and Sanctions Regulations. The DOJ also filed a related civil forfeiture complaint claiming that more than $12 million is subject to forfeiture.

    Financial Crimes OFAC Department of Treasury Iran Of Interest to Non-US Persons Financial Institutions

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