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  • Updated FinCEN advisory warns of continued Venezuelan money laundering attempts

    Financial Crimes

    On May 3, the Financial Crimes Enforcement Network (FinCEN) issued an updated advisory to warn financial institutions of continued public corruption and attempted money laundering related to Venezuelan government agencies and political figures. The advisory updates a September 2017 advisory (previously covered by InfoBytes here) and renews the description of public corruption in Venezuela. The advisory also describes how “corrupt Venezuelan senior political figures exploit a Venezuelan government-administered food program by directing overvalued, no-bid contracts to co-conspirators that use ‘an over-invoicing trade-based money laundering’” scheme, which involves, among other things, front or shell companies, non-dollar denominated accounts, and nested accounts designed to evade sanctions and anti-money laundering/countering the financing of terrorism (AML/CFT) controls. The advisory also notes attempts by former President Maduro’s regime to evade sanctions and AML/CFT controls through the use of digital currency. The update provides revised financial red flags to assist with the identification and reporting of suspicious activity to FinCEN in connection with senior Venezuelan political figures.

    FinCEN further emphasizes that financial institutions should continue to follow a risk-based approach and that normal transactions involving Venezuelan business and nationals are not necessarily reflective of the aforementioned risks.

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

    Financial Crimes FinCEN Bank Secrecy Act Anti-Money Laundering Venezuela Of Interest to Non-US Persons Combating the Financing of Terrorism

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  • Special Alert: OFAC formalizes expectations for sanctions compliance programs

    Financial Crimes

    Buckley Special Alert

    The U.S. Department of the Treasury’s Office of Foreign Assets Control last week issued a framework for OFAC Compliance Commitments, which, for the first time, outlines OFAC’s views on essential elements of a risk-based sanctions compliance program in a single document that can serve as a roadmap for organizations as they structure and evaluate these programs. The framework should be considered carefully by U.S. organizations with any significant foreign dealings, and foreign organizations that conduct business with the United States or that utilize U.S. goods, services, or financial systems.

    The framework also makes clear that OFAC intends to target individual employees who are culpable for violations. That emphasis follows an action from earlier this year, where OFAC sanctioned an individual it deemed responsible for circumventing his employer’s compliance protocols.

    * * *

    Click here to read the full special alert.

    If you have questions about the OFAC’s new guidance or related issues, please visit our Bank Secrecy Act/Anti-Money Laundering & Sanctions practice page or contact a Buckley attorney with whom you have worked in the past.

    Financial Crimes Department of Treasury OFAC Sanctions Compliance Special Alerts

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  • OFAC, shipping company resolve blocked vessel EFT processing charges

    Financial Crimes

    On May 2, 2019, U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $871,837 settlement with a New York global shipping and logistics company, as well as its subsidiaries and affiliates, for five alleged violations of the Weapons of Mass Destruction Proliferators Sanctions Regulations. The settlement resolves potential civil liability for the company’s alleged processing of five electronic funds transfers pertaining to payments associated with blocked vessels identified on OFAC’s Specially Designated Nationals List.

    In arriving at the settlement amount, OFAC considered various aggravating factors, such as (i) the alleged violations constitute an egregious case and were not voluntarily self-disclosed; (ii) the company recklessly disregarded its obligations to comply with U.S. economic and trade sanctions; (iii) managers were aware of, and participated in, the conduct leading to the alleged violations; and (iv) the company is a global, commercially sophisticated company operating in a high-risk industry.

    OFAC also considered numerous mitigating factors, including that the company has not received a penalty or finding of a violation in the five years prior to the transactions at issue, and the company cooperated with OFAC during the investigation and has undertaken remedial efforts to minimize the risk of similar violations from occurring in the future.

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

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  • OFAC publishes A Framework for OFAC Compliance Commitments

    Financial Crimes

    On May 2, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the publication of A Framework for OFAC Compliance Commitments to provide guidance on the essential components of a risk-based sanctions compliance program (SCP) for organizations subject to U.S. jurisdiction, along with foreign entities that conduct business in or with the U.S. or U.S. persons, or use U.S.-origin goods or services. The framework highlights five essential compliance components that should be incorporated into an effective SCP: (i) senior management commitment; (ii) risk assessment “identifying potential OFAC issues” likely to be encountered; (iii) internal controls; (iv) testing and auditing; and (v) training. The framework notes that should an entity be subject to a civil monetary penalty (CMP), the Office of Compliance and Enforcement will determine, as appropriate, what other elements should be added to the entity’s SCP. In additional, OFAC states it will “consider favorably” entities that are able to demonstrate the existence of an effective SCP at the time of an apparent violation, which may mitigate a CMP and contribute towards the determination as to whether the violations are “deemed ‘egregious.’”

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

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  • OFAC regulations address foreign interference in U.S. elections

    Financial Crimes

    On April 26, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced regulations effective April 29 implementing Executive Order (E.O.) 13848. As previously covered by InfoBytes, E.O. 13848 was issued last September to authorize sanctions against foreign persons found to have engaged in, assisted, or otherwise supported foreign interference in U.S. elections. OFAC stated it intends to supplement the final rule with further regulations, “which may include additional interpretive and definitional guidance, general licenses, and statements of licensing policy.”

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

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  • OFAC sanctions Venezuelan officials connected to Maduro regime

    Financial Crimes

    On April 26, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against the two individuals identified as current or former officials of the Government of Venezuela for providing support to former President Maduro’s regime. Financial Crimes Enforcement Network advisories FIN-2017-A006, FIN-2017-A003, and FIN-2018-A003 provide additional 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. As a result, all property and interests in property of the sanctioned individuals, and 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 generally prohibited from entering into transactions with designated persons. 

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

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

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  • OFAC sanctions Hizballah financier conduits

    Financial Crimes

    On April 24, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against two individuals and three entities “acting as conduits for sanctions evasion schemes" for Hizballah finances. The designated entities and individuals are also subject to secondary sanctions pursuant to the Hizballah Financial Sanctions Regulations, which implement the Hizballah International Financing Prevention Act of 2015, and allows OFAC the authority to “prohibit or impose strict conditions on the opening or maintaining in the United States of a correspondent account or a payable-through account by a foreign financial institution that knowingly facilitates a significant transaction for Hizballah, or a person acting on behalf of or at the direction of, or owned or controlled by, Hizballah.” As a result, all property and interests in property of the sanctioned individuals and entities, and 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 designated persons. 

    Visit here for additional InfoBytes coverage on sanctions involving Hizballah networks.

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

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  • OFAC reaches settlement with New Jersey corporation for alleged Ukrainian sanctions violations

    Financial Crimes

    On April 25, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $75,375 settlement with a New Jersey corporation for two alleged violations of the Ukraine Related Sanctions Regulations. The settlement resolves potential civil liability for the company’s alleged issuance of two separate invoices for software licensing and software support services to an entity previously identified on OFAC’s Sectoral Sanctions Identification List. According to OFAC, the designated entity’s attempts to remit payment were rejected by financial institutions after it was determined that the transaction by prohibited by OFAC regulations on certain debts. However, the corporation—which allegedly failed to have in place a sanctions compliance program and failed to “recognize that the delayed collection of payment was prohibited”—explored possible options to collect the payment and did not seek guidance or authorization from OFAC.

    In arriving at the settlement amount, OFAC considered various aggravating factors, such as the corporation “demonstrated reckless disregard for U.S. economic sanctions requirements by repeatedly ignoring warning signs that its conduct constituted or likely constituted a violation of OFAC’s regulations.” Moreover, OFAC claimed that the corporation did not voluntary self-disclose the apparent violations to OFAC, and that senior management had knowledge of the alleged conduct.

    OFAC also considered numerous mitigating factors, including that (i) the alleged violations “resulted in minimal actual harm to the sanctions programs” and constituted a non-egregious case; (ii) the corporation has not received a penalty or finding of a violation in the five years prior to the transactions at issue; and (iii) the corporation has implemented a risk-based compliance program to minimize the risk of recurring conduct.

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

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  • FinCEN, virtual currency exchanger agree to penalty for BSA/AML violations

    Financial Crimes

    On April 18, the Financial Crimes Enforcement Network (FinCEN) announced a civil money penalty against an individual operating as peer-to-peer exchanger for willful violations of Bank Secrecy Act (BSA) money service business (MSB) requirements. According to FinCEN, the exchanger engaged in activities such as (i) advertising his intentions to purchase and sell bitcoin; and (ii) completing transactions using in-person cash payments, currency sent or received in the mail, or wire transfers through the use of a depository institution. These activities, FinCEN claimed, qualified him as a virtual currency exchanger, MSB, and a financial institution under the BSA. As such, the exchanger was required to register as a MSB with FinCEN, establish and implement an effective written anti-money laundering program, detect and file suspicious activity reports, and report currency transactions, which he failed to do. The order requires the exchanger to pay a $35,350 civil money penalty and permanently prohibits him from engaging in any activity that would qualify him as a MSB.

    Financial Crimes FinCEN Bank Secrecy Act Anti-Money Laundering Money Service / Money Transmitters Virtual Currency

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  • Treasury sanctions Venezuela’s central bank and official connected to Maduro regime; sanctions Nicaraguan bank and official

    Financial Crimes

    On April 17, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against Venezuela’s central bank, along with an individual determined to be a current or former official of the Government of Venezuela, for providing support to former President Maduro’s regime. OFAC states that the U.S. “has taken steps to ensure that regular debit and credit card transactions can proceed and personal remittances and humanitarian assistance continue unabated and are able to reach those” affected by the humanitarian crisis in Venezuela. Financial Crimes Enforcement Network advisories FIN-2017-A006, FIN-2017-A003, and FIN-2018-A003 provide additional 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. OFAC concurrently issued amendments to existing Venezuela-related general licenses as well as two new general licenses in connection with the designations, including “authorizations to ensure that U.S. persons may continue to engage in and facilitate non-commercial, personal remittances and the provision of humanitarian assistance to the people of Venezuela.”

    Additionally the same day, OFAC designated the Nicaraguan president’s son along with a Nicaraguan bank for actions supporting the Ortega regime. According to OFAC, the bank has, among other things, provided material, technical, and financial support to the previously sanctioned vice president, as well as money laundering assistance to the regime. OFAC also cited to the president’s son’s involvement with foreign investors to provide “preferential access to the Nicaraguan economy.” As a result, all property and interests in property of the sanctioned entities and individuals, and 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 the sanctioned entities and individuals. 

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

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