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  • OFAC identifies Venezuelan aircraft as blocked property, issues amended Venezuela-related general licenses

    Financial Crimes

    On January 21, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced amendments to the list of property implicated by the Specially Designated Nationals List (SDN List) pursuant to Executive Order (E.O.) 13884, which blocks the property of the Venezuelan government. OFAC identified 15 aircraft that either transported senior members of the Maduro regime or “operated in an unsafe and unprofessional manner in proximity to U.S. military aircraft, while in international air space.” OFAC reiterated that its “regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked persons.”

    In connection with the designations, OFAC issued amended Venezuela General License (GL) 20B, titled “Authorizing Official Activities of Certain International Organizations Involving the Government of Venezuela.” GL 20B authorizes certain transactions and activities otherwise prohibited under E.O.s 13850 and 13857 involving Banco Central de Venezuela, and E.O. 13884 involving the Government of Venezuela.

    Earlier, on January 17, OFAC issued two additional amended Venezuela GLs. GL 5B provides that on or after April 22, all transactions related to the financing for, and other dealings in the Petróleos de Venezuela SA 2020 8.5 Percent Bond that would be prohibited under a certain subsection of E.O. 13835, as amended by E.O. 13857, are authorized. GL 8E, titled “Authorizing Transactions Involving Petróleos de Venezuela, S.A. (PdVSA) Necessary for Maintenance of Operations for Certain Entities in Venezuela,” supersedes GL 8D to extend the expiration date for certain authorizations through April 22.

    Financial Crimes Department of Treasury OFAC Iran Combating the Financing of Terrorism Of Interest to Non-US Persons Sanctions

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  • OFAC clarifies wind-down period for Iran transactions

    Financial Crimes

    On January 16, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the issuance of Iran-related Frequently Asked Question (FAQ) 816, which addresses the question, “Is there a wind-down period for Executive Order [(E.O.)] 13902?” (previously covered in InfoBytes here). According to the FAQ, individuals and entities involved in activities that qualify as sanctionable under E.O. 13902, which include activities dealing with the mining, construction, manufacturing and textiles industries in Iran, should wind down those transactions within 90 days after the E.O. was issued. OFAC stresses that new engagements entered into with the specified Iranian sectors on or after January 10 will not be considered wind-down activities. These new engagements may be sanctionable during the wind-down period, even if the new engagements commence prior to the end of the 90-day wind-down period, which expires on April 9.

    Financial Crimes Department of Treasury Iran Combating the Financing of Terrorism Of Interest to Non-US Persons OFAC Sanctions

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

    Financial Crimes

    On January 14, the U.S. Treasury Department'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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  • Trump administration's Executive Order 13902 authorizes Iranian industry sanctions

    Financial Crimes

    On January 10, the Trump administration issued new sanctions intended to deny the Iranian government revenues from the export of key economic products that may be used to fund its nuclear program.  Specifically, newly-issued Executive Order 13902 authorizes the Secretary of the Treasury, in conjunction with the Secretary of State, to impose asset blocking sanctions on any person determined to operate in the construction, mining, manufacturing or textile sectors of the Iranian economy, or any additional sector as they may jointly determine.  Additionally, EO 13902 authorizes the imposition of certain sanctions on any person determined to have engaged in, or any foreign financial institution determined to have knowingly facilitated, a significant transaction involving one of the aforementioned sectors of the Iranian economy. 

    Financial Crimes Department of Treasury OFAC Sanctions Of Interest to Non-US Persons Combating the Financing of Terrorism Executive Order Iran

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  • OFAC issues Ukraine-/Russia-related FAQs

    Financial Crimes

    On December 20, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC), published a new Ukraine-/Russia-related FAQ. FAQ 815 explains that Section 7503 of the National Defense Authorization Act for Fiscal Year 2020, or the Protecting Europe’s Energy Security Act of 2019 became effective immediately upon the President signing it on December 20. This section—entitled “Imposition of sanctions with respect to provision of certain vessels for the construction of certain Russian energy export pipelines”—specifies that parties who have knowingly provided vessels engaged in deep sea pipe laying for the Nord Stream 2 or Turkstream pipelines must ensure that such vessels cease such activity as soon as safely possible in order to protect human life and “avoid any environmental or other significant damage.”

    Financial Crimes OFAC Department of Treasury Sanctions Ukraine Russia

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  • District Court voids OFAC fine of $2 million

    Financial Crimes

    On December 31, the U.S. District Court for the Northern District of Texas vacated a $2 million civil penalty imposed on a global petroleum company (company) by OFAC for the company’s purported violation of sanctions, ruling that the OFAC regulations did not provide “fair notice” to the company that its actions were prohibited. In May of 2014, OFAC issued sanctions regulations relating to Ukraine. Shortly afterwards, the company and a Russian oil company, with which it had a long-established business relationship, executed several contracts. Although the Russian company was not a blocked entity, its president, who signed the contracts, had been named a specially designated national (SDN). In July of 2014, OFAC issued a penalty notice with a $2 million penalty to the company, alleging that the contracts the company executed with the Russian company violated the Ukraine-related sanctions. The company immediately challenged the penalty notice and fine, asserting that at the time it entered into the subject transactions, the OFAC regulations on Ukraine were not clear, and it interpreted them to allow the transactions. The court agreed with the company, holding that the “text of the regulations does not provide fair notice of its interpretation” in accordance with the Due Process Clause, because “the text [of the regulation] does not ‘fairly address’ whether a U.S. entity receives a service from a SDN when that SDN performs a service enabling the U.S. person to contract with a non-blocked entity. Therefore, the court granted the company’s motion for summary judgment and vacated OFAC’s Penalty Notice.

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

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  • OFAC issues amended Iran-related General License, FAQs

    Financial Crimes

    On December 19, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) issued amended Iran General License (No. K-1), which permits transactions “ordinarily incident and necessary to the maintenance or wind down of transactions” involving certain shipping entities blocked by Executive Order 13846. In conjunction with the amendment, OFAC amended three Iran-related FAQs (FAQ 804, 806, and 807), which discuss whether sanctions on certain shipping tankers apply to their corporate parent and affiliates, the types of activities considered “maintenance” in General License K-1, and the processing of transactions by U.S. financial institutions involving a specific shipping tanker under General License K-1.

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

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  • SEC settles FCPA charges stemming from Malaysian development fund scheme

    Financial Crimes

    On December 16, the SEC announced a resolution with a former executive at a U.S. financial institution to settle allegations that he violated the anti-bribery, internal controls, and books and records provisions of the FCPA by using a third party intermediary to bribe government officials in Malaysia and Abu Dhabi. According to the administrative order, the bribes enabled the financial institution to obtain business from a Malaysian investment development fund, including underwriting several bond deals for which the financial institution allegedly earned roughly $600 million. The SEC further found that the former executive personally received more than $43 million in payments for his alleged role in facilitating the bribery scheme.

    The former executive consented to the order without admitting or denying the factual basis, and consented to being permanently barred from the securities industry. He also agreed to pay disgorgement of $43.7 million, which will be offset and “deemed satisfied” by a forfeiture order in a previously instituted parallel DOJ criminal action where he pleaded guilty to FCPA and money laundering conspiracies. (Previous InfoBytes coverage here.)

    Financial Crimes FCPA Of Interest to Non-US Persons SEC DOJ Bribery

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  • Aircraft maintenance company issued OFAC violation

    Financial Crimes

    On December 12, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) issued a Finding of Violation to a now dissolved Texas-based aircraft maintenance company for alleged violations of the Global Terrorism Sanctions Regulations (GTSR). According to OFAC, in 2016, the company negotiated and entered into a memorandum of understanding (MOU) for aircraft maintenance with an Iranian commercial airline that was on OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List) for providing financial, material, and technological support to the Islamic Revolutionary Guard Corps-Qods Force. Although the company was aware that the airline was on the SDN list, and in fact, had made the MOU contingent upon the airline being removed from the list, they incorrectly believed that Iran General License I (GL I) allowed them to negotiate and enter into the contingent contract. The GL I, however, excluded transactions and dealings with anyone, including the airline, whose property is blocked pursuant to Executive Order 13224. In deciding to issue a Finding of Violation, OFAC considered as mitigating factors that the company had not been issued a penalty or a Finding of Violation in at least five years prior to the alleged violations and that the company was a small company with financial problems that led to its bankruptcy and dissolution. OFAC also considered a number of aggravating factors including that the airline was a “high-profile entity identified on the SDN List,” that the company knew that the airline was on the SDN list, and that the company “engaged in a reckless violation of the law” by negotiating and entering an MOU with the airline. According to OFAC, had it not dissolved, the company would have been subject to “a strong civil monetary penalty.”

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

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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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