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OFAC issues extension of Ukraine-related General Licenses
On November 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the issuance of Ukraine-related General Licenses (GL) 13G, 14C, 15B, and 16C, which amend previous licenses related to permissible wind-down transactions that otherwise would be prohibited by Ukraine-Related Sanctions Regulations with respect to the subject entities. OFAC extended the expiration dates of the licenses from December 12 to January 7, 2019, while reviewing the sanctioned entities’ proposed “substantial corporate governance changes” that may result in significant changes in their control.
GL 13G supersedes GL 13F and authorizes, among other things, activities “ordinarily incident and necessary” to (i) divest or transfer debt, equity, or other holdings in the specified blocked entities to a non-U.S. person; or (ii) facilitate the transfers of debt, equity, or other holdings in those entities by a non-U.S. person to another non-U.S. person. GL 14C, which supersedes GL 14B, relates to specific wind-down activities involving a Russian aluminum producer sanctioned last April as previously covered by InfoBytes here. GL 15B and GL 16C supersede GL 15A and GL 16B, respectively, and authorize permissible activities relating to the maintenance or wind-down of operations, contracts, and agreements with designated entities and subsidiaries that were effective prior to April 6.
Visit here for additional InfoBytes coverage on Ukraine sanctions.
OFAC sanctions target persons supporting Russia’s “malign activity” in Crimea and eastern Ukraine
On November 8, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced its decision to sanction an additional three individuals and nine entities, pursuant to the Countering America’s Adversaries Through Sanctions Act of 2017 (CAATSA) and Executive Orders (E.O.) 13685 and 13661, for supporting Russia’s occupation of Crimea and parts of eastern Ukraine and its continued “malign activity and destabilizing behavior.” According to OFAC, two of the individuals and one of the entities placed on the Specially Designated Nationals and Blocked Persons List (SDN List) allegedly engaged in serious human rights abuses in “territories forcibly occupied or otherwise controlled by Russia” under the Support for the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act of 2014, as amended by CAATSA Section 228. Additionally, pursuant to E.O. 13685, OFAC imposed sanctions on eight entities and one individual allegedly responsible for helping Russia advance its interests by operating in the Crimea region of Ukraine. OFAC further noted that one of the eight entities is also designated for being owned or controlled by, directly or indirectly, a sanctioned Russian bank and a Russian national whose property and interests in property are blocked pursuant to E.O. 13661. As a result, all property and interests in property belonging to the identified individuals and entities subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from entering into transactions with them.
Visit here for additional InfoBytes coverage on Russia sanctions.
Money services business agrees to extend DOJ deferred prosecution agreement; settles FTC order breach
On November 8, the DOJ announced that a money services business has agreed to forfeit $125 million and extend its deferred prosecution agreement (DPA) due to deficiencies in its anti-fraud and anti-money laundering (AML) programs. The global settlement also resolves contempt allegations brought by the FTC related to the violation of a 2009 FTC order, which mandated that the company implement a comprehensive fraud prevention program.
The DOJ filed charges against the company in 2012 for allegedly “willfully failing to maintain an effective AML program and aiding and abetting wire fraud,” including scams targeting the elderly and other vulnerable groups that involved victims sending funds through the company’s money transfer system. In connection with the DOJ’s and company’s joint motion to extend and amend the DPA, the DOJ announced that the company: (i) experienced significant weaknesses in its AML and anti-fraud program; (ii) inadequately disclosed these weaknesses to the government; and (iii) failed to complete all of the DPA’s required enhanced compliance undertakings, resulting in the processing of at least $125 million additional consumer fraud transactions between April 2015 and October 2016. Under the amendment to and extension of the DPA—in effect until May 2021—the company has agreed to, among other things, comply with additional enhanced anti-fraud and AML compliance obligations.
In a related matter, the FTC filed a motion for compensatory relief and modified order for permanent injunction, which alleges that the company failed to adopt and implement a comprehensive fraud prevention program mandated by the 2009 order. The motion indicates that the company has agreed to the entry of an order modifying the 2009 Order to include a broader range of relief, including a requirement to interdict (or block) the transfers of known fraudsters and provide refunds for non-compliance with certain policies or procedures.
U.S. financial institution acknowledges investigations related to Malaysian development fund scheme
On November 2, a New York-based financial institution disclosed in its Form 10-Q filing that it had received subpoenas and requests for documents and information from multiple government agencies as part of investigations relating to matters involving a Malaysian development fund. The filing acknowledged the indictments and guilty plea of a former participating managing director of the financial institution, and a former managing director, which indicated that they “knowingly and willfully circumvented” the financial institution’s internal accounting controls. The filing further stated that the financial institution is cooperating with the DOJ and other investigations relating to the company.
FFIEC issues joint statement on OFAC Cyber-Related Sanctions Program
On November 5, the Federal Financial Institutions Examination Council (FFIEC) members issued a joint statement alerting financial institutions to the potential impact that the U.S. Treasury Department’s Office of Foreign Assets Control’s (OFAC) recent actions under its Cyber-Related Sanctions Program may have on financial institutions’ risk management programs. OFAC implemented the Cyber-Related Sanctions Program in response to Executive Order 13694 to address individuals and entities that threaten national security, foreign policy, and the economy of the U.S. by malicious cyber-enabled activities. FFIEC’s press release announcing the joint statement references OFAC’s June action against five Russian entities and three Russian individuals who, through “malign and destabilizing cyber activities,” provided material and technological support to Russia’s Federal Security Service (previously covered by InfoBytes here), noting that these entities may offer services to financial institutions operating in the U.S.
The joint statement reminds financial institutions to ensure that their compliance and risk management processes address possible interactions with an OFAC sanctioned entity. The statement notes that continued use of products or services from a sanctioned entity may cause the financial institution to violate the OFAC sanctions. Additionally, use of software or technical services from a sanctioned entity may increase a financial institution’s cybersecurity risk. The statement encourages financial institutions to take appropriate corrective action, as well as to ensure their third-party service providers comply with OFAC’s requirements.
The OCC also released Bulletin 2018-40, which corresponds with the FFIEC’s joint statement.
OFAC announces several actions related to the “snap-back” of sanctions on Iran, effective November 5
On November 5, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced several actions in conjunction with the full re-imposition of sanctions on Iran effective immediately. As previously covered by InfoBytes, President Trump announced his decision to withdraw from the Joint Comprehensive Plan of Action (JCPOA) on May 8. Following the end of the wind-down period, which authorized certain activities through November 4, OFAC issued FAQs related to the “snap-back” of Iranian sanctions. OFAC also updated its Specially Designated Nationals (SDN) list to add over 700 persons, including persons previously removed from the SDN list during the U.S.’s participation in the JCPOA and persons previously identified on the Executive Order 13599 list. OFAC additionally provided a technical notice containing details related to the SDN list changes.
OFAC’s announcement also refers to an amendment effective November 5 to the Iranian Transactions and Sanctions Regulations (ITSR), in connection with President Trump’s decision to cease U.S. participation in the JCPOA. The newly issued amendment reflects sanctions re-imposed by Executive Order 13846, as covered by InfoBytes here, in addition to changes to certain sanctions lists maintained by OFAC. OFAC also announced it is “amending an existing general license in the ITSR to authorize U.S. persons to sell personal property in Iran and transfer the proceeds to the [U.S.],” if the personal property was either: (i) acquired before the individual became a U.S. person; or (ii) inherited from persons in Iran.
See here for continuing InfoBytes coverage on Iranian sanctions.
President Trump issues new Venezuela Executive Order targeting gold sector; OFAC publishes related FAQs
On November 1, President Trump issued Executive Order 13850 (E.O. 13850) authorizing the imposition of sanctions on persons who operate in Venezuela's gold sector “or in any other sector of the Venezuelan economy as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State.” The sanctions come in response to the actions of Venezuelan President Maduro’s regime and associated persons in allegedly “plunder[ing] Venezuela's wealth for their own corrupt purposes.” Among other things, the sanctions specifically block the acquisition or retention of property and interests in the United States by persons who “operate in the gold sector of the Venezuelan economy” or “have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any activity or transaction” involving deceptive practices or corruption in conjunction with the Venezuelan government.
The same day, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) released a set of FAQs connected to the issuance of E.O. 13850, stating that it “expects to use its discretion to target in particular those who operate corruptly in the gold or other identified sectors of the Venezuela economy, and not those who are operating legitimately in such sectors.”
E.O. 13850 is issued in conjunction with E.O.s 13692, 13808, 13827, and 13835. See here for continuing InfoBytes coverage of Venezuelan actions and E.O.s.
Oil company executives found guilty in U.K. of money laundering
According to the U.K Serious Fraud Office (SFO), the former CEO and CFO of an oil and gas exploration and production company were sentenced in the UK on October 29 for their parts in a kickback scheme in Nigeria. The former CEO was sentenced to up to six years in prison, and the CFO to up to five years. The executives were found to have recommended that the company enter a $300 million deal with an oil field partner in Nigeria without telling the company’s board that they would personally receive 15 percent of the deal’s value from the partner. They then laundered more than $45 million, using some of the proceeds to buy luxury Caribbean real estate. The SFO thanked the U.S. DOJ for its assistance with the investigation.
U.S. announces charges and guilty plea stemming from Malaysian development fund scheme
The DOJ unsealed two indictments and a guilty plea related to the sprawling Malaysian development fund fraud on November 1 in the Eastern District of New York. A Malaysian financier and a former banker were charged with conspiring to launder billions of dollars embezzled from the investment development fund, and conspiracy to violate the anti-bribery provisions of the FCPA. The former banker was also charged with conspiring to violate the FCPA by circumventing the internal accounting controls of a U.S. financial institution, which underwrote $6 billion in bonds issued by the fund. He was a managing director at the bank. Another former banker at the same financial institution, pleaded guilty to the same charges. He has been ordered to forfeit $43.7 million.
These three and others allegedly conspired to bribe Malaysian and Abu Dhabi officials to obtain business for the financial institution, including the fund's bond deals. They also allegedly conspired to launder the proceeds through purchasing luxury New York real estate, artwork, and financing major Hollywood films, such as The Wolf of Wall Street.
For prior coverage of the fund's scheme, please see here.
Former Venezuelan state-owned oil company procurement officer pleads guilty
On October 30, a Texas businessman, who was a former procurement officer for PDVSA, pleaded guilty to conspiracy to launder the bribe payments he and his co-conspirators at PDVSA received for directing PDVSA business to a Miami-based supplier. The scheme involved false invoices, false e-mail addresses, and shell companies with a Swiss bank account.
For prior coverage of the company's actions, please see here.