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  • FinCEN director discusses CVC compliance requirements

    Financial Crimes

    On November 15, Financial Crimes Enforcement Network (FinCEN) Director Kenneth Blanco delivered remarks at the Chainalysis Blockchain Symposium to discuss, among other things, the agency’s focus on convertible virtual currency (CVC) and remind attendees—particularly financial institutions—of their compliance obligations. Specifically, Blanco emphasized that FinCEN applies a “technology-neutral regulatory framework to any activity that provides the same functionality at the same level of risk, regardless of its label.” As such, money transmissions denominated in CVC, Blanco stated, are money transmissions. Blanco discussed guidance issued by FinCEN in May (previously covered by InfoBytes here) that reminded persons subject to the Bank Secrecy Act (BSA) how FinCEN regulations relating to money services businesses apply to certain business models involving money transmissions denominated in CVC. Blanco also highlighted the agency’s recent collaboration with the CFTC and the SEC to issue joint guidance on digital asset compliance obligations. (Previous InfoBytes coverage here.) Highlights of Blanco’s remarks include (i) suspicious activity reporting related to CVC has increased, including “filings from exchanges identifying potential unregistered, foreign-located money services businesses”; (ii) compliance with the “Funds Travel Rule” is mandatory and applies to CVC; (iii) for anti-money laundering/combating the funding of terrorism purposes, accepting and transmitting activity denominated in stablecoins falls within FinCEN's definition of “money transmission services” under the BSA; and (iv) administrators of stablecoins must register as money services businesses with FinCEN.

    Financial Crimes FinCEN Of Interest to Non-US Persons Fintech Anti-Money Laundering CVC Virtual Currency Bank Secrecy Act Money Service / Money Transmitters

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  • OFAC sanctions ISIS procurement and financial networks

    Financial Crimes

    On November 18, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13224 against two Islamic State of Iraq and Syria (ISIS) procurement agents based in Turkey and four ISIS-linked entities operating in Syria, Turkey, and across the Gulf and Europe for allegedly providing financial and logistical support to ISIS. OFAC also took action against an Afghanistan-based organization, as well as two affiliated senior officials, for “using false charitable pretenses as a cover to facilitate the transfer of funds and support the activities of the terrorist group’s branch in Afghanistan, ISIS – Khorasan.” OFAC noted that these sanctions coincide with the twelfth meeting of the Counter ISIS Finance Group, which coordinates efforts to isolate ISIS from the international financial system and eliminate revenue sources. As a result of the sanctions, all property and interests in property of the designated entities and individuals within U.S. jurisdiction are blocked and must be reported to OFAC. OFAC further 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 Specially Designated Global Terrorists, they may be subject to U.S. correspondent account or payable-through account sanctions.

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

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  • FATF issues an advisory on jurisdictions with AML/CFT deficiencies

    Financial Crimes

    On November 12, the Financial Crimes Enforcement Network (FinCEN) issued an advisory on the Financial Action Task Force (FATF)-identified jurisdictions with “strategic deficiencies” in their anti-money laundering and combating the financing of terrorism (AML/CFT) regimes. As previously covered by InfoBytes, in October, FATF updated the list of jurisdictions to include the Bahamas, Botswana, Cambodia, Ghana, Iceland, Mongolia, Pakistan, Panama, Syria, Trinidad and Tobago, Yemen, and Zimbabwe. At the time, FATF noted that several jurisdictions had not yet been reviewed, and that it “continues to identify additional jurisdictions, on an ongoing basis, that pose a risk to the international financial system.”

    The FinCEN advisory reminds financial institutions of the FATF October updates and emphasizes that financial institutions should consider both the FATF Public Statement and the Improving Global AML/CFT Compliance: On-going Process documents when reviewing due diligence obligations and risk-based policies, procedures, and practices. Moreover, the advisory includes public statements on the status of, and obligations involving, the Democratic People’s Republic of Korea (DPRK) and Iran, in particular. The advisory reminds jurisdictions of the actions the United Nations and the U.S. have taken with respect to sanctioning the DPRK and Iran and emphasizes that financial institutions must comply “with the extensive U.S. restrictions and prohibitions against opening or maintaining any correspondent accounts, directly or indirectly, with foreign banks licensed by the DPRK or Iran.”

    Financial Crimes FATF Anti-Money Laundering Combating the Financing of Terrorism Of Interest to Non-US Persons Customer Due Diligence

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  • Jury convicts former French power company executive of multiple FCPA, money laundering and conspiracy offenses

    Financial Crimes

    On November 8, the DOJ announced that a jury had returned a guilty verdict against a British national and former French power and transportation company executive who was accused of bribing Indonesian officials to secure a power contract. Following a two-week trial, the jury convicted the former executive on six counts of violating the FCPA, three counts of money laundering, and two counts of conspiracy. As previously covered by InfoBytes, while the French company pleaded guilty in 2014, and three other executives—each of whom worked for the French company’s U.S.-based subsidiary—entered guilty pleas, the trial for the former executive (originally indicted in 2013) was delayed as he challenged the reach of the FCPA. The U.S. Court of Appeals for the Second Circuit held in 2018 that a non-resident foreign national lacking sufficient ties to a U.S. entity could not be charged with conspiring or aiding and abetting something that he could not be directly charged with, because he was “not an agent, employee, officer, director, or shareholder of an American issuer or domestic concern” within the scope of the FCPA’s jurisdictional provision and had not himself committed a crime inside the U.S. The 2nd Circuit also determined, however, that the former executive could still be charged with FCPA offenses, as the DOJ had signaled its intention to prove he “was an agent of a domestic concern,” which would place him “squarely within the terms of the statute.”

    According to the DOJ’s press release, it presented evidence at the trial to show that the former executive violated the FCPA by overseeing and supporting the U.S.-based subsidiary’s efforts to win the contract with the bribery scheme, including pressing the U.S. subsidiary to structure the payment terms to a consultant used as an intermediary in the scheme to “get the right influence.” The former executive and his co-conspirators allegedly helped arrange the payment of bribes to Indonesian officials by assisting in the U.S. subsidiary’s retention of two consultants, purportedly to provide legitimate consulting services on behalf of the subsidiary but with the intention of employing them to pay and conceal the bribes. The DOJ observed in its release that the former executive and his co-conspirators were successful in securing the contract from Indonesia’s state-owned and state-controlled electricity company and “subsequently made payments to the consultants for the purpose of bribing the Indonesian officials.”

    Sentencing is scheduled for January 31, 2020 in the U.S. District Court for the District of Connecticut.

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

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  • FinCEN renews GTOs covering 12 metropolitan areas; legal entities that are U.S. publicly-traded companies not required to report

    Financial Crimes

    On November 8, the Financial Crimes Enforcement Network (FinCEN) announced the renewal of its Geographic Targeting Order (GTO), which requires 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 12 major metropolitan areas. While the purchase amount threshold for the beneficial ownership reporting requirement remains set at $300,000 for residential real estate purchased in the 12 covered areas, FinCEN modified the renewed GTO to note that it “will not require reporting for purchases made by legal entities that are U.S. publicly-traded companies. Real estate purchases by such entities are identifiable through other business filings.”

    The renewed GTO takes effect November 12 and covers 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 announces settlement with aviation investment company for sanctions violations

    Financial Crimes

    On November 7, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $210,600 civil settlement with a U.S. aviation investment company to resolve 12 alleged violations of the Sudanese Sanctions Regulations (SSR), which prohibit U.S. persons from dealing in property and interests in property of the Government of Sudan. The settlement addressed allegations that the company leased three aircraft engines to a United Arab Emirates-incorporated entity, which then subleased the engines to a Ukrainian airline that had the engines installed on an aircraft that was “wet leased” to a Sudanese airline. According to OFAC, the company violated SSR regulations because OFAC’s List of Specially Designated Nationals and Blocked Persons identified the Sudanese airline as meeting the definition of “Government of Sudan” at the time of the alleged transactions.

    In arriving at the settlement amount, OFAC considered various mitigating factors, including that (i) company personnel were not aware of the conduct leading to the alleged violations; (ii) OFAC has not issued a violation against the company in the five years preceding the earliest date of the transactions at issue; and (iii) the company cooperated with the investigation. OFAC also noted that the company undertook several remedial measures in response to the alleged violations, including implementing additional compliance processes such as improving its “Know-Your-Customer screen procedures” and employee training, and obtaining “U.S. law export compliance certificates from lessees and sublessees.”

    OFAC also considered various aggravating factors, including that the violations harmed U.S. sanctions program objectives, and that the company failed to properly monitor the precise whereabouts of the engines during the life of the leases.

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

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  • OFAC sanctions additional Venezuelan government officials, amends and adds general licenses

    Financial Crimes

    On November 5, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against five current Venezuelan government officials. The sanctions—issued pursuant to Executive Order (E.O.) 13884, which prevents all property and property interests of the Government of Venezuela existing within the U.S. or in the possession of a U.S. person from being transferred, paid, exported, withdrawn, or otherwise dealt in (previous InfoBytes coverage here)—reflects Treasury’s continued efforts against persons who offer support to the Maduro regime.

    In conjunction with the sanctions, OFAC also issued amended Venezuelan General License (GL) 34A, which supersedes and replaces GL 34, and authorizes transactions with certain Venezuelan government individuals blocked by E.O. 13884. OFAC also issued GL 35, titled “Authorizing Certain Administrative Transactions with the Government of Venezuela,” which permits certain transactions “necessary and ordinarily incident” to day-to-day operations. New and amended FAQs provide additional guidance.

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

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

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  • OFAC extends two Ukraine-related general licenses

    Financial Crimes

    On November 1, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) announced it extended the expiration date to March 31, 2020 of two Ukraine-related general licenses (GLs) by issuing GL 13M, which supersedes GL 13L, and GL 15G, which supersedes GL 15F. OFAC also noted that GL 15G includes an expanded authorization for certain safety-related activity and a new authorization for certain activities to comply with environmental regulatory requirements.

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

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

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  • Terrorist Financing Targeting Center designates network supporting IRGC and Hizballah

    Financial Crimes

    On October 30, the U.S. Treasury Department announced that the seven member nations of the Terrorist Financing Targeting Center (TFTC) have jointly designated 25 targets for allegedly supporting Iran’s Islamic Revolutionary Guard Corps and Hizballah, as part of Treasury’s efforts to “bolster the fight against terrorist financing.” The targets include 21 entities that comprise a “vast network of businesses providing financial support to the Basij Resistance Force” through the use of shell companies and other measures within Iran’s automotive, mining, metals, and banking industries, along with four Hizballah-affiliated individuals allegedly involved in related financial activities in Iraq. The seven members—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates, and the U.S.—coordinate disruptive actions, share financial intelligence information, and enhance member state capacity in order to target activities posing national security threats to TFTC members, including the disruption of financial networks used to fund terrorism.

    Visit here for additional InfoBytes coverage on actions involving Iran and Hizballah.

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

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  • OFAC amends Venezuela-related general license, delays effective date

    Financial Crimes

    On October 24, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued amended Venezuela General License (GL) 5A to highlight a delay in effectiveness and clarify that prior to January 22, 2020, certain transactions related to the financing for, and other dealings in the Petróleos de Venezuela SA 2020 8.5 Percent Bond are prohibited under Executive Orders 13835 and 13857, unless specifically authorized by OFAC. OFAC also published a new FAQ to provide additional guidance on the reason for the issues of GL 5A.

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

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

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