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  • CEO and director of investment firm convicted of conspiracy to bribe Haitian officials

    Financial Crimes

    After a two-week jury trial in the United States District Court for the District of Massachusetts, the CEO of an investment firm and one of its directors were convicted of conspiracy to violate the FCPA and the Travel Act. Joseph Baptiste, a retired U.S. Army Colonel, was also found guilty of violating the Travel Act and conspiracy to commit money laundering. For prior coverage of the charges against Baptiste and CEO Roger Richard Boncy, please see here.

    The evidence that federal prosecutors presented against Boncy and Baptiste included intercepted phone calls in which they discussed their plan to bribe Haitian officials “at all levels of government” in order to obtain governmental approval of a proposed $84 million project to develop a port in northwestern Haiti. In a recorded conversation with undercover agents posing as investors, Boncy and Baptiste allegedly solicited funds and told agents that the funds would be used to bribe the aide of a high-level elected official in Haiti. To conceal the bribes, Boncy and Baptiste allegedly said that they would funnel the agents’ funds through a U.S.-based non-profit organization that Baptiste controlled, which purported to sponsor social programs for Haitian residents. 

    The case against Boncy and Baptiste began with a sting operation conducted by the FBI in 2017. Boncy and Baptiste are scheduled to be sentenced by Judge Allison D. Burroughs on September 12, 2019.

    Financial Crimes FCPA Bribery Of Interest to Non-US Persons

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  • OFAC amends Venezuela-related general licenses; temporarily extends two Ukraine-related general licenses

    Financial Crimes

    On June 26, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced General License (GL) 13B, which supersedes and replaces GL 13A. GL 13B expires on October 25. Additionally, OFAC extended the expiration date to November 8 of two Ukraine-related GLs by issuing GL 13L, which supersedes GL 13K, and GL 15F, which supersedes GL 15 E. OFAC also noted that GL 15F includes a new authorization for certain safety-related activity.

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

    Financial Crimes Department of Treasury OFAC Sanctions Venezuela Ukraine

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  • FATF establishes binding measures on virtual currency regulation

    Financial Crimes

    On June 21, the Secretary of the U.S. Department of the Treasury issued a statement confirming that FATF members agreed to regulate and supervise virtual asset financial activities and related service providers. On the same day, FATF issued a statement noting that it “adopted and issued an Interpretive Note to Recommendation 15 on New Technologies (INR. 15) that further clarifies the FATF’s previous amendments to the international Standards relating to virtual assets and describes how countries and obliged entities must comply with the relevant FATF Recommendations to prevent the misuse of virtual assets for money laundering and terrorist financing and the financing of proliferation.” As previously covered by InfoBytes, in October 2018, FATF urged all countries to take measures to prevent virtual assets and cryptocurrencies from being used to finance crime and terrorism and updated The FATF Recommendations to add new definitions for “virtual assets” and “virtual asset service providers” and to clarify how the recommendations apply to financial activities involving virtual assets and cryptocurrencies.

    According to FATF announcement, INR. 15 establishes “binding measures,” which require countries to, among other things, (i) assess and mitigate risks associated with virtual asset activities and service providers; (ii) license or register service providers and subject them to supervision; (iii) implement sanctions and other enforcement measures when service providers fail to comply with an anti-money laundering/combating the financing of terrorism (AML/CFT) obligation; and (iv) ensure that service providers implement the full range of AML/CFT preventive measures under the FATF Recommendations, including customer due diligence, record-keeping, suspicious transaction reporting, and screening all transactions for compliance with targeted financial sanctions.

    Financial Crimes Department of Treasury Of Interest to Non-US Persons FATF Fintech Virtual Currency Cryptocurrency

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  • President Trump imposes new sanctions on Iran; OFAC announces designations

    Financial Crimes

    On June 24, President Trump issued Executive Order (E.O.) 13876, “Imposing Sanctions with Respect to Iran,” which: (i) imposes sanctions on Iran’s Supreme Leader’s Office (SLO); and (ii) targets persons appointed to certain official or other positions by the Supreme Leader and/or his office for allegedly taking actions to “destabilize the Middle East, promote international terrorism, and advance Iran’s ballistic missile program, and Iran’s irresponsible and provocative actions in and over international waters.” Among other things, E.O. 13876 authorizes the Secretaries of Treasury and State to impose sanctions on a foreign financial institution if it is determined that it has knowingly conducted or facilitated any significant financial transactions in these sectors, or for or on behalf of a blocked person. These sanctions would prohibit the opening of, or impose strict conditions on maintaining, a correspondent account or payable-through account by such foreign financial institutions in the United States.

    On the same day, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated eight senior commanders of the Islamic Revolutionary Guard Corps (IRGC) pursuant to E.O. 13224, which “provides a means by which to disrupt the financial support network for terrorists and terrorist organizations.” According to OFAC, the sanctions are meant to reinforce the President’s newly issued E.O. 13876. As a result of the designations, “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 persons who engage in transactions with the designated individuals and entities may be exposed to sanctions themselves or subject to enforcement action.

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

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  • Japanese bank pays $33 million to settle NYDFS claims of weak BSA/AML controls

    State Issues

    On June 24, the New York Department of Financial Services (NYDFS), together with the New York Attorney General, announced a $33 million settlement with a Japanese bank resolving allegations the bank’s internal controls—specifically, its anti-money laundering (AML), Bank Secrecy Act (BSA), and Office of Foreign Assets Control (OFAC) sanctions compliance programs—at its New York Branch were “systematically deficient” between November 2014 and November 2018. This allegedly resulted in violations of state and federal laws and regulations, as well as two previous NYDFS consent orders from 2013 and 2014. The settlement resolves an action that was commenced by the bank against NYDFS in connection with a 2017 application with the OCC to convert its state-licensed branches in New York, Illinois, and California and its state-licensed agency offices in Texas to federally licensed branches and agency offices. The action sought to block a NYDFS order that would keep the bank under its supervisory purview notwithstanding the OCC’s granting of the federal charter. The settlement indicates that neither NYDFS, NYAG, or the bank admit any wrongdoing, but have agreed to dismiss all outstanding claims, upon the bank’s monetary payment. The settlement states that NYDFS releases the bank of any further obligations related to the previous consent orders and notes that it “will not attempt to exercise any visitorial power or other supervisory, regulatory, or enforcement authority over [the bank] or its branches or agencies.”

    State Issues NYDFS State Attorney General Bank Secrecy Act Anti-Money Laundering Financial Crimes Consent Order Supervision OCC

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  • Multinational retailer settles FCPA claims by DOJ and SEC for $282 million

    Financial Crimes

    On June 20, the DOJ announced a $137 million settlement with a U.S.-based multinational retailer (the Retailer) and its wholly owned Brazilian subsidiary (the Subsidiary) to resolve claims they violated the FCPA. The Retailer entered into a non-prosecution agreement, while the Subsidiary pleaded guilty. On the same day, the SEC issued an administrative order requiring the Retailer to pay $144 million in disgorgement and interest. The SEC stated that the Retailer failed to “operate a sufficient anti-corruption compliance program for more than a decade as the retailer experienced rapid international growth.” In total, the Retailer will pay more than $282 million to settle the charges.  

    According to the DOJ announcement, from 2001 to 2011, the Retailer failed to implement and maintain internal accounting controls related to anti-corruption, and senior officials were aware of the failures. The failures allegedly allowed the Retailer’s foreign subsidiaries in Mexico, India, Brazil and China to hire third-party intermediaries (TPIs) “without establishing sufficient controls to prevent those TPIs from making improper payments to government officials in order to obtain store permits and licenses,” which, in turn, allowed the foreign subsidiaries to open stores faster, earning the company additional profits.  In its non-prosecution agreement with the DOJ, in addition to the monetary penalty, the Retailer agreed to: (i) appoint an independent compliance monitor for a two-year term; and (ii) continue to cooperate with the DOJ’s investigation. The monetary penalty amount was calculated by reducing by 25 percent the bottom of the U.S. Sentencing Guidelines fine range for the portion of the penalty applicable to conduct in Brazil, China, and India, and reducing by 20 percent the bottom of the U.S. Sentencing Guidelines fine range for the portion of the penalty applicable to conduct in Mexico.

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

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  • OFAC targets Russian facilitators of illicit North Korean transactions

    Financial Crimes

    On June 19, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced its decision to sanction a Russian financial entity, pursuant to Executive Order 13382, for allegedly “having provided, or attempted to provide, financial, material, technological, or other support for, or goods or services” on behalf of an entity that is owned and controlled by North Korea’s primary foreign exchange bank. According to OFAC, since at least 2017 and continuing through 2018, the Russian entity has provided multiple accounts to the North Korean entity, which has “enabled North Korea to circumvent U.S. and UN sanctions to gain access to the global financial system in order to generate revenue for the Kim regime’s nuclear program.” Pursuant to OFAC’s sanctions, all property and interests in property of the designated persons within U.S. jurisdiction must be blocked and reported to OFAC. OFAC notes that its regulations “generally prohibit” U.S. persons from participating in transactions with these individuals and entities.

    Financial Crimes Russia North Korea Sanctions Department of Treasury OFAC

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  • OFAC sanctions entity and two individuals for trafficking weapons to IRGC-QF and facilitating sanctions evasion

    Financial Crimes

    On June 12, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on a resource trading company and its two Iraqi associates, for trafficking “hundreds of millions of dollars’ worth of weapons” to the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and facilitating access to the Iraqi financial system to evade sanctions.

    According to OFAC, the sanctions were issued pursuant to Executive Order 13224, which “provides a means by which to disrupt the financial support network for terrorists and terrorist organizations.” As a result, “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 persons who engage in transactions with the designated individuals and entities may be exposed to sanctions themselves or subject to enforcement action. Moreover, OFAC warned foreign financial institutions that, unless an exemption applies, they may be subject to U.S. sanctions if they knowingly facilitate significant transactions for any of the designed individuals or entities.

    Financial Crimes Department of Treasury OFAC Executive Order Sanctions Venezuela

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  • OFAC adds Syrian developer and related businesses to Specially Designated Nationals List

    Financial Crimes

    On June 11, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced additions to the Specially Designated Nationals List pursuant to Executive Orders (E.O.) 13573 and 13582. OFAC’s additions to the list include 13 entities and three individuals associated with an international network benefiting the Assad regime in Syria. According to OFAC, a Syrian business developer and his associated businesses have “leveraged the atrocities of the Syrian conflict into a profit-generating enterprise.” As a result, “all property and interests in property of these individuals and entities that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC.”

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

    Financial Crimes Syria OFAC Sanctions Department of Treasury

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  • OFAC settles with global money services business for alleged sanctions violations

    Financial Crimes

    On June 7, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced an approximately $400,000 settlement with a global money services business for alleged violations of the Global Terrorism Sanctions Regulations (GTSR). The settlement resolves potential civil liability for the money services business' processing of certain transactions totaling roughly $1.275 million. According to OFAC, the transactions were paid out to third-party, non-designated beneficiaries who collected their remittances from a company in Gambia that OFAC designated pursuant to the GTSR in December 2010.  Notwithstanding this designation, the money services business continued processing payments to the company until March 2015. In arriving at the settlement amount, OFAC considered various mitigating factors, including the fact that the money services business voluntarily self-disclosed the issue to OFAC. OFAC also considered various aggravating factors, including that the money services business could have identified that the company was a sanctions target with the exercise of reasonable due diligence.

     

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

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