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  • FinCEN seeks comments on updating AML/CFT regime

    Agency Rule-Making & Guidance

    On December 14, the Financial Crimes Enforcement Network (FinCEN) issued a request for information (RFI) in the Federal Register seeking comments from regulated entities; state, local, and Tribal governments; law enforcement; regulators; and other consumers of Bank Secrecy Act (BSA) data, on ways to redevelop the anti-money laundering and countering the financing of terrorism (AML/CFT) regime in the U.S. According to the announcement, FinCEN intends to collect comments regarding ways to modernize risk-based AML/CFT regulations and guidance so that they protect U.S. national security in a cost-effective and efficient manner. Additionally, the RFI “supports FinCEN’s efforts to conduct a formal review of BSA regulations and related guidance, which is required by Section 6216 of the Anti-Money Laundering Act of 2020.”

    As previously covered by InfoBytes, the Anti-Money Laundering Act of 2020 made numerous changes to the BSA, including amendments to the definition of “financial institution” to include a “person engaged in the trade of antiquities, including an advisor, consultant, or any other person who engages as a business in the solicitation or the sale of antiquities.” According to FinCEN, this “review will help FinCEN ensure that BSA regulations and guidance continue to safeguard the U.S. financial system from threats to national security posed by various forms of financial crime, and that BSA reporting and recordkeeping requirements continue to be highly useful in countering financial crime.” This review will also permit the agency “to identify regulations and guidance that are outdated, redundant, or otherwise do not promote a risk-based AML/CFT compliance regime for financial institutions, or that do not conform with U.S. commitments to meet international AML/CFT standards.” The findings of the review will be reported to Congress, and will include administrative and legislative recommendations. Comments are due by February 14, 2022.

    Agency Rule-Making & Guidance FinCEN Bank Secrecy Act Combating the Financing of Terrorism Financial Crimes Anti-Money Laundering Anti-Money Laundering Act of 2020 Federal Register

  • OFAC announces human rights abuse sanctions

    Financial Crimes

    On December 10, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13818 against 15 individuals and 10 entities under the Global Magnitsky Human Rights Accountability Act. According to OFAC, the sanctioned individuals and entities are connected to human rights abuse and repression in several countries. The same day, OFAC announced that it imposed investment restrictions on one company in connection with the surveillance technology sector of the People’s Republic of China’s economy, highlighting the human rights abuses allowed through technology. OFAC also noted that the actions are taken on International Human Rights Day, which marks the day the United Nations General Assembly adopted the Universal Declaration of Human Rights in 1948. 

    As a result of the sanctions, all property and interests in property belonging to the sanctioned entities subject to U.S. jurisdiction are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” OFAC noted that its regulations generally prohibit U.S. persons from participating in transactions with these persons, which include “the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person or the receipt of any contribution or provision of funds, goods or services from any such person.”

    Financial Crimes OFAC Department of Treasury Of Interest to Non-US Persons OFAC Sanctions OFAC Designations SDN List China

  • OFAC sanctions corruption networks connected to transnational organized crime

    Financial Crimes

    On December 8, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against 16 individuals and 24 entities across several countries in Europe and the Western Hemisphere under the Global Magnitsky Human Rights Accountability Act, which “targets perpetrators of corruption and serious human rights abuse.” These designations follow actions announced last week targeting corruption in the Democratic Republic of Congo as well as persons that contribute to repression and the undermining of democracy around the world (covered by InfoBytes here and here). OFAC also highlighted the recently released United States Strategy on Countering Corruption, which outlines a whole-of-government approach to elevating the fight against corruption, and places particular “emphasis on the transnational dimensions of the challenges posed by corruption, including by recognizing the ways in which corrupt actors have used the U.S. financial system and other rule-of-law based systems to launder their ill-gotten gains.” (Covered by InfoBytes here.) Organized crime and corruption, which are often linked, OFAC warned, undermine the integrity of the international financial system.

    As a result of the sanctions, all property and interests in property belonging to the sanctioned persons subject to U.S. jurisdiction are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” OFAC noted that U.S. persons are prohibited from participating in transactions with these persons, which includes “the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person or the receipt of any contribution or provision of funds, goods or services from any such person.”

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

  • Biden outlines anti-corruption strategy

    Federal Issues

    On December 6, the Biden administration released the United States Strategy on Countering Corruption (Strategy) in response to President Biden’s June Memorandum on Establishing the Fight Against Corruption as a Core United States National Security Interest, which designated the “fight against corruption” as a top priority in preserving national security in the United States. (Covered by InfoBytes here.) According to a fact sheet issued the same day, the comprehensive Strategy is intended to “improve the U.S. Government’s ability to prevent corruption, more effectively combat illicit finance, better hold corrupt actors accountable, and strengthen the capacity of activists, investigative journalists, and others on the front lines of exposing corrupt acts.” To achieve this, the Strategy presents a “whole-of-government approach to elevating the fight against corruption,” including by taking expanded steps to reduce corrupt actors from accessing the U.S. and international financial system to hide assets and lauder proceeds derived from corrupt acts. The Strategy, which discusses enforcement and rulemaking under the FCPA, Bank Secrecy Act, and Corporate Transparency Act, among other statutes, is divided into the following five pillars:

    • “Modernizing, coordinating, and resourcing U.S. Government efforts to fight corruption,” including “prioritizing intelligence collection and analysis on corrupt actors and their networks.”
    • “Curbing illicit finance” by, among other things, “[i]ssuing beneficial ownership transparency regulations” to identify bad actors and reveal when ill-gotten cash or criminal proceeds is hidden in real estate transactions, as well as cooperating with other counties to strengthen anti-money laundering regimes to increase transparency in the international financial system.
    • “Holding corrupt actors accountable” by engaging with partner countries to detect and disrupt foreign bribery, developing “a kleptocracy asset recovery rewards program that will enhance the U.S. Government’s ability to identify and recover stolen assets linked to foreign government corruption that are held at U.S. financial institutions,” and working with the private sector to “encourage[e] the adoption and enforcement of anti-corruption compliance programs by U.S. and international companies.”
    • “Preserving and strengthening the multilateral anti-corruption architecture,” including working to implement robust transparency and anti-corruption measures with the G7 and G20 and “target[ing] corruption in finance, acquisition, and human resource functions.”
    • “Improving diplomatic engagement and leveraging foreign assistance resources to achieve anti-corruption policy goals” by, among other things, safeguarding government assistance funds from corrupt actors, “[e]xpanding anti-corruption focused U.S. assistance, and monitoring the efficacy of this assistance,” allowing for flexibility within “anti-corruption initiatives and broader assistance efforts to respond to unexpected situations worldwide,” and improving support for independent audit and oversight institutions.

    The Strategy will require federal departments and agencies to submit annual reports to President Biden on progress made to achieve its objectives.

    Federal Issues Biden Financial Crimes Corruption Agency Rule-Making & Guidance Of Interest to Non-US Persons Anti-Money Laundering Beneficial Ownership Bribery FCPA Bank Secrecy Act Corporate Transparency Act

  • OFAC sanctions persons linked to Democratic Republic of Congo

    Financial Crimes

    On December 6, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13818 against an individual and 12 associated entities in the Democratic Republic of the Congo and Gibraltar under the Global Magnitsky Human Rights Accountability Act. All of the designated persons have allegedly provided support for a previously sanctioned billionaire, OFAC stated, adding that these measures build upon Treasury’s commitment to “supporting the Democratic Republic of the Congo’s anti-corruption efforts by going after those that abuse the political system for economic gain and unfairly profit from the Congolese state.” As a result of the sanctions, all property and interests in property belonging to the sanctioned persons, and “any entities that are owned, directly or indirectly, 50 percent or more” by them that are subject to U.S. jurisdiction are blocked and must be reported to OFAC. OFAC noted that its regulations generally prohibit U.S. persons from participating in transactions with these individual and entities unless authorized by a general or specific license. This includes “the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person or the receipt of any contribution or provision of funds, goods, or services from any such person.”

    Financial Crimes OFAC Department of Treasury Of Interest to Non-US Persons OFAC Sanctions OFAC Designations Congo SDN List

  • OFAC and State Dept. announce additional corruption, human rights abuse sanctions

    Financial Crimes

    On December 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13818 targeting 15 individuals and entities connected to corruption and serious human rights abuse in several countries across Central America, Africa, and Europe under the Global Magnitsky Human Rights Accountability Act. OFAC noted that the designations were announced on International Anti-Corruption Day to “reinforce the priority placed upon curbing corruption through strategic and regulatory action at the Summit for Democracy.” As a result of the sanctions, all property and interests in property belonging to the sanctioned entities subject to U.S. jurisdiction are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” OFAC noted that its regulations generally prohibit U.S. persons from participating in transactions with these persons, which include “the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person or the receipt of any contribution or provision of funds, goods or services from any such person.” In a complementary action, the U.S. Department of State also announced visa restrictions under Section 7031(c) of the Department of State, Foreign Operations, and Related Programs Appropriations Act, which targeted several corrupt officials and their immediate family members, making them ineligible to enter the U.S. 

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

  • FINRA fines financial firms $2.25 million for alleged improper storage of customer data

    Financial Crimes

    On December 6, the Financial Industry Regulatory Authority (FINRA) entered into a Letter of Acceptance, Waiver, and Consent (AWC), which requires two units of a national bank (respondents) to jointly and severally pay a $2.25 million fine for allegedly failing to store customer information in the format required under federal securities regulations, and then taking three years to report the issue after it was discovered. According to FINRA, in 2016, the agency found that the respondents allegedly violated various books and records retention requirements and related supervisory rules when maintaining approximately one million electronic brokerage records. In 2017, the respondents certified that they “had ‘adopted and implemented policies and procedures reasonably designed to achieve compliance with the applicable federal securities laws and FINRA rules’ addressed in the December 2016 AWC.” However, FINRA claimed that from 2003 to August 2020, the respondents allegedly failed to properly store roughly 13 million records related to their customer identification program (CIP) in the required “write once, read many” format (known as “WORM”). This “non-rewritable, non-erasable” format required under federal securities regulations is intended to prevent the alteration or destruction of customer identification information, FINRA explained. The respondents conducted an internal review in 2020, which concluded that the respondents were storing CIP records on a non-WORM compliant system. However, the respondents self-reported the issue to FINRA in April 2020 and migrated the relevant records to a WORM-compliant system by August 2020. The respondents did not admit nor deny the findings as part of the AWC, but have agreed to a censure and will pay the fine.

    Financial Crimes Anti-Money Laundering Privacy/Cyber Risk & Data Security FINRA Enforcement

  • OFAC reaches $133,860 settlement in Iranian sanctions matter

    Financial Crimes

    On December 8, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $133,860 settlement against an individual for allegedly facilitating four payments on behalf of an Iranian company using a personal bank account in the U.S., in violation of the Iranian Transactions and Sanctions Regulations (ITSR), 31. C.F.R. part 560. According to OFAC’s web notice, between February 2016 and March 2016, the individual accepted $133,860 in the U.S., which went to a personal bank account, on behalf of an Iran-based company selling Iranian-origin cement to another company for a project in a third country.

    In arriving at the settlement amount, OFAC considered various aggravating factors, including, among other things, that the individual: (i) willfully was in violation of or recklessly ignored U.S. sanctions on Iran when receiving payments on behalf of an Iranian company; (ii) was aware of, and actively participated in, the violations; and (iii) “harmed the objectives of the ITSR by enabling the evasion of sanctions by an Iranian company.” OFAC also considered various mitigating factors, including that the individual did not receive a penalty notice, finding of violation, or cautionary letter from OFAC in the past five years, and is a natural person with a limited ability to pay.

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

  • FinCEN issues NPRM on beneficial ownership

    Financial Crimes

    On December 7, FinCEN issued a notice of proposed rulemaking (NPRM) implementing the beneficial ownership information reporting provisions of the Corporate Transparency Act (CTA). As previously covered by InfoBytes, the CTA is included within the Anti-Money Laundering Act of 2021, which was enacted in January as part of the National Defense Authorization Act for Fiscal Year 2021. The proposed rule implements the reporting requirements under the CTA and “reflects FinCEN’s careful consideration of public comments received in response to its April advance notice of proposed rulemaking on the same topic.” (Covered by InfoBytes here.) Among other things, the NPRM addresses who must report beneficial ownership information, when to report it, and what information they must provide. According to FinCEN, gathering “this information and providing access to law enforcement, financial institutions, and other authorized users will diminish the ability of malign actors to hide, move, and enjoy the proceeds of illicit activities.” Treasury Deputy Secretary Wally Adeyemo released a statement noting that Treasury, through the public comments gathered from the NPRM, intends to “develop a regulatory approach that will safeguard the integrity of our markets and root out corruption in American real estate.” The comment period ends 60 days after publication in the Federal Register.

    Financial Crimes FinCEN Agency Rule-Making & Guidance Of Interest to Non-US Persons Anti-Money Laundering Act of 2020 Anti-Money Laundering Bank Secrecy Act Beneficial Ownership Federal Register Corporate Transparency Act

  • OFAC sanctions 15 international human rights abusers

    Financial Crimes

    On December 7, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13818 targeting fifteen actors across three countries under the Global Magnitsky Human Rights Accountability Act. According to OFAC, the sanctioned actors are associated with human rights abuse and repressive acts targeting civilians, political opponents, and peaceful protestors. As a result of the sanctions, all property and interests in property belonging to the sanctioned entities subject to U.S. jurisdiction are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” OFAC noted that U.S. persons are prohibited from participating in transactions with these persons, which includes “the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person or the receipt of any contribution or provision of funds, goods or services from any such person.”

    Financial Crimes OFAC Department of Treasury OFAC Sanctions Of Interest to Non-US Persons Iran Syria Uganda OFAC Designations SDN List

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