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Financial Services Law Insights and Observations


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  • OFAC fines truck manufacturer for Iranian sanctions violations

    Financial Crimes

    On August 6, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a roughly $1.7 million settlement with a Washington-based truck manufacturer for 63 alleged violations of the Iranian Transactions and Sanctions Regulations. The settlement resolves potential civil liability for actions taken by a wholly-owned subsidiary of the company that allegedly sold or supplied trucks with a total transactional value of over $5.4 million to European customers, but knew or had reason to know the trucks were ultimately intended for buyers in Iran.

    In arriving at the settlement amount, OFAC considered various mitigating factors, including that (i) neither the company nor the subsidiary have received a penalty or finding of a violation in the five years prior to the transactions at issue; (ii) the subsidiary had in place at the time of the alleged violations a trade sanctions compliance program with contractual prohibitions on dealers and service partners that were re-selling products in violation of U.S. trade sanctions; and (iii) the company and subsidiary voluntarily self-disclosed the issue to OFAC, cooperated with OFAC during the investigation, and undertook remedial efforts to minimize the risk of similar violations from occurring in the future.

    OFAC also considered various aggravating factors, including that the subsidiary failed to exercise caution when alerted to warning signs regarding the potential sales, and that in each instance, a subsidiary employee was aware of the conduct leading to the alleged violations.

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

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

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  • President Trump issues Executive Order blocking property of the Government of Venezuela

    Financial Crimes

    On August 5, President Trump issued Executive Order (E.O.) 13884 titled “Blocking Property of the Government of Venezuela,” which, among other things, prevents all property and interest in property 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. E.O. 13884 is being issued in light of the actions of the Maduro regime, “as well as human rights abuses, including arbitrary or unlawful arrest and detention of Venezuelan citizens, interference with freedom of expression, including for members of the media, and ongoing attempts to undermine Interim President Juan Guaido and the Venezuelan National Assembly's exercise of legitimate authority in Venezuela.”

    In connection with the issuance of the E.O, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued new and revised FAQs, as well as 12 amended general licenses (General Licenses 2A, 3F, 4C, 7C, 8C, 9E, 10A, 13C, 15B, 16B, 18A, 20A) and 13 new general licenses (General Licenses 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33) related to Venezuela.

    Additionally, OFAC issued new guidance highlighting the U.S. government’s “commitment to the unfettered flow of humanitarian aid to the Venezuelan people.” OFAC notes that its regulations and general licenses allow U.S. persons to continue to provide humanitarian support to the Venezuelan people, including via transactions through the U.S. financial system for authorized activities. OFAC sanctions do not prohibit transactions involving the country or people of Venezuela, provided blocked persons or proscribed conduct are not involved.

    For continuing InfoBytes coverage on Venezuela, including more information on blocked persons or actions, click here.

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

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  • President Trump authorizes new sanctions on Russian sovereign debt; OFAC imposes prohibition on certain U.S. bank loans

    Financial Crimes

    On August 1, President Trump issued Executive Order (E.O.) 13883 titled “Administration of Proliferation Sanctions and Amendment of Executive Order 12851,” which authorizes sanctions on new issuances of Russian sovereign debt and directs the U.S. government to attempt to cut off international financing and forbids U.S. bank loans to governments subject to U.S. sanctions for using chemical or nuclear weapons. Among other things, E.O. 13883 allows the Secretary of the Treasury, in consultation with the Secretary of Defense, the authorization to (i) “oppose. . .the extension of any loan or financial or technical assistance to [a sanctioned] country by international financial institutions”; and (ii) “prohibit any U.S. bank from making any loan or providing any credit to the government of [a sanctioned] country, except for loans or credits for the purpose of purchasing food or other agricultural commodities or products.”

    Following the issuance of E.O. 13883, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions on August 3 against the Russian Federation, which will “impos[e] a prohibition related to certain U.S. bank loans and will oppose multilateral development bank assistance to the Russian Federation.” According to OFAC, the sanctions are issued in response to Russia’s use of the “Novichok” nerve agent in the U.K. in March 2018. In order to implement the sanctions related to U.S. bank loans, OFAC issued the CBW Act Directive on August 2—scheduled to take effect August 26 following a required Congressional notification period—which “prohibits U.S. banks from participating in the primary market for non-ruble denominated bonds issued by the Russian sovereign and also prohibits U.S. banks from lending non-ruble denominated funds to the Russian sovereign.” OFAC also released a set of FAQs to provide guidance on the CBW Act Directive.

    Financial Crimes Executive Order Sanctions Of Interest to Non-US Persons Russia

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  • OFAC sanctions Iran’s foreign minister

    Financial Crimes

    On July 31, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), pursuant to Executive Order (E.O.) 13876, designated Iran’s foreign minister for allegedly acting on behalf of, directly or indirectly, the Supreme Leader of the Islamic Republic of Iran. As previously covered by InfoBytes, in June, the President issued E.O. 13876, which, among other things, authorizes the Secretaries of the Treasury and State Departments to impose sanctions on a foreign financial institution if it is determined the institution has knowingly conducted or facilitated any significant financial transactions for or on behalf of a blocked person. OFAC noted that additional information also indicated the Iranian foreign minister had coordinated with the IRGC-Qods Force, which is designated pursuant to terrorism and human rights authorities. 

    As a result of the sanctions designation, “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 designated individuals and entities may expose themselves to sanctions or be subject to enforcement action.

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

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  • Treasury undersecretary delivers remarks on the importance of network sanctions

    Financial Crimes

    On July 31, Department of Treasury Under Secretary for Terrorism and Financial Intelligence (TFI) Sigal Mandelker delivered remarks at the Center for Strategic and International Studies in Washington, D.C. to discuss the use of sanctions in combating critical national security and illicit financial threats. After summarizing several achievements related to the exposure and disruption of global financial schemes, Mandelker discussed TFI’s collaboration with other Treasury agencies, such as the Office of Foreign Assets Control, the Financial Crimes Enforcement Network, the Office of Intelligence and Analysis, and the Office of Terrorist Financing and Financial Crimes, to create an organizational structure that “integrates unparalleled insight into the financing of emerging global threats with powerful economic authorities to counter them.” Mandelker noted that while sanctions can be very powerful tools to cut off both financial and material support to terrorist groups and regimes, a broader strategic approach is necessary, including, among other things, anti-money laundering measures, enforcement actions, foreign engagement, intelligence and analysis, and private-sector partnerships. She noted that one method employed by the agencies to maximize their impact in combating illicit financial threats is through the use of network sanctions, which recognize that “bad actors” rarely act alone, and instead frequently rely upon complicated structures using shell companies, business partners, and facilitators to disguise activities and launder money. “When we focus on these broader networks and their assets, we can more effectively block a bad actor’s ability to access their ill-gotten gains, making it more difficult for them to use the global marketplace or continue in their business arrangements,” Mandelker stated. Mandelker further commented that in 2019 alone, Treasury has “issued nearly $1.3 billion in civil monetary penalties and settlements for financial institutions and corporate actors related to violations of our sanctions programs.” 

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

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  • OFAC sanctions corruption network linked to Venezuela’s food subsidy program; DOJ charges two of same individuals for money laundering related to bribery

    Financial Crimes

    On July 25, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against two Colombian nationals responsible for “orchestrating a vast corruption network,” which has enabled former President Maduro and his regime “to significantly profit from food imports and distribution in Venezuela.” According to OFAC, the Colombian nationals created a network comprised of shell companies, business partners, and family members—all of whom have also been designated for their involvement in the network—that illicitly profited from their involvement in Venezuela’s food subsidy program as well as other contracts with the Venezuelan government. The sanctioned network—which also included Maduro’s three stepsons—allegedly “laundered hundreds of millions of dollars in corruption proceeds around the world.” As a result of the sanctions, “all property and interests in property of the individuals and entities designated today, and of any entities that are owned, directly or indirectly, 50 percent or more by those individuals or entities, that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC.” OFAC noted that its regulations “generally prohibit” U.S. persons from participating in transactions with the designated entities and individuals. OFAC also referred financial institutions to Financial Crimes Enforcement Network advisories FIN-2019-A002FIN-2017-A006, and FIN-2018-A003 for further information concerning the efforts of Venezuelan government agencies and individuals to use the U.S. financial system and real estate market to launder corrupt proceeds, as well as human rights abuses connected to corrupt foreign political figures and their financial facilitators.

    The same day, the DOJ announced charges, pursuant to an indictment filed in the U.S. District Court for the Southern District of Florida, against two of the same sanctioned Colombian nationals for money laundering and conspiracy to commit money laundering. The charges relate to the Colombian nationals’ alleged roles in laundering the proceeds of an illegal bribery scheme from bank accounts located in Venezuela to and through bank accounts located in the United States. The bribery scheme resulted in the transfer of approximately $350 million, and allegedly involved contracts to build low-income housing units and efforts to take advantage of Venezuela’s government-controlled exchange rates through the use of “false and fraudulent import documents for goods and materials.”

    Financial Crimes Department of Treasury OFAC Sanctions Venezuela Of Interest to Non-US Persons FCPA Anti-Corruption Anti-Money Laundering Bribery

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  • OFAC designates North Korean operative working in Vietnam

    Financial Crimes

    On July 29, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced the addition of a North Korean individual operating in Vietnam to the Specially Designated Nationals List pursuant to Executive Order 13687. According to OFAC, the individual works on behalf of the Munitions Industry Department (MID), a Workers’ Party of Korea subordinate, and was responsible for trade activity that earned currency for the North Korean regime, which violates the United Nations Security Council resolutions (UNSCRs) and supports North Korea’s weapons program. OFAC notes that its regulations “generally prohibit all dealings by U.S. persons or within the United States that involve” transactions with the designated entities and individuals. Moreover, OFAC warned foreign financial institutions that if they knowingly facilitate significant transactions for any of the designated entities or individuals, they may be subject to U.S. correspondent account or payable-through account sanctions which, if imposed, could restrict their access to the U.S. financial system.

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

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  • OFAC extends Venezuela-related general license

    Financial Crimes

    On July 26, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced General License (GL) 8B, titled “Authorizing Transactions Involving Petroleos de Venezuela, S.A. (PdVSA) Necessary for Maintenance of Operations for Certain Entities in Venezuela,” which supersedes GL 8A to extend the expiration date through October 25.

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

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

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  • OFAC amends several sanctions regulations

    Financial Crimes

    On July 22, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) released amendments to the Global Terrorism Sanctions Regulations (GTSR); Transnational Criminal Organizations Sanctions Regulations (TCOSR); and portions of the Hizballah Financial Sanctions Regulations (HFSR). Specifically, the GTSR and the TCOSR were amended to implement the Hizballah International Financing Prevention Amendments Act of 2018. The TCOSR was also amended to implement Executive Order 13863. OFAC also announced amendments to the GTSR to implement and reference the Sanctioning the Use of Civilians as Defenseless Shields Act of 2018. Finally, OFAC amended the HFSR to make various technical and conforming changes as well as update certain provisions. The amendments take effect July 23.

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

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  • Federal banking agencies and FinCEN issue statement on risk-focused BSA/AML examinations

    Agency Rule-Making & Guidance

    On July 22, the Federal Reserve Board, FDIC, NCUA, and the OCC along with the Financial Crimes Enforcement Network (FinCEN), released a joint statement to improve transparency of their risk-focused approach to Bank Secrecy Act/anti-money laundering (BSA/AML) supervision. The statement outlines common practices for assessing a bank’s risk profile, including (i) leveraging available information, including internal BSA/AML risk assessments, independent audits, and results from previous examinations; (ii) contacting banks between examinations or before finalizing the scope of an examination; and (iii) considering the bank’s ability to identify, measure, monitor, and control risks. Examiners will use the information from the risk assessments to scope and plan the examination, as well as to evaluate the adequacy of the bank’s BSA/AML compliance program. The statement notes that the extent of examination activities needed to evaluate a bank’s BSA/AML compliance program, “generally depends on a bank’s risk profile and the quality of its risk management processes.”

    Agency Rule-Making & Guidance FDIC OCC NCUA Federal Reserve FinCEN Financial Crimes Bank Secrecy Act Anti-Money Laundering Supervision Examination

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