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OFAC issues counter terrorism general licenses and related FAQs, updates SDN List
On January 19, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued four General Licenses in conjunction with State Department designations against a foreign terrorist organization: General License 9, “Official Business of the United States Government,” General License 10, “Official Activities of Certain International Organizations,” General License 11, “Certain Transactions in Support of Nongovernmental Organizations’ Activities in Yemen,” and General License 12, “Transactions Related to the Exportation or Reexportation of Agricultural Commodities, Medicine, Medical Devices, Replacement Parts and Components or Software Updates.” The general licenses authorize certain transactions ordinarily prohibited by the Global Terrorism Sanctions Regulations, Foreign Terrorist Organizations Sanctions Regulations, and Executive Order 13224, including actions “to help facilitate the uninterrupted flow of humanitarian assistance, including COVID-19-related assistance, and certain other critical commodities to the people of Yemen that would otherwise be prohibited pursuant to authorities administered by OFAC.” OFAC also published related FAQs 875, 876, and 877.
OFAC also updated its Specially Designated Nationals and Blocked Persons List to add individuals and entities associated with Venezuela, Russia, and Yemen designations.
FinCEN reaches $390 million settlement with bank for BSA violations
On January 15, the Financial Crimes Enforcement Network (FinCEN) announced a $390 million civil money penalty against a national bank for allegedly violating the Bank Secrecy Act and its implementing regulations. The settlement resolves an investigation into the bank’s alleged failure to maintain an effective anti-money laundering (AML) program. According to FinCEN, the bank’s check-cashing business unit failed to file thousands of suspicious activity reports (SARs) and currency transaction reports (CTR). As a result, suspicious transactions were not reported in a timely and accurate manner. FinCen noted that while the bank was allegedly aware of several compliance and money laundering risks associated with its check-cashing business unit, its process for investigating suspicious transactions was insufficient. The bank also allegedly failed to file SARs even though it had actual knowledge of criminal charges against specific customers and continued to process transactions for these customers’ businesses. In determining the penalty, FinCEN considered the bank’s significant remediation efforts—including taking remedial measures related to its SARs and CTR filing systems and enhancing its AML program over the past several years—as well as its cooperation with the agency’s investigation.
OFAC sanctions Cuban Ministry of the Interior for human rights abuse
On January 15, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against the Cuban Ministry of Interior and the Minister of Interior for his alleged connection to serious human rights abuses. According to OFAC, the sanctions are taken pursuant to Executive Order 13818, which implements the Global Magnitsky Human Rights Accountability Act and “targets perpetrators of serious human rights abuse and corruption.” As a result of the sanctions, all of the individual’s property and interests in property that are blocked pursuant to the Cuban Assets Control Regulations continue to be blocked, as well as any of the individual’s property and interests in property in the United States or possessed or controlled by U.S. persons. Additionally, OFAC regulations prohibit U.S. persons from participating in transactions with the individual unless exempt or otherwise authorized by an OFAC general or specific license.
OFAC issues new general license and related FAQs involving Chinese military companies
On January 14, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued General License (GL) 2, “Authorizing Securities Exchanges Operated by U.S. Persons to Engage in Transactions Involving Securities of Communist Chinese Military Companies.” This license permits transactions and activities otherwise prohibited by Executive Order (E.O.) 13959 (which was recently amended) involving “publicly traded securities, or any securities that are derivative of, or are designed to provide investment exposure to such securities, of any entity that is listed on the [OFAC]’s Non-SDN Communist Chinese Military Companies List (NS-CCMC List).” OFAC also published several new frequently asked questions, 871, 872, 873, 874, related to E.O. 13959.
OFAC issues Hong Kong-related sanctions regulations, updates SDN List
On January 15, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued regulations implementing Executive Order (E.O.) 13936 issued last July. As previously covered by InfoBytes, E.O. 13936, among other things, targets and authorizes the imposition of sanctions on persons who materially assist, sponsor, or provide financial, material, or technological support to activities contributing to the undermining of Hong Kong’s democracy and autonomy. The regulations outline prohibitions, including prohibited transactions, and provide general definitions, interpretations, licensing authorizations, and penalties and findings of violations. OFAC noted it intends to supplement Part 585 of the regulations with more comprehensive regulations that “may include additional interpretive and definitional guidance and additional general licenses and statements of licensing policy.”
The same day, OFAC also added several individuals and entities to its Specially Designated Nationals List. These persons have been added pursuant to OFAC’s Hong Kong-related designations, Global Magnitsky designations, E.O. 13846, and the Iran Freedom and Counter-Proliferation Act, among others.
Indonesian company settles with OFAC for $1 million for North Korea sanctions violations, enters into deferred prosecution agreement with DOJ
On January 14, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a more than $1 million settlement with an Indonesian-based paper products manufacturer for 28 apparent violations of the North Korea Sanction Regulations. According to OFAC’s web notice, between 2016 and 2018, the company “exported cigarette paper to entities located in or doing business on behalf of the Democratic People’s Republic of Korea (DPRK),” including a Chinese intermediary that procured paper on behalf of an OFAC-designated company operating under an alias. The company allegedly directed payments for its DPRK-related exports to a U.S. dollar bank account held at a non U.S. bank, leading to 28 wire transfers being cleared through U.S. banks. OFAC noted that while the company initially referenced the DPRK entities on documents such as invoices, packing lists, and bills of lading, it eventually replaced the references with the names of intermediaries located in third countries.
In arriving at the settlement amount, OFAC considered various aggravating factors, including that the company (i) “acted with reckless disregard for U.S. sanctions laws and regulations” by directing DPRK-related payments to its U.S. dollar account; (ii) was aware that management had actual knowledge of the conduct at issue; and (iii) the company’s actions “caused U.S. persons to confer economic benefits to the DPRK and an OFAC-designated person.”
OFAC also considered various mitigating factors, including that the company (i) cooperated with OFAC’s investigation; (ii) has undertaken remedial measures, ceased all dealings with the DPRK, and enhanced its compliance controls and internal policies by, among other things, procuring a sanctions screening service from a third-party provider, implementing a know-your-customer process, and requiring that “all trading companies or agents purchasing goods on behalf of other end-users sign an anti-diversion agreement that includes OFAC sanctions compliance commitments.”
Separately, the DOJ announced that the company agreed to pay a $1.5 million fine and enter into a deferred prosecution agreement for conspiring to commit bank fraud after admitting it deceived U.S. banks in order to trade with the DPRK. The company also “agreed to implement a compliance program designed to prevent and detect violations of U.S. sanctions laws and regulations and to regularly report to the [DOJ] on the implementation of that program.” The company is also required to report violations of relevant U.S. laws to the DOJ and “cooperate in the investigation of such offenses.”
OFAC updates CAATSA FAQs
On January 5, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the publication of two new FAQs related to the Countering America’s Adversaries Through Sanctions Act (CAATSA). FAQ 869 states that entities owned 50 percent or more by a person subject to the non-blocking menu-based sanctions in Section 235(a) of CAATSA are not subject to the same non-blocking sanctions. FAQ 870 details the prohibitions of the loan and credit-related sanction described in Section 235(a)(3) of CAATSA. Additionally, OFAC amended FAQ 545 and 546.
Find continuing InfoBytes covered on CAATSA-related sanctions here.
OFAC issues Syria-related settlement with French bank for $8.5 million
On January 4, the Department of Treasury’s Office of Foreign Assets Control (OFAC) announced an over $8.5 million settlement with a French bank that facilitates trade finance between Europe and the Middle East, North Africa, sub-Saharan Africa, and Asia for 127 apparent violations of Syria-related sanctions. The 127 apparent violations include: (i) 114 internal transfers on behalf of Syrian entities totaling over $1 billion, with 45 of the transfers processed between two clients, one being a sanctioned Syrian entity and 69 of the transfers conducted as a foreign exchange transaction with a sanctioned Syrian customer; and (ii) 13 “back-to-back” letter of credit transactions or other trade finance transactions involving sanctioned Syrian parties, processed through a U.S. bank.
In arriving at the settlement amount, OFAC considered various aggravating factors, including that management had “actual knowledge” of the conduct, and that the bank “conferred substantial economic benefit to U.S.-sanctioned parties,” causing “significant harm to the integrity of U.S. sanctions programs and their associated policy objectives.”
OFAC also considered various mitigating factors, including (i) the majority of the violations occurred in late 2011, after an August 2011 Executive Order significantly expanded U.S. sanctions against Syria; (ii) the bank voluntarily self-disclosed the apparent violations and cooperated with the investigations; and (iii) had a compliance program in place at the time of the apparent violations.
OFAC sanctions organizations controlled by the Supreme Leader of Iran
On January 13, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against two purportedly charitable organizations controlled by the Supreme Leader of Iran, as well as their leaders and subsidiaries, for, among other things, allegedly controlling assets expropriated from political dissidents and religious minorities in order to benefit senior Iranian government officials. The OFAC sanctions were taken pursuant to Executive Order 13876 and follow sanctions issued last November against a conglomerate of roughly 160 holdings in key sectors of Iran’s economy (covered by InfoBytes here). 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. U.S. persons are generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons. OFAC further warned foreign financial institutions that knowingly conducting or facilitating significant transactions for or on behalf of the designated persons could subject them to U.S. correspondent account or payable-through sanctions.
OFAC sanctions individuals and entities for Russian-linked election interference
On January 11, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against seven individuals and four entities that are allegedly part of a Russia-linked foreign influence network associated with a Russian agent previously designated for his attempt to influence the 2020 U.S. presidential election. The individuals and entities associated with the Russian agent are now being similarly designated pursuant to Executive Order 13848 for “having directly or indirectly engaged in, sponsored, concealed, or otherwise been complicit in foreign influence in a United States election.” As a result, all property and interests in property belonging to, or owned by, the identified individuals and entities subject to U.S. jurisdiction are blocked, and “any entities that are owned, directly or indirectly, 50 percent or more by the designated entities, are also blocked.” U.S. persons are generally prohibited from dealing with any property or interests in property of blocked or designated persons.