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OFAC issues amended Venezuela-related general license and FAQ
On October 6, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Venezuela General License (GL) 5E, which supersedes GL 5D and authorizes certain transactions otherwise prohibited under Executive Orders 13835 and 13857 related to, or that provide financing for, dealings in the Petróleos de Venezuela, S.A. 2020 8.5 Percent Bond on or after January 19, 2021. Concurrently, OFAC amended a Venezuela-related frequently asked question regarding GL 5E.
FinCEN, OFAC issue ransomware advisories
On October 1, the U.S. Treasury Department’s Office of Terrorism and Financial Intelligence issued two advisories to aid U.S. individuals and businesses in combating ransomware scams and attacks. In issuing the advisories, Treasury emphasized that “[e]fforts to detect and report ransomware payments are vital to prevent and deter cyber actors from deploying malicious software to extort individuals and businesses, and to hold ransomware attackers accountable for their crimes.” The advisory released by FinCEN, titled the Advisory on Ransomware and the Use of the Financial System to Facilitate Ransom Payments, provides information on the role of financial intermediaries in payments, ransomware trends and typologies, and related financial red flags indicators. Among other things, the advisory urges financial institutions to file suspicious activity reports when handling any transfer of funds related to a ransomware-related activity, and provides information on effectively reporting and sharing information related to ransomware attacks.
The advisory released by Treasury’s Office of Foreign Assets Control (OFAC), titled the Advisory on Potential Sanctions Risks for Facilitating Ransomware Payments, cautions that companies that facilitate ransomware payments to cyber actors on behalf of victims targeted by ransomware activities may face potential sanctions risks. Among other things, the advisory encourages financial institutions and other companies that engage with victims of ransomware attacks to implement risk-based compliance programs “to mitigate exposure to sanctions-related violations,” and to report such attacks to law enforcement. These sanctions compliance programs, OFAC emphasizes, “should account for the risk that a ransomware payment may involve [a specially designated national] or blocked person, or a comprehensively embargoed jurisdiction.” OFAC also cautions companies to consider whether they also need to comply with FinCEN’s regulatory obligations. Furthermore, the advisory provides U.S. government resources for reporting ransomware attacks, as well as guidance on factors OFAC generally considers when determining an appropriate enforcement response to an apparent violation.
OFAC sanctions Syrian government officials
On September 30, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced three individuals and 13 entities were added to the Specially Designated Nationals and Blocked Persons List, pursuant to Syria sanctions authorities. As a result, all property and interests in property belonging to the designated individuals and entities subject to U.S. jurisdiction are blocked and must be reported to OFAC. OFAC further noted that its regulations “generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked or designated persons,” and warned that non-U.S. persons that engage in transactions with the designated persons may expose themselves to designation.
Moreover, OFAC issued a new Syria General License 20, “Authorizing Transactions and Activities Necessary for Wind Down of Transactions with Emma Tel LLC,” and updated the FAQs to reflect the new issuance.
FinCEN Director encourages specificity in Covid-19 SARs filings
On September 29, FinCEN Director Kenneth A. Blanco spoke at the Association of Certified Anti-Money Laundering Specialists (ACAMS) virtual AML conference, noting that FinCEN has received over 91,000 suspicious activity reports (SARs) referencing Covid-19 and the federal stimulus programs under the CARES Act. Blanco stated that the vast majority (about 71 percent) of the Covid-19 SARs have come from depository institutions, while 17 percent have come from credit unions and five percent have come from the Money Services Business (MSB) industry. The securities and casino industries account for the final three percent. Blanco urged financial institutions to be “as specific as possible” when filling out their Covid-19-related SARs to ensure it gets to the right investigative team expeditiously. Blanco noted that “vague references to ‘stimulus’ or ‘CARES Act’ or ‘benefit,’” hinders the agency’s ability to get the SAR to the right team. Additionally, Blanco emphasized FinCEN’s advisories and guidance related to Covid-19 fraud (covered by InfoBytes here, here, and here) and encouraged the audience to review the agency’s dedicated Covid-19 webpage.
OFAC settles Iranian Transactions and Sanctions Regulations violations
On September 24, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $473,157 settlement with a California-based equipment and software company for six apparent violations of the Iranian Transactions and Sanctions Regulations (ITSR). According to OFAC’s web notice, from roughly January 2016 to June 2016, the company—through a former subsidiary it had since merged with—allegedly reexported U.S. export-controlled test measurement equipment to Iran. Among other things, OFAC noted that prior to the merger, the subsidiary “committed to cease all existing and future business” with certain sanctioned countries, including Iran. However, after the acquisition, certain subsidiary personnel continued to engage in transactions with Iran, with three employees taking “measures to obfuscate from [the company] their dealings with Iran.”
In arriving at the settlement amount, OFAC considered various aggravating factors, including that (i) the subsidiary willfully violated the ITSR by shipping products in order to bypass the company’s directive to cease Iran-related business; and (ii) some of the subsidiary’s senior branch and sales managers knowingly participated in the apparent violations.
OFAC also considered various mitigating factors, including that the company (i) fully cooperated with OFAC’s investigation; (ii) undertook several remedial measures, such as terminating the appropriate employees; (iii) “assess[ed] past and current transactions for compliance with OFAC regulations, implement[ed] mechanisms to halt current transactions, and ensur[ed] that no further transactions involved restricted countries”; and (iv) enhanced its sanctions compliance program to minimize the risk of similar violations from occurring in the future.
OFAC amends CACR to restrict revenue sources to the Cuban regime
On September 23, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a final rule amending the Cuban Assets Control Regulations (CACR) to further implement portions of the President’s foreign policy to deny the Cuban regime sources of revenue. Among other things, the final rule (i) amends an interpretive provision and several general licenses regarding lodging and related transactions at certain properties in Cuba identified on the State Department’s “Cuba Prohibited Accommodations List,” including those owned or controlled by the Cuban government; (ii) amends four general licenses to restrict the importation of Cuban-origin alcohol and tobacco products into the U.S.; (iii) amends a general license to eliminate the authorization for U.S. persons to attend or organize professional meetings or conferences in Cuba (specific licenses may be issued on a case-by-case basis for certain transactions); and (iv) eliminates a general license that authorizes U.S. persons “to participate in or organize certain public performances, clinics, workshops, other athletic or non-athletic competitions, and exhibitions, and replaces it with a specific licensing policy” (again permitting the authorization of specific activities via specific license on a case-by-case basis). The final rule also makes several technical and conforming changes, and is effective September 24.
Asphalt company agrees to pay over $16 million to settle FCPA charges
On September 22, the DOJ announced that a Florida-based asphalt company pleaded guilty to conspiracy to violate the anti-bribery provisions of the FCPA, agreeing to pay a $16.6 million criminal fine to resolve the charges. According to the information filed in the U.S. District Court for the Eastern District of New York, the company and its affiliates bribed foreign officials in Brazil, Venezuela, and Ecuador with millions of dollars in order to “obtain contracts to purchase or sell asphalt to the countries’ state-owned and state-controlled oil companies, in violation of the FCPA.” Between 2010 and 2015, to execute the bribery scheme in Brazil, the company entered into fake consulting agreements with intermediaries and sent international wires from company bank accounts to offshore bank accounts controlled by the bribe intermediaries. The intermediaries would then pay bribes to Brazilian government officials on the company’s behalf. In Venezuela, between 2012 and 2018, the company used similar fake consulting agreements to bribe Petróleos de Venezuela, S.A. (PDVSA) officials and used code names to hide the names of PDVSA officials in emails and texts. Lastly, in 2014, the company again used similar sham consulting arrangements to bribe Ecuador’s state-owned oil company to secure a contract to supply asphalt.
The announcement notes that the DOJ recently unsealed charges and guilty pleas of five individuals involved in the bribery scheme, including a company senior executive, a company trader, two bribe intermediaries, and a former PDVSA official. Additionally, the announcement states that a different company trader pleaded guilty in 2017 for his role in the scheme and a pending criminal complaint against a former PDVSA official was also recently unsealed in federal court.
OFAC sanctions individuals for supporting Maduro regime
On September 22, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against five key individuals for allegedly “facilitate[ing] the illegitimate Maduro regime’s efforts to undermine democracy in Venezuela.” The sanctions, issued pursuant to Executive Order 13692, reflect Treasury’s continued efforts to hold persons who offer support to the Maduro regime accountable. As a result, all property and interests in property belonging to the identified individuals subject to U.S. jurisdiction are blocked, and “any entities that are owned, directly or indirectly, 50 percent or more by the designated individuals, are also blocked.” U.S. persons are generally prohibited from dealing with any property or interests in property of blocked or designated persons.
OFAC issues Iran nuclear and ballistic missile program sanctions
On September 21, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) designated three high-ranking individuals of the Atomic Energy Organization of Iran (AEOI), numerous AEOI subsidiaries, equipment supply companies, and various senior officials working on Iran’s missile programs pursuant to Executive Order (E.O.) 13382, which allows for sanctions for engaging in or supporting the proliferation of weapons of mass destruction (WMD). As a result of the sanctions, all property and interests in property of the designated persons that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. OFAC further warned foreign financial institutions that knowingly facilitating significant transactions or providing significant support to the designated entities may subject them to sanctions and could sever access to the U.S. financial system.
In addition, the U.S. Department of Treasury announced a new Executive Order titled, "Blocking Property of Certain Persons with Respect to the Conventional Arms Activities of Iran,” which authorizes the Secretary of the Treasury, in conjunction with the Secretary of State, to impose asset blocking sanctions on any person engaged in any activity that materially contributes to the supply, sale, or transfer of destabilizing conventional weapons and acquisition of arms and related materiel by Iran.
Special Alert: FinCEN extends AML program, other requirements to banks without federal regulators
On September 14, the Financial Crimes Enforcement Network (FinCEN) issued a final rule to align Bank Secrecy Act (BSA) requirements applicable to most banks with the requirements applicable to banks lacking a “federal functional regulator.” In particular, the final rule will require all non-federally regulated banks — including private banks, non-federally insured credit unions, and certain trust companies — to establish and implement anti-money-laundering (AML) programs and customer identification programs (CIP).