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  • OFAC sanctions arms facilitator for attempted North Korea-Russia deals

    Financial Crimes

    On March 30, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions, pursuant to Executive Order 13551, against a Slovakian national for attempting to facilitate arms deals between Russia and the Democratic People’s Republic of Korea (DPRK) to aid Russia’s war against Ukraine. “Schemes like the arms deal pursued by this individual show that Putin is turning to suppliers of last resort like Iran and the DPRK,” Secretary of the Treasury Janet L. Yellen said. “We remain committed to degrading Russia’s military-industrial capabilities, as well as exposing and countering Russian attempts to evade sanctions and obtain military equipment from the DPRK or any other state that is prepared to support its war in Ukraine.”

    As a result of the sanctions, all property and interests in property of the sanctioned individual that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC, as well as “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons.” Persons that engage in certain transactions with the designated individual may themselves be exposed to sanctions, and “any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for the individual designated today could be subject to U.S. correspondent or payable-through account sanctions.”

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

  • FinCEN looks at business email threat in real estate

    Financial Crimes

    On March 30, FinCEN released a Financial Trend Analysis examining threat patterns and trends identified in Bank Secrecy Act (BSA) data relating to business email compromise (BEC) in the real estate sector during 2020 and 2021. According to the analysis, BEC attackers target businesses and financial institutions that routinely conduct large wire transfers and rely on email for communication about these wires. FinCEN explained in its announcement that attackers “may obtain unauthorized access to networks and systems to misappropriate confidential and proprietary information,” noting in its analysis that “[p]erpetrators typically compromise a key email account by using computer intrusions or social engineering and send an email that fraudulently directs funds to criminal-controlled accounts” where many times “the victim is tricked into thinking a legitimate email from a trusted person or entity is directing them to make a payment.” According to the Federal Bureau of Investigation’s Internet Crime Compliant Center, BEC incidents resulted in more than $43 billion in worldwide losses between June 2016 and December 2021.

    FinCEN’s analysis found that attackers most commonly impersonated title and closing entities and personnel, and that 1,767 incidents involved initial domestic transfers of fraudulent funds to accounts at U.S. depository institutions (151 incidents involved initial transfers of fraudulent funds to international institutions). Additionally, the analysis found that 83 of the 2,103 reported real estate-related BEC incidents involved convertible virtual currency.

    FinCEN reiterated that financial institutions, real estate sector entities, and the public “may all play an important role in protecting the U.S. financial system from [real estate] BEC attacks through awareness of actions to detect and mitigate attacks, information sharing mechanisms that can prevent attacks, and various ways to report incidents when they occur.” FinCEN further encouraged these entities to “[a]ssess the vulnerability of their business processes with respect to BEC and consider actions to ‘harden’ or increase the resiliency of their processes and systems against email fraud schemes.” This includes understanding quantifiable risks associated with the authentication of participants involved in communications, the authorization of transactions, and the communication of information and changes about transactions. Additionally, entities should “[a]dopt a multi-faceted transaction verification process—as well as training and awareness-building—to identify and evade spear phishing attempts.” FinCEN emphasized that “[i]dentifying fraudulent transaction payment instructions before payments are issued is essential to preventing and reducing unauthorized transactions.”

    Financial Crimes FinCEN Of Interest to Non-US Persons Bank Secrecy Act Real Estate Business Email Compromise Digital Assets

  • OFAC sanctions individuals involved in Syria’s drug production and trafficking

    Financial Crimes

    On March 28, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) designated key individuals for supporting the regime of Syrian President Bashar al-Assad and the regime’s billion-dollar illicit drug production and trafficking enterprise. Taken in coordination with the UK, the designations, issued pursuant to Executive Orders 13572, 13582, and 13224, “also highlight the important role of Lebanese drug traffickers—some of whom maintain ties to Hizballah—in facilitating the export of Captagon[,]” the dangerous amphetamine at issue. 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.” U.S. persons are also generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons. Persons that engage in certain transactions with the designated individuals or entities may themselves be exposed to sanctions or subject to an enforcement action, OFAC warned.

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

  • OFAC sanctions Belarusian state-owned enterprises and government officials; amends Belarus Sanctions Regulations

    Financial Crimes

    On March 24, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against Belarusian state-owned enterprises and government officials. In so doing, OFAC designated three entities and nine individuals, and identified one presidential aircraft as blocked property, pursuant to Executive Order 14038. The announcement noted that the designations build on previously issued sanctions taken against individuals and entities in Belarus in response to efforts by the Lukashenka regime to suppress democracy and support the Russian Federation’s war against Ukraine. “The authoritarian Lukashenka regime relies on state-owned enterprises and key officials to generate substantial revenue that enables oppressive acts against the Belarusian people,” Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian Nelson said in the announcement. Concurrently, the State Department imposed visa restrictions on 14 additional individuals, “including regime officials involved in policies to threaten and intimidate the Belarusian people, for their involvement in undermining democracy under Presidential Proclamation 8015.”

    As a result of the sanctions, all property and interests in property belonging to the sanctioned persons that are in the U.S. or in the possession or control of U.S. persons are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons, unless authorized by a general or specific OFAC license, or if otherwise exempt.

    Additionally, OFAC published a final rule in the Federal Register amending and reissuing the Belarus Sanctions Regulations in their entirety in order to implement the August 2021 Belarus-related Executive Order 14038 (discussed above), “Blocking Property of Additional Persons Contributing to the Situation in Belarus,” and incorporate a directive regarding sovereign debt (covered by InfoBytes here and here). The final rule (effective March 27) also updates and adds new definitions, general licenses, and interpretive guidance, among other things.

    Financial Crimes Of Interest to Non-US Persons OFAC OFAC Sanctions OFAC Designations Belarus Russia Ukraine Ukraine Invasion

  • OFAC sanctions additional persons connected to Burma’s military regime

    Financial Crimes

    On March 24, pursuant to Executive Order 14014, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against two individuals and six entities connected to Burma’s military regime. In announcing the sanctions, OFAC explained that the Burmese military, which overthrew the country’s democratic government in February 2021, has increased its reliance on air strikes in civilian populated areas and that the designated persons have provided assistance to military efforts through the importation, storage, and distribution of jet fuel. “Burma’s military regime continues to inflict pain and suffering on its own people,” Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson said in the announcement. “The United States remains steadfast in its commitment to the people of Burma, and will continue to deny the military the materiel it uses to commit these atrocities.”

    In conjunction with the sanctions, OFAC published an alert warning of the sanctions risks associated with providing jet fuel to the Burmese military. As a result of the sanctions, all property and interests in property belonging to the sanctioned persons that are in the U.S. or in the possession or control of U.S. persons 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.” U.S. persons are generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons, unless authorized by a general or specific OFAC license, or if otherwise exempt.

    Financial Crimes Of Interest to Non-US Persons OFAC OFAC Designations OFAC Sanctions Burma SDN List

  • FinCEN releases beneficial ownership reporting guidance

    Financial Crimes

    On March 24, FinCEN released its first set of guidance materials to aid the public and small businesses in reporting beneficial ownership information (i.e., individuals who directly or indirectly own or control a company). As previously covered by InfoBytes, last September, FinCEN published a final rule establishing beneficial ownership information requirements, as required by the Corporate Transparency Act. The final rule, which becomes effective January 1, 2024, will require most corporations, limited liability companies, and other entities created in or registered to do business in the United States, to report information about their beneficial owners to FinCEN. Reporting companies created or registered before January 1, 2024, will have until January 1, 2025, to file their initial reports, while reporting companies created or registered after January 1, 2024, will have 30 days after creation or registration to file their initial reports. The guidance materials include FAQs, information on key filing dates, and informational videos. Additional guidance will be published in the coming months, including a Small Entity Compliance Guide, FinCEN said in the announcement.

    Financial Crimes Agency Rule-Making & Guidance Of Interest to Non-US Persons FinCEN Beneficial Ownership Corporate Transparency Act

  • OFAC continues to sanction Iran’s UAV procurement network

    Financial Crimes

    On March 21, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions in coordination with the FBI against four entities and three individuals in Iran and Turkey accused of supporting Iran’s unmanned aerial vehicle (UAV) procurement efforts. The sanctions, taken pursuant to Executive Order (E.O.) 13382, follow the recent designation of a China-based network, as well as several prior OFAC actions targeting Iran’s UAV manufacturers and their executives (covered by InfoBytes here). According to OFAC, the procurement network operates on behalf of Iran’s Ministry of Defense and Armed Forces Logistic, which was sanctioned by OFAC in 2007 “for having engaged, or attempted to engage, in activities or transactions that have materially contributed to, or pose a risk of materially contributing to, the proliferation of weapons of mass destruction or their means of delivery.”

    As a result of the sanctions, all property interests belonging to the sanctioned individuals and entities that are in the U.S. or in the possession or control of U.S. persons are blocked and must be reported to OFAC. Further, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are generally prohibited from engaging in any dealings involving the property interests of blocked or designated persons. Persons that engage in certain transactions with the designated individuals or entities may themselves be exposed to sanctions, and “any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the individuals or entities designated today pursuant to E.O. 13382 could be subject to U.S. sanctions.”

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

  • OCC releases enforcement actions

    On March 17, the OCC released a list of recent enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with such entities. Included is a cease and desist order against a New York-based bank for allegedly engaging in unsafe or unsound practices related to its information technology security and controls, as well as its information technology risk governance and board of director/management oversight of its corporate risk governance processes. The OCC also found alleged deficiencies (including unsafe or unsound practices) in the bank’s Bank Secrecy Act (BSA)/anti-money laundering risk management controls in the following areas: “internal controls, BSA officer, customer identification program, customer due diligence, enhanced due diligence, [] beneficial ownership,” and suspicious activity monitoring and reporting. The order requires the bank to, among other things, maintain a compliance committee, develop a corporate governance program to ensure appropriate board oversight, establish a written strategic plan and conduct an internal audit to assess the sufficiency of the bank’s internal controls program, implement information technology governance and security programs, and adopt an automated clearing house risk management program. The bank is also required to appoint a BSA officer to ensure adherence to the bank’s BSA/AML internal controls, conduct a suspicious activity review lookback, implement a customer information program that is reasonably designed to identify and verify beneficial owners of legal entity customers, and develop and adopt a BSA/AML model risk management process.

    Bank Regulatory Federal Issues OCC Enforcement Bank Secrecy Act Anti-Money Laundering Financial Crimes SARs

  • U.S., German law enforcement disable darknet crypto mixer

    Federal Issues

    On March 15, U.S. law enforcement, along with German criminal authorities, disabled a darknet cryptocurrency “mixing” service used to allegedly launder more than $3 billion in cryptocurrency underlying ransomware, darknet market activities, fraud, cryptocurrency heists, hacking schemes, and other activities. According to the DOJ’s announcement, law enforcement agencies seized two domains and back-end servers, as well as more than $46 million in cryptocurrency. The DOJ claimed the mixing service allowed criminals to obfuscate the source of stolen cryptocurrency by commingling users’ cryptocurrency in a way that made it difficult to trace the transactions. In conjunction with the action taken against the mixing service, a Vietnamese national responsible for creating and operating the online infrastructure was charged with money laundering, operating an unlicensed money transmitting business, and identity theft connected to the mixing service. Separate actions have also been taken by German law enforcement authorities, the DOJ said. “Criminals have long sought to launder the proceeds of their illegal activity through various means,” Special Agent in Charge Jacqueline Maguire of the FBI Philadelphia Field Office said in the announcement. “Technology has changed the game, though[.] In response, the FBI continues to evolve in the ways we ‘follow the money’ of illegal enterprise, employing all the tools and techniques at our disposal and drawing on our strong partnerships at home and around the globe.”

    Federal Issues DOJ Enforcement Digital Assets Of Interest to Non-US Persons Germany Cryptocurrency Anti-Money Laundering Illicit Finance Financial Crimes Crypto Mixer Criminal Enforcement

  • OFAC sanctions additional persons in Bosnia and Herzegovina

    Financial Crimes

    On March 15, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against three individuals in Bosnia and Herzegovina (BiH), pursuant to Executive Orders 14033 or 14059. The designations build on other sanctions measures taken in the region (covered by InfoBytes here) and “collectively underscore the United States’ willingness to hold accountable those who are undermining democratic institutions and furthering their agendas for political and personal gain, at the expense of peace, stability, and progress in the Western Balkans,” OFAC explained. Specifically, the sanctions target the director general for BiH’s Intelligence Security Agency, a BiH national who headed an agency responsible for obstructing or threatening the implementation of the Dayton Peace Agreement, and a significant Balkans narcotics trafficker.

    As a result of the sanctions, all property and interests in property belonging to the sanctioned individuals subject to U.S. jurisdiction are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked.” OFAC further noted that “transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or blocked persons are prohibited unless authorized by a general or specific license issued by OFAC, or exempt,” 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.” OFAC warned financial institutions and other persons that should they engage in certain transactions or activities with the sanctioned individuals they may expose themselves to sanctions or be subject to an enforcement action.

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

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