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OFAC reports on licensing activities
On September 27, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced its Quarterly Reports of Licensing Activities pursuant to Section 906(b) of the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA), covering activities undertaken by OFAC under Section 906(a)(1) of the TSRA from April 2019 through September 2021. According to OFAC, as required by TSRA-related regulations, OFAC processes license applications requesting authorization to export agricultural commodities, medicine, and medical devices to Iran and Sudan under the specific licensing regime set forth in Section 906 of the TSRA.
OFAC sanctions state prosecutor in Bosnia and Herzegovina
On September 26, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 14033 against a state prosecutor in Bosnia and Herzegovina. According to OFAC, the individual has played a central role in enabling corruption and has been designated for being “responsible for or complicit in, or having directly or indirectly engaged in, actions or policies that undermine democratic processes or institutions in the Western Balkans.” As a result of the sanctions, all property and interests in property belonging to the sanctioned individual subject to U.S. jurisdiction are blocked and must be reported to OFAC. U.S. persons are also generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons unless authorized by an OFAC general or specific license. U.S. persons who violate these prohibitions may face civil or criminal penalties.
OFAC settles with banks for multiple sanctions violations
On September 26, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $720,258 settlement with an indirect subsidiary of a Switzerland-based bank for allegedly processing transactions in violation of the Cuba, Ukraine-related, Iran, Sudan, and Syria sanctions programs. According to OFAC’s web notice, from April 2013 to April 2016, the bank processed 273 transactions totaling approximately $3,076,180 on behalf of individuals residing in Cuba, Crimea, Iran, Sudan, and Syria. Specifically, OFAC noted that customers in sanctioned jurisdictions were able to continue to purchase and sell securities through the U.S. financial system and to receive related dividend and interest payments until the bank took further steps to prevent such payments.
In arriving at the settlement amount of $720,258, OFAC considered various aggravating factors, including that bank personnel “had reason to know they were processing transactions through the U.S. financial system for individual customers located in comprehensively sanctioned jurisdictions based on the underlying [know-your-customer (KYC)] data obtained by [the bank], which included address information indicating the customers’ location,” and “conferred approximately $3,076,180 in economic benefit to persons in Cuba, Crimea, Iran, Sudan, and Syria,” which caused harm to multiple sanctions programs' integrity. OFAC also considered various mitigating factors, including that the bank cooperated with OFAC throughout the investigation, and has undertaken remedial measures intended to minimize the risk of recurrence of similar conduct.
Separately, the same day OFAC announced a $401,039 settlement with a different indirect subsidiary of the Switzerland-based bank for allegedly processing transactions in violation of the Cuba, Ukraine-related, Iran, Sudan, and Syria sanctions programs. According to OFAC’s web notice, from December 2011 until July 2016, the bank processed 426 transactions totaling approximately $1,233,967 on behalf of individuals ordinarily resident in Cuba, Iran, and Syria.
In arriving at the settlement amount of $401,039, OFAC considered various aggravating factors, including that bank personnel “had reason to know they were processing transactions through the U.S. financial system for individual customers located in comprehensively sanctioned jurisdictions based on the underlying KYC data [the bank had] obtained,” and the bank “conferred approximately $1,233,967 in economic benefit to persons in Cuba, Iran, and Syria,” which caused harm to multiple sanctions programs' integrity. OFAC also considered various mitigating factors, including that the bank cooperated with OFAC throughout the investigation, and has undertaken remedial measures intended to minimize the risk of recurrence of similar conduct.
OFAC sanctions Iran’s Morality Police and senior security officials for human rights violence
On September 22, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13553 against Iran’s Morality Police along with seven senior leaders who oversee Iran’s security organizations. These designations were taken in response to recent abuse and violence against Iranian women and violence against peaceful protestors and members of Iranian civil society, among others. “Today’s action to sanction Iran’s Morality Police and senior Iranian security officials responsible for this oppression demonstrates the Biden - Harris Administration’s clear commitment to stand up for human rights, and the rights of women, in Iran and globally,” Secretary of the Treasury Janet Yellen said.
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 must be blocked and reported to OFAC. U.S. persons are also prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons, and “persons that engage in certain transactions with the individuals or entities designated today may themselves be exposed to designation,” OFAC said. Additionally, OFAC warned that “any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the individuals or entities designated today could be subject to U.S. correspondent or payable-through account sanctions.”
Treasury official discusses U.S. efforts in response to Russian invasion of Ukraine
On September 20, Assistant Secretary for Terrorist Financing and Financial Crimes Elizabeth Rosenberg delivered prepared remarks before a Senate Committee on Banking, Housing, and Urban Affairs hearing, in which she provided an overview of recent efforts taken by the U.S. Treasury Department to hold Russia accountable for its invasion of Ukraine. Rosenberg explained that these measures are intended to “squeeze Russia’s access to finance and technology for strategic sectors of its economy and degrade its industrial capacity for years to come” and highlighted sanctions imposed against hundreds of Russian individuals and entities, including Russia’s largest financial institutions and key nodes in the country’s military-industrial supply chains, to cut them off from the U.S. financial system. She noted that Treasury has also implemented restrictions on dealings in Russian sovereign debt and has “prohibited economic dealings with the so-called Donetsk People’s Republic and Luhansk People’s Republic regions of Ukraine” as well as new investments in the Russian Federation. Rosenberg added that Treasury has “also imposed prohibitions on importing certain commodities from Russia into the United States, including oil and natural gas, and similarly imposed prohibitions on exporting certain items like luxury goods and dollar-denominated banknotes.” Additionally, Rosenberg discussed international efforts, including “implementing the largest sanctions regime in modern history[,]” and working with allies to facilitate information sharing, law enforcement data, and relevant financial records. She emphasized that “Treasury has mounted an aggressive campaign to close the global financial policy and regulatory loopholes across jurisdictions that Russian aiders and abettors of this war, and other criminals, use to perpetuate their illicit activity[,]” and stated that Treasury remains focused on denying funds to Russia through its oil exports.
Find continuing InfoBytes coverage on the U.S. sanctions response to Russia’s invasion of Ukraine here.
OFAC issues sanctions, general licenses, and FAQs on Russia’s invasion of Ukraine
On September 15, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), in coordination with the Departments of Commerce and State, announced sanctions against 22 individuals and two entities connected to Russia’s invasion of Ukraine. According to OFAC, the designated persons include multiple individuals who have furthered the Government of the Russian Federation’s objectives in Ukraine, both prior to and during Russia’s invasion of Ukraine in 2022. Also included among those designated is a neo-Nazi paramilitary group that has aided Russia’s military in Ukraine, and two of the group’s senior leaders. As a result of the sanctions, all property and interests in property belonging to the sanctioned individuals and 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 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 and the receipt of any contribution or provision of funds, goods, or services from any such person.”
The same day, OFAC issued Russia-related General License (GL) 51, authorizing the wind down of transactions involving the Limited Liability Company Group of Companies Akvarius, and GL 52, which relates to journalistic activities and the establishment of news bureaus. According to the GL 51, “all transactions ordinarily incident and necessary to the wind down of any transaction involving Limited Liability Company Group of Companies Akvarius (Aquarius), or any entity in which Aquarius owns, directly or indirectly, a 50 percent or greater interest, that are prohibited by Executive Order (E.O.) 14024,” are authorized as of October 15, subject to certain qualifications. According to GL 52, “news reporting organizations that are U.S. persons, and individual U.S. persons who are journalists or broadcast or technical personnel, are authorized to engage in certain transactions where such transactions are ordinarily incident and necessary to such U.S. persons’ journalistic activities or to the establishment or operation of a news bureau and are prohibited” by E.O. 14024, subject to certain qualifications.
Additionally, OFAC published several frequently asked questions clarifying “Russian Harmful Foreign Activities Sanctions,” which include guidance on the use of the National Payment Card System (NSPK) or the Mir National Payment System given the broad sanctions imposed on Russia’s financial system this year.
OFAC issues Zimbabwe-related sanctions
On September 15, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13469 against a Zimbabwe individual for his role in undermining Zimbabwe’s democratic processes and institutions. OFAC also removed eleven others from the Specially Designated Nationals List (SDN List) under the Zimbabwe sanctions program. According to OFAC, the sanctioned individual, among other things, undermined political parties that opposed the policies of the ruling Zimbabwe African National Union-Patriotic Front party, and, in 2020, supported Zimbabwe security services’ use of pressure and intimidation on prominent opposition figures. As a result of the sanctions, all property and interests in property belonging to the sanctioned individual that are in the U.S. or in the possession or control of U.S. persons, and “any entities that are owned 50 percent or more by one or more designated persons” are blocked. Additionally, U.S. persons are prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons, unless exempt or authorized by a general or specific OFAC license.
OFAC publishes additional guidance related to sanctioned virtual currency “mixer”
On September 13, the U.S. Treasury Department’s Office of Foreign Assets Control published new cyber-related frequently asked questions concerning transactions involving a virtual currency mixer sanctioned last month for allegedly laundering more than $7 billion in virtual currency since 2019. As previously covered by InfoBytes, the company “repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis,” and provided financial, material, or technological support for, or in support of, cyber-enabled activity contributing to a significant threat to the national security, foreign policy, or economic health or financial stability of the U.S. The FAQs outline requirements for completing virtual currency transactions without violating U.S. sanctions regulations, discuss whether OFAC reporting obligations apply to transactions involving unsolicited and nominal amounts of virtual currency, and reiterate that transactions involving identified virtual currency wallet addresses are prohibited absent a specific OFAC license. The FAQs noted that as part of the SDN List entry, OFAC included as identifiers certain virtual currency wallet addresses associated with the company as well as the company’s URL address. OFAC provided additional clarification on interactions with open-source code that does not involve a prohibited transaction with the sanctioned company.
OFAC sanctions individuals and entities connected to IRGC-QF
On September 14, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions as part of a joint action with the DOJ, Department of State, FBI, U.S. Cyber Command, National Security Agency, and Cybersecurity and Infrastructure Security Agency, against ten individuals and two entities for their roles in conducting malicious cyber acts, including ransomware activity. The individuals and entities designated are affiliated with Iran’s Islamic Revolutionary Guard Corps (IRGC), which “is known to exploit software vulnerabilities in order to carry out their ransomware activities, as well as engage in unauthorized computer access, data exfiltration, and other malicious cyber activities.” OFAC also noted that a joint cyber security advisory was published to highlight continued malicious cyber activity by advanced persistent threat actors that the authoring agencies assess are affiliated with IRGC. As a result of the sanctions, all property, and interests in property of the designated individuals and entities, “and of any entities that are owned, directly or indirectly, 50 percent or more by them, individually, or with other blocked persons, that are in the United States or in the possession or control of U.S. persons, must be blocked and reported to OFAC.” U.S. persons are generally prohibited from engaging in transactions with the designated persons. OFAC further warned that engaging in certain transactions with the individuals and entities designated today entails risk of additional sanctions.
OFAC sanctions Iranians involved in production of UAVs to Russia
On September 8, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Orders 13382 and 14024 against an Iran-based air transportation service provider, as well as three companies and one individual involved in the research, development, production, and procurement of Iranian unmanned aerial vehicles (UAVs) and UAV components. Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson reiterated that the U.S. “is committed to strictly enforcing our sanctions against both Russia and Iran and holding accountable Iran and those supporting Russia’s war of aggression against Ukraine,” and stressed that the U.S. will “not hesitate to target producers and procurers who contribute to Iran and its IRGC’s UAV program, further demonstrating [the U.S.’s] resolve to continue going after terrorist proxies that destabilize the Middle East.” The sanctions follow designations implemented by OFAC last year against members of a network of companies and individuals that provided critical support to Iran’s Islamic Revolutionary Guard Corps Qods Force’s use of UAVs (previously covered by InfoBytes here).
As a result of the sanctions, all property and interests in property belonging to the sanctioned individuals and entities subject to U.S. jurisdiction are blocked and must be reported to OFAC. U.S. persons are also generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons. Additionally, OFAC warned that “any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the individuals or entities designated today could be subject to U.S. correspondent or payable-through account sanctions.”