InfoBytes Blog
Filter
Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.
OFAC sanctions Iran’s MOIS over cyber activities
On September 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order (E.O.) 13694 against Iran’s Ministry of Intelligence and Security (MOIS) and its Minister of Intelligence for conducting malicious cyber-enabled activities targeting government and private-sector organizations and across various critical infrastructure sectors, including the U.S. and its allies. OFAC noted that in July, MOIS and the Iranian government sponsored cyber-threat actors who disrupted the Albanian government computer systems. OFAC previously flagged MOIS pursuant to E.O.s 13224, 13472, and 13553 for supporting multiple terrorist groups, as well as for commissioning serious human rights abuses against the Iranian people.
As a result of the sanctions, all property and interests in property belonging to the sanctioned targets 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. Additionally, OFAC warned that “any foreign financial institution that knowingly conducts or facilitates a significant transaction for or on behalf of the persons designated today could be subject to U.S. correspondent or payable-through account sanctions.”
OFAC amends cyber-related sanctions regulations
On September 2, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) announced that it is amending, and reissuing in their entirety, the Cyber-Related Sanctions Regulations. OFAC noted that this administrative action replaces regulations that were published in abbreviated form on December 31, 2015, with a more comprehensive set of regulations that includes additional interpretive and definitional guidance, general licenses, and other regulatory provisions that will provide further guidance to the public. As previously covered by InfoBytes, the regulations prohibited all transactions described in Executive Order (E.O.) 13694, including dealing in the property or interests in property, that come within the United States, of blocked persons. Among other things, under E.O. 13694, a party may be blocked if the U.S. government finds the party “to be responsible for or complicit in, or to have engaged in, directly or indirectly, cyber-enabled activities originating from, or directed by persons located, in whole or in substantial part, outside the U.S. that are reasonably likely to result in, or have materially contributed to, a significant threat to the national security, foreign policy, or economic health or financial stability of the United States” and that have one of the purposes or effects enumerated in the order. The sanctions became effective September 6.
Additionally, OFAC noted that “the publication of this final rule has triggered an automatic administrative update to a number of sanctions entries.” OFAC listed unique identifier numbers (UIDs) for the affected entries as part of the administrative update and provided FAQs to clarify UIDs.
OFAC issues updated Iran general license and related FAQ
On August 25, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Iran General License (GL) M-2, “Authorizing the Exportation of Certain Graduate Level Educational Services and Software,” which authorizes accredited graduate and undergraduate degree-granting academic institutions in the U.S. to engage with Iranian students in online educational services and exploration of software through September 1, 2023, provided certain criteria are met. OFAC also published an updated FAQ related to GL M-2. Effective August 25, GL M-2 supersedes and replaces GL M-1.
OFAC issues new Russia-related general licenses
On August 19, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Russia-related General License (GL) 38A and GL 50. GL 38A authorizes transactions related to pension payments to U.S. persons or non-U.S. persons not located in the Russian Federation that are normally prohibited by Executive Order (E.O.) 14024 “provided that the only involvement of blocked persons is the processing of funds by financial institutions blocked pursuant to E.O. 14024.” GL 50 authorizes “the closing of an account of an individual, wherever located, who is not a blocked person” held at financial institutions blocked pursuant to E.O. 14024. GL 50 also permits “the unblocking and lump sum transfer of all remaining funds and other assets in the account to the account holder, including to an account of the account holder held at a non-blocked financial institution.”
OFAC sanctions Liberian officials
On August 15, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13818 against two Liberian government officials under the Global Magnitsky Human Rights Accountability Act. According to OFAC, the sanctioned individuals are involved in ongoing public corruption in Liberia, and the sanctions are intended “to target[] perpetrators of serious human rights abuse and corruption around the world.” As a result, 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 designated individuals entails risk of sanctions.
OFAC sanctions “mixer” for laundering over $7 billion in virtual currency
On August 8, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13694 against a virtual currency mixer accused of allegedly laundering more than $7 billion in virtual currency since 2019. According to OFAC, this amount includes more than $455 million stolen by a previously sanctioned Democratic People’s Republic of Korea state-sponsored hacking group (covered by InfoBytes here). OFAC stated that the designations resulted from the company “having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, a cyber-enabled activity originating from, or directed by persons located, in whole or in substantial part, outside the United States that is reasonably likely to result in, or has materially contributed to, a significant threat to the national security, foreign policy, or economic health or financial stability of the United States and that has the purpose or effect of causing a significant misappropriation of funds or economic resources, trade secrets, personal identifiers, or financial information for commercial or competitive advantage or private financial gain.” Under Secretary of the Treasury for Terrorism and Financial Intelligence, Brian E. Nelson, added that the company “repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis,” and stressed that Treasury “will continue to aggressively pursue actions against mixers that launder virtual currency for criminals and those who assist them.” As previously covered by InfoBytes, in 2020, Treasury’s FinCEN penalized a bitcoin mixer $60 million for violating the Bank Secrecy Act.
As a result of the sanctions, all property and interests in property of the sanctioned entity 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.” OFAC noted that its regulations prohibit U.S. persons from participating in transactions with designated persons unless authorized by a general or specific license issued by OFAC or exempt.
Treasury further stressed that players in the virtual currency industry should take a risk-based approach for assessing risks associated with different virtual currency services, implementing measures to mitigate risks, and addressing the challenges anonymizing features can present to anti-money laundering/countering the financing of terrorism sanctions obligations. “[M]ixers should in general be considered as high-risk by virtual currency firms, which should only process transactions if they have appropriate controls in place to prevent mixers from being used to launder illicit proceeds,” Treasury said.
OFAC sanctions Russian companies and other entities
On August 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced several new sanctions in response to Russia’s invasion of Ukraine. The new sanctions, issued pursuant to Executive Order 14024, target elites, a major multinational company, a sanctions evasion operation, and a yacht used by a sanctioned individual. The action was taken together with the U.S. Department of State, which imposed additional sanctions on entities and individuals, as well as visa restrictions. 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, and “any entities that are owned, directly or indirectly, 50 percent or more” by the targeted persons are blocked and must be reported to OFAC. 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.
The following day, OFAC issued several new Russia-related General Licenses (GLs). OFAC also published three frequently asked questions regarding “Russian Harmful Foreign Sanctions.”
OFAC sanctions Iranian petrochemical network
On August 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13846 against companies used by one of Iran’s largest petrochemical brokers to facilitate the sale of Iranian petroleum and petrochemical products from Iran to East Asia. The designations follow OFAC sanctions announced on July 6 against a network of individuals and entities for facilitating the delivery and sale of hundreds of millions of dollars’ worth of Iranian petroleum and petrochemical products from Iranian companies to East Asia through a web of Gulf-based front companies (covered by InfoBytes here). As a result of the sanctions, all property and interests in property of the sanctioned persons subject to U.S. jurisdiction, as well as any entities owned 50 percent or more by such persons, are blocked and must be reported to OFAC. U.S. persons are also generally prohibited from entering into transactions with the sanctioned persons. Additionally, OFAC warned that “any foreign financial institution that knowingly facilitates a significant transaction for any of the individuals or entities designated today could be subject to U.S. sanctions.”
OFAC issues Russia-related sanction, general licenses, and FAQs
On July 21, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced Russia-related General License (GL) 45 and GL 46. GL 45 authorizes transactions related to the wind down of certain financial contracts prohibited by Executive Order (E.O.) 14071. GL 46 authorizes transactions in support of an auction process to settle certain credit derivative transactions prohibited by E.O. 14071. OFAC also announced that it published two new Frequently Asked Questions (FAQs) and two amended FAQs on “Russian Harmful Foreign Activities Sanctions.” Additionally, OFAC added a name to the SDN list.
OFAC settles with bank for alleged Foreign Narcotics Kingpin Sanctions Regulations violations
On July 15, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $430,500 settlement with a subsidiary of a national bank for allegedly processing transactions in violation of the Foreign Narcotics Kingpin Sanctions Regulations. According to OFAC’s web notice, between May 2018 and July 2018, the bank allegedly processed 214 transactions totaling $155,189, in violation of OFAC’s Kingpin sanctions. Specifically, OFAC noted that the processed transactions were for an account whose supplemental card holder was designated in connection with illegal drug distribution and money laundering.
In arriving at the settlement amount of $430,500, OFAC considered various aggravating factors, including that the bank “is a large and sophisticated financial institution with a global presence,” and “conferred $155,189.42 in economic benefit to an account associated with a [person] who was designated for involvement in illegal drug distribution and money laundering.” 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.