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OFAC sanctions North Koreans for development of WMDs
On April 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13382 against five entities for supporting the Democratic People’s Republic of Korea’s (DPRK’s) development of weapons of mass destruction (WMD) and ballistic missile programs in violation of multiple United Nations Security Council resolutions. According to OFAC, the sanctions target a DPRK WMD research and development organization, which is connected to the development of the DPRK’s intercontinental ballistic missile launches, along with four of its revenue generating subsidiaries. As a result of the sanctions, all property and interests in property of the sanctioned entities are blocked and must be reported to OFAC. OFAC noted that its regulations generally prohibit U.S. persons from participating in transactions with the designated entities, including transactions transiting the U.S. OFAC’s announcement further warned that any foreign financial institution that knowingly facilitates significant transactions or provides significant financial services for any of the designated individuals may be subject to U.S. correspondent account or payable-through account sanctions.
OFAC sanctions Russian technology companies
On March 31, 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 21 entities and 13 individuals connected to the Russian Federation “as part of its crackdown on the Kremlin’s sanctions evasion networks and technology companies.” Additionally, OFAC has determined that three additional sectors of the Russian Federation’s economy are subject to sanctions, which permits OFAC to impose sanctions on any individual or entity determined to operate or have operated in any of those sectors. According to OFAC, one of the sanctioned entities is a technology company that exports over 50 percent of Russian microelectronics and is Russia’s largest chipmaker. This action follows OFAC’s March 24 designation of dozens of companies in Russia’s defense-industrial base that are directly involved in Russia’s invasion of Ukraine (covered by InfoBytes here). OFAC also expanded sanctions authorities to include the Russian aerospace, marine, and electronics sector. 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, individually or in the aggregate, 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 and entities, unless exempt or authorized by a general or specific OFAC license.
OFAC reaches $78,750 settlement with financial analytics company
On April 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a roughly $78,750 settlement with a financial analytics company for allegedly processing transactions in violation of Ukraine-Related Sanctions Regulations. According to OFAC’s web notice, in August 2016, the company (which had been recently acquired) reissued and re-dated an August 2015 invoice with a new date that was 374 days after the invoice for the debt was originally issued. After a partial payment, the company reissued the original August 2015 invoice creating two “new” invoices each reflecting half of the remaining balance and dated November 2016, both with payment due upon receipt. After another partial payment, the company reissued a fourth invoice with the remaining debt in September 2017, again altering the date. OFAC concluded that the company violated the Ukraine-Related Sanctions Regulations “by dealing in new debt of longer than 90 days maturity when [it] extended the payment date of its invoices.”
In arriving at the settlement amount, OFAC considered various aggravating factors, including, among other things, that (i) the company “failed to exercise a minimal degree of caution or care when it reissued and re-dated four invoices to extend the payment date of invoices far beyond the authorized debt tenor, knowing or having reason to know such conduct would violate U.S. sanctions regulations”; (ii) the company’s staff “were aware of and involved in the conduct giving rise to the Apparent Violations”; and (iii) the company “was a commercially sophisticated entity and considered a leader in global energy market analysis, with over 500 customers in 60 countries.” OFAC also considered various mitigating factors, including, among other things, that the company (i) has not received a penalty notice from OFAC in the preceding five years; (ii) “took remedial measures by enhancing their compliance program to better ensure compliance with OFAC sanctions, creating more robust training, adding periodic testing to invoices involving SSI List entities, and adding additional staff to manage sanctions issues”; and (iii) cooperated during the investigation.
Providing context for the settlement, OFAC stated that this “case underscores the importance of careful adherence to OFAC regulations, including in cases where counterparties may make compliance challenging.”
OFAC sanctions IRGC-connected entities
On March 30, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order (E.O.) 13224, as amended, as well as E.O. 13382, against an Iran-based procurement agent and his network of companies that supported the Islamic Revolutionary Guard Corps Research and Self Sufficiency Jihad Organization (IRGC), the IRGC unit responsible for the research and development of ballistic missiles, as well as Iran’s Parchin Chemical Industries (PCI), an element of Iran’s Defense Industries Organization. Additionally, OFAC sanctioned an Iranian intermediary involved in the procurement of parts used to develop missile propellant on behalf of PCI.
According to OFAC, the sanctions follow Iran’s missile attack on March 13 in Erbil, Iraq and an Iranian-enabled Houthi missile attack against a Saudi Aramco facility on March 25, in addition to other missile attacks by Iranian proxies against Saudi Arabia and the United Arab Emirates. 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. U.S. persons are generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons.
OFAC sanctions individuals for raising funds supporting Nigerian terrorist group
On March 25, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13224, as amended, against six individuals connected to the Nigerian terrorist group Boko Haram. According to OFAC, the six individuals “were found guilty of establishing a Boko Haram cell in the United Arab Emirates (UAE) to raise funds for and provide material assistance to Boko Haram insurgents in Nigeria.” The sanctions follow “arrests, prosecutions, and designations in the UAE in September 2021, demonstrating the commitment of the Emirati government to using judicial measures and targeted financial sanctions to disrupt the flow of funds to these networks.” Under Secretary of the Treasury Brian Nelson stated that the U.S. is joining the UAE in targeting terrorist financing networks to ensure the Boko Haram network is unable to further move funds through the international financial system. As a result of the sanctions, all property and interests in property belonging to the sanctioned individuals 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 individuals 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.
OFAC’s announcement further warned that “engaging in certain transactions with the individuals designated today entails risk of secondary sanctions” and that any foreign financial institution that knowingly facilitates significant transactions or provides significant financial services on behalf of a Specially Designated Global Terrorist may be subject to U.S. correspondent account or payable-through account sanctions.
OFAC sanctions Russian defense companies, political leaders, and Sberbank CEO
On March 24, 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 (EO) 14024, target dozens of Russian defense companies, 328 members of the Russian State Duma, and the CEO of Sberbank, Russia’s largest financial institution. According to OFAC, the sanctions target “companies that are part of Russia’s defense-industrial base and that produce weapons that have been used in Russia’s assault against Ukraine’s people, infrastructure, and territory,” and are intended to prevent 48 companies from accessing western technological and financial resources. The sanctions imposed against the Russian Duma members (political and national security leaders who have supported Russia’s invasion of Ukraine) expand on previous sanctions taken against other Duma members (covered by InfoBytes here) and expand designations to now include the State Duma itself as an entity. OFAC further noted that the sanctioned CEO of Sberbank is a close Putin associate who oversees a large number of companies owned by Sberbank in other industries. 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 same day, OFAC also published one new Frequently Asked Question clarifying the impact of EO 14024 and other Russia-related sanctions on gold-related transactions or persons participating in the gold market.
Find continuing InfoBytes coverage on the U.S. sanctions response to Russia’s invasion of Ukraine here.
OFAC announces Burmese sanctions
On March 25, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 14014 against five individuals and five entities connected to the military regime in Burma. According to OFAC, the sanctions “come[] as the regime prepares to mark the 77th Armed Forces Day.” OFAC also described that “[f]ollowing the February 1, 2021, coup that overthrew Burma’s democratically elected civilian government, the military committed numerous atrocities against the people of Burma, including the violent repression of political dissent and violence against innocent people, including at pro-democracy protests during last year’s Armed Forces Day that killed more than 100 people.” As a result of the sanctions, all property and interests in property belonging to the sanctioned 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.” U.S. persons are generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons.
Treasury official says it’s time to reconsider “culture of compliance”
On March 21, the U.S. Treasury Department’s Assistant Secretary for Terrorist Financing and Financial Crimes Elizabeth Rosenberg delivered remarks before the Association of Certified Anti-Money Laundering Specialists (ACAMS) Hollywood Conference, asking attendees to consider “[w]hat must a culture of compliance look like in a world where autocracy is on the rise” and how financial institutions should adapt their Bank Secrecy Act/anti-money laundering (AML) obligations to ensure they are effective. Rosenberg praised the quick responses taken by financial institutions and financial service providers in implementing the growing list of sanctions against Russia and Russian President Vladimir Putin’s support structure in light of the recent invasion of Ukraine. “Russia’s war has meaningfully expanded AML and sanctions obligations,” Rosenberg cautioned, stressing it was time for an updated approach to considering and managing risk. “Geopolitical events are evolving fast, and we need financial institutions more than ever to act swiftly as we in the government are pushing out new designations and advisories almost daily.” She instructed attendees to “think about risk and enhanced due diligence when it comes to Russian oligarchs and kleptocrats who may not have been priorities for [entities’] compliance efforts in early February but are now crucial players, supporting Putin’s power structure.”
Rosenberg further noted that Treasury’s efforts would be aided if public and private sectors were faster about sharing information and if information sharing was improved “across borders, between financial institutions, and with the government.” Closing money laundering and global passport loopholes through which sanctioned actors can move funds and assets around the globe is also critical, Rosenberg stated. She also highlighted the U.S. government’s recent collaboration with foreign partners to help countries effectively take measures to “find, restrain, freeze, and where appropriate, to confiscate the assets of those who have been sanctioned in connection with Russia’s invasion of Ukraine.” These multilateral efforts include the recent launch of the Russian Elites, Proxies, and Oligarchs multilateral task force, and Treasury’s Kleptocracy Asset Recovery Rewards Program, as well as recently issued FinCEN advisories to help compliance officials better identify Russian sanctions evasion and suspicious financial activity including through real estate, luxury goods, and other high-value assets. (Covered by InfoBytes here.)
Find continuing InfoBytes coverage on the U.S. sanctions response to Russia’s invasion of Ukraine here.
OFAC announces human rights abuse sanctions
On March 21, the U.S. Treasury Department’s Office of Foreign Assets Control announced sanctions pursuant to Executive Order 13818 against the Republic of the Sudan Central Reserve Police (CRP) for serious human rights abuse. According to OFAC, the “CRP has used excessive force against pro-democracy protesters peacefully demonstrating against the military-led overthrow of the civilian-led transitional government in Sudan.” As a result of the sanctions, all property and interests in property belonging to the sanctioned person subject to U.S. jurisdiction are blocked and must be reported to OFAC. OFAC also noted that its regulations generally prohibit all dealings by U.S. persons that involve any property or interests in property of designated persons.
OFAC sanctions Guatemalan drug trafficking organization connected to Mexican cartels
On March 18, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 14059 against a drug trafficking organization tied to Mexican cartels, as well as the organization’s leaders, for engaging in actions that threaten the people and security of the U.S. and Guatemala. Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson stated that “Treasury and our U.S. and Guatemalan government partners will continue to use every available resource to dismantle these criminal networks” that have “engaged in, or attempted to engage in, activities or transactions that materially contributed to, or pose a significant risk of materially contributing to, the international proliferation of illicit drugs or their means of production.” As a result of the sanctions, the designated persons’ property located in the U.S. or held by U.S. persons are blocked and must be reported to OFAC. Additionally, OFAC regulations generally prohibit U.S. persons from participating in transactions with the designated persons.