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OFAC issues Syria-related settlement with French bank for $8.5 million
On January 4, the Department of Treasury’s Office of Foreign Assets Control (OFAC) announced an over $8.5 million settlement with a French bank that facilitates trade finance between Europe and the Middle East, North Africa, sub-Saharan Africa, and Asia for 127 apparent violations of Syria-related sanctions. The 127 apparent violations include: (i) 114 internal transfers on behalf of Syrian entities totaling over $1 billion, with 45 of the transfers processed between two clients, one being a sanctioned Syrian entity and 69 of the transfers conducted as a foreign exchange transaction with a sanctioned Syrian customer; and (ii) 13 “back-to-back” letter of credit transactions or other trade finance transactions involving sanctioned Syrian parties, processed through a U.S. bank.
In arriving at the settlement amount, OFAC considered various aggravating factors, including that management had “actual knowledge” of the conduct, and that the bank “conferred substantial economic benefit to U.S.-sanctioned parties,” causing “significant harm to the integrity of U.S. sanctions programs and their associated policy objectives.”
OFAC also considered various mitigating factors, including (i) the majority of the violations occurred in late 2011, after an August 2011 Executive Order significantly expanded U.S. sanctions against Syria; (ii) the bank voluntarily self-disclosed the apparent violations and cooperated with the investigations; and (iii) had a compliance program in place at the time of the apparent violations.
OFAC sanctions organizations controlled by the Supreme Leader of Iran
On January 13, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against two purportedly charitable organizations controlled by the Supreme Leader of Iran, as well as their leaders and subsidiaries, for, among other things, allegedly controlling assets expropriated from political dissidents and religious minorities in order to benefit senior Iranian government officials. The OFAC sanctions were taken pursuant to Executive Order 13876 and follow sanctions issued last November against a conglomerate of roughly 160 holdings in key sectors of Iran’s economy (covered by InfoBytes here). 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. U.S. persons are generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons. OFAC further warned foreign financial institutions that knowingly conducting or facilitating significant transactions for or on behalf of the designated persons could subject them to U.S. correspondent account or payable-through sanctions.
OFAC sanctions individuals and entities for Russian-linked election interference
On January 11, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against seven individuals and four entities that are allegedly part of a Russia-linked foreign influence network associated with a Russian agent previously designated for his attempt to influence the 2020 U.S. presidential election. The individuals and entities associated with the Russian agent are now being similarly designated pursuant to Executive Order 13848 for “having directly or indirectly engaged in, sponsored, concealed, or otherwise been complicit in foreign influence in a United States election.” As a result, all property and interests in property belonging to, or owned by, the identified individuals and entities subject to U.S. jurisdiction are blocked, and “any entities that are owned, directly or indirectly, 50 percent or more by the designated entities, are also blocked.” U.S. persons are generally prohibited from dealing with any property or interests in property of blocked or designated persons.
OFAC announces several actions related to securities transactions involving Chinese military companies
On January 8, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued General License (GL) 1—“Authorizing Transactions Involving Securities of Certain Communist Chinese Military Companies.” This license permits transactions and activities otherwise prohibited by Executive Order (E.O.) 13959 involving “publicly traded securities, or any securities that are derivative of, or are designed to provide investment exposure to such securities, of an entity whose name closely matches the name of a Communist Chinese military company identified in the Annex to E.O. 13959” but does not appear on OFAC’s Non-SDN Communist Chinese Military Companies List. Authorization is granted through 9:30 am eastern standard time, January 28. The Non-SDN Communist Chinese Military Companies List was also updated the same day.
OFAC also recently published several new frequently asked questions related to E.O. 13959. Specifically, FAQ 862 states that U.S. persons are not required “to divest their holdings in publicly traded securities (and securities that are derivative of, or are designed to provide investment exposure to, such securities) of the Communist Chinese military companies identified in the Annex to E.O. 13959 by January 11, 2021.” FAQ 863 explains that U.S. persons are permitted to engage in activity related to the following services: “custody, offer for sale, serve as a transfer agent, and trade in covered securities.” Meanwhile, FAQ 864 clarifies that E.O. 13959’s prohibitions apply to “publicly traded securities (or any publicly traded securities that are derivative of, or are designed to provide investment exposure to, such securities)” of any entities with names that exactly or closely match the name of an entity identified in the aforementioned annex. Additionally, FAQ 865 clarifies that “[m]arket intermediaries and other participants may engage in ancillary or intermediary activities that are necessary to effect divestiture” from publicly traded securities of Communist Chinese military companies during relevant wind-down periods or that are otherwise not prohibited under E.O, 13959.
OFAC issues amended Venezuela-related general license, sanctions Venezuelan officials
On January 4, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Venezuela-related General License (GL) 31A and an amended related frequently asked question. GL 31A authorizes certain transactions and activities involving the IV Venezuelan National Assembly, the Interim President of Venezuela, and certain other persons that would otherwise be prohibited by Executive Order (E.O.) 13884, as incorporated into the Venezuela Sanctions Regulations. (See previous InfoBytes coverage here.)
Additionally, earlier on December 30, OFAC announced sanctions pursuant to E.O. 13692 against two Venezuelan government officials who presided over the trials of six U.S. persons in Venezuela. According to OFAC, the six executives’ trials “were based on politically motivated charges and marred by a lack of fair trial guarantees.” 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 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.
OFAC reaches settlement with Saudi Arabian bank to resolve Sudanese and Syrian sanctions violations
On December 28, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $653,347 settlement with a Saudi Arabian bank to resolve 13 apparent violations of the Sudanese Sanctions Regulations, or section 2(b) of Executive Order (E.O.) 13582, which prohibits certain transactions with respect to Syria. According to OFAC’s web notice, between 2011 and 2014, the bank processed—directly or indirectly—13 U.S. dollar (USD) transactions totaling more than $5.9 million “to or through the United States in circumstances where a benefit of [the bank’s] service was received by Sudanese or Syrian counterparties, or that involved goods originating in or transiting through Sudan or Syria.” OFAC noted that the apparent violations began after the bank had implemented more robust compliance measures, “including those relating to sanctions screening and OFAC sanctions compliance.”
In arriving at the settlement amount, OFAC considered various aggravating factors, including that the bank “conferred substantial economic benefit to U.S.-sanctioned parties,” causing “significant harm to the integrity of U.S. sanctions programs and their associated policy objectives.”
OFAC also considered various mitigating factors, including that the bank (i) did not willfully intend to violate U.S. sanctions law or recklessly disregard its sanctions obligations; (ii) cooperated with the investigation and signed a tolling agreement; and (iii) has undertaken remedial measures and has enhanced its compliance controls and internal policies, including by requiring the screening of all payments against international sanctions lists and prohibiting the opening of USD accounts for any Sudanese customers or financial institutions.
OFAC sanctions Iraqi militia leader for human rights abuse
On January 8, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against an Iraqi militia leader for his alleged connection to serious human rights abuses. According to OFAC, the sanctions are taken pursuant to Executive Order 13818, which implements the Global Magnitsky Human Rights Accountability Act and “targets perpetrators of serious human rights abuse and corruption.” As a result of the sanctions, all of the militia leader’s property and interests in property that are in the United States, as well as any entities that are owned 50 percent or more by him are blocked and must be reported to OFAC. Additionally, OFAC regulations “generally prohibit” U.S. persons from participating in financial transactions with the individual and blocked entities.
OFAC sanctions additional actors in Iranian steel sector
On January 5, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against a Chinese supplier of graphite electrodes, 12 Iranian producers of steel and other metal products, and a major Iranian metals and mining holding company’s three foreign-based sales agents. OFAC’s actions are taken pursuant to Executive Order 13871 (covered by InfoBytes here), which authorizes the imposition of sanctions on persons determined to operate in Iran’s iron, steel, aluminum, and copper sectors, which OFAC identified as providing “funding and support for the proliferation of weapons of mass destruction, terrorist groups and networks, campaigns of regional aggression, and military expansion.” As a result of the sanctions, “all property and interests in property of these 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 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 foreign financial institutions that knowingly conducting or facilitating significant transactions for or on behalf of the designated persons could subject them to U.S. correspondent account or payable-through sanctions.
OFAC settles with digital asset company over multiple sanctions violations
On December 30, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a nearly $100,000 settlement with a California-based digital asset security company for 183 apparent violations of multiple sanctions programs. According to OFAC, between March 2015 and December 2019, the company processed 183 digital currency transactions, totaling over $9,000, on behalf of individuals who were located in sanctioned jurisdictions, such as the Crimea region of Ukraine, Cuba, Iran, Sudan, and Syria. OFAC notes that, prior to April 2018, the company allowed users to open accounts by providing only a name and email address, and while it then amended its policies to require all new accountholders to verify the country in which they were located, it did not perform additional verification or diligence on their actual location.
In arriving at the settlement amount, OFAC considered various aggravating factors, including that the company (i) failed to implement appropriate, risk-based sanctions compliance controls; and (ii) had reason to know that some of its users were located in sanctioned jurisdictions based on users’ IP address data.
OFAC also considered various mitigating factors, such as (i) the company not having received a penalty notice from OFAC in the proceeding five years; (ii) the company cooperating with the investigation; and (iii) the company having undertaken remedial measures, including hiring a Chief Compliance Officer and implementing a new OFAC policy.
OFAC sanctions Central Bank of Syria and Syrian officials
On December 22, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against two individuals, nine business entities, and the Central Bank of Syria, pursuant to Syria sanctions authorities. Treasury notes that the sanctions are intended to “discourage future investment in government-controlled areas of Syria, force the regime to end its atrocities against the Syrian people, and compel its commitment to the United Nations-facilitated process in line with UN Security Council Resolution 2254.” Additionally, concurrent with OFAC’s designations, the State Department also designated six Syrian persons pursuant to Section 2 of Executive Order 13894. 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 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 designated or otherwise blocked persons,” and warned that non-U.S. persons that engage in certain transactions with the designated persons may expose themselves to designation.