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REPO task force highlights efforts taken against sanctioned Russians
On March 9, the multilateral Russian Elites, Proxies, and Oligarchs (REPO) Task Force released a statement on the group’s continued work one year after Russia’s invasion of Ukraine. As previously covered by InfoBytes, the U.S. Treasury Department, along with representatives from Australia, Canada, Germany, France, Italy, Japan, the United Kingdom, and the European Commission, formed REPO last February to collect and share information among authorities in order “to take concrete actions, including sanctions, asset freezing, and civil and criminal asset seizure, and criminal prosecution.” REPO noted that it has, among other things, (i) blocked or frozen more than $58 billion in sanctioned Russian assets; (ii) taken collective measures to restrict sanctioned Russians’ access to the global financial system and “to investigate and counter Russian sanctions evasions, including attempts to hide or obfuscate assets, illicit cryptocurrency and money laundering schemes, illicit Russian defense procurement, and sanctioned Russians’ use of financial facilitators”; (iii) led international sanctions enforcement efforts; (iv) “[w]orked to update or expand and implement REPO members’ respective legal frameworks that enable the freezing, seizure, forfeiture and/or disposal of assets”; and (v) brought about the first forfeiture of assets of a sanction Russian as part of $5.4 million foreign assistance funds transfer to Ukraine. REPO also issued a joint Global Advisory on Russian Sanctions Evasion, intended to ensure effective sanctions implementation and compliance across member jurisdictions.
OFAC sanctions Iran’s international UAV procurement network
On March 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against a China-based network of five companies and one individual accused of supporting Iran’s unmanned aerial vehicle (UAV) procurement efforts, pursuant to Executive Order 13382. According to OFAC, the network “is responsible for the sale and shipment of thousands of aerospace components, including components that can be used for UAV applications,” to an Iranian aircraft manufacturing company previously sanctioned by OFAC in 2008, for being owned or controlled by Iran’s Ministry of Defense and Armed Forces Logistics and for having provided support to Iran’s Islamic Revolutionary Guard Corps.
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.”
OFAC sanctions “shadow banking” network responsible for moving billions for Iranian regime
On March 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against “39 entities constituting a significant ‘shadow banking’ network,” pursuant to Executive Order 13846. OFAC explained that this network is “one of several multi-jurisdictional illicit finance systems,” which grants sanctioned Iranian entities access to the international financial system and obfuscates sanctioned entities’ trade with foreign customers. “Iran cultivates complex sanctions evasion networks where foreign buyers, exchange houses, and dozens of front companies cooperatively help sanctioned Iranian companies to continue to trade,” Deputy Secretary of the Treasury Wally Adeyemo said in the announcement. “Today’s action demonstrates the United States’ commitment to enforcing our sanctions and our ability to disrupt Iran’s foreign financial networks, which it uses to launder funds.” The action follows previous designations of six Iran-based petrochemical manufacturers or their subsidiaries, as well as three firms located in Malaysia and Singapore, for their involvement in the sale and shipment of petroleum and petrochemicals on behalf of a previously designated company (covered by InfoBytes here).
As a result of the sanctions, all property interests belonging to the sanctioned targets 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 individuals or entities designated today may themselves be exposed to sanctions or subject to enforcement. 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” unless an exception applies.
OFAC sanctions Iranian officials for serious human rights abuses
On March 8, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions, pursuant to Executive Orders 13553 and 13846, against several Iranian regime officials and entities for serious human rights abuses against women and girls. Included among the sanctioned individuals are “the top commander of the Iranian army and a high-ranking leader in the Islamic Revolutionary Guard Corps (IRGC), as well as an Iranian official who was central to the regime’s efforts to block internet access.” OFAC also imposed sanctions against three Iranian companies and their leadership for their role in enabling the violent repression by the Iranian Law Enforcement Forces of peaceful protestors. The actions, taken in coordination with the EU, UK, and Australia, mark the continued effort to impose sanctions on persons who engage in serious human rights abuse or censorship with respect to Iran.
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.” OFAC further warned that “persons that engage in certain transactions with the persons designated today may themselves be exposed to sanctions or subject to an enforcement action,” and that “any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the persons designated today could be subject to U.S. sanctions.”
OFAC sanctions Russian human rights abusers
On March 3, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions, pursuant to Executive Order (E.O.) 13818, against three individuals involved in serious human rights abuses against a prominent Russian human rights defender. The designations are complemented by visa restrictions imposed by the Department of State against two of the individuals and their families. The Department of State also concurrently designated three other individuals pursuant to E.O. 14024 “for being or having been leaders, officials, senior executive officers, or members of the board of directors of the Government of the Russian Federation.” 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 also 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 license issued by OFAC, or exempt.
Agencies flag intermediaries in evading Russia-related sanctions
On March 2, the DOJ, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), and the Department of Commerce’s Bureau of Industry and Security (BIS) issued a joint compliance note on the use of third-party intermediaries or transshipment points to evade Russian- and Belarussian-related sanctions and export controls. This is the first collective effort taken by the three agencies to inform the international community, the private sector, and the public about efforts taken by malign actors to evade sanctions and export controls in order to provide support for Russia’s war against Ukraine. The compliance note outlines enforcement trends and details attempts made by Russia “to circumvent restrictions, disguise the involvement of Specially Designated Nationals and Blocked Persons [] or parties on the Entity List in transactions, and obscure the true identities of Russian end users.” The compliance note also provides common red flags indicating whether a third-party intermediary may be engaged in efforts to evade sanctions or export controls, and outlines guidance for companies on maintaining effective, risk-based sanctions and export compliance programs. The agencies highlight other measures taken to constrain Russia, including stringent export controls imposed by BIS to restrict Russia’s access to technologies and other items, sanctions and civil money penalties issued against U.S. persons who violate OFAC sanctions and non-U.S. persons who cause U.S. persons to violate Russian sanctions programs, and the DOJ’s interagency law enforcement task force, Task Force KleptoCapture, which enforces sanctions, export controls, and economic countermeasures imposed by the U.S. and foreign allies and partners.
OFAC settles with Indian tobacco company on North Korean transactions
On March 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $332,500 settlement with an India-registered tobacco company to resolve allegations that it “requested payment in U.S. dollars for its indirect exportation of tobacco to the Democratic People’s Republic of Korea [(DPRK)].” According to OFAC’s web notice, in late 2016, an assistant manager at the company and a representative from a Thai intermediary began communicating about a prospective order of tobacco from a DPRK customer. A decision was eventually made not to include the DPRK customer or to list the DPRK in trade documents for the order. Rather, the order listed the Thai intermediary as the customer and China as the destination. OFAC maintained that the company issued three invoices to the Thai intermediary for its tobacco orders, and asked that payments be sent in USD to either the company’s bank account at a non-U.S. bank in India or to the India-branch of a U.S. bank. Between July and August 2017, four Hong Kong-organized intermediaries remitted funds to the company for these shipments and made five payments totaling approximately $369,228. Four of the five USD payments were sent to the non-U.S. bank, causing three U.S. financial institutions to clear the payments. The fifth payment was sent to the India-branch of a U.S. bank. By directing the Hong Kong intermediaries to remit payments in USD, OFAC claimed the company “caused U.S. correspondent banks that processed the payments, as well as the foreign branch of a U.S. bank, to export financial services to or otherwise facilitate the exportation of tobacco to the DPRK” in violation of the North Korea Sanctions Regulations.
In arriving at the settlement amount, OFAC determined, among other things, that several managers had actual knowledge of the alleged conduct at issue, and that the company “acted recklessly” by “fail[ing] to exercise a minimal degree of caution or care for U.S. sanctions laws and regulations and caus[ing] U.S. financial institutions to export financial services or otherwise facilitate the exportation of tobacco to the DPRK.”
OFAC also considered various mitigating factors, including that the company has not received a penalty notice from OFAC in the preceding five years. Additionally, the company undertook remedial measures upon learning of the alleged violations, cooperated with OFAC throughout the investigation, and agreed to toll the statute of limitations, the notice said.
Providing context for the settlement, OFAC said that this action “highlights the deceptive practices DPRK entities use to evade U.S. and international sanctions and acquire revenue-generating goods, such as by employing intermediaries in various countries to coordinate shipping and make payments.”
OFAC sanctions timeshare fraud network
On March 2, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions, pursuant to Executive Order 14059, against eight Mexican companies connected to timeshare fraud on behalf of the Cartel de Jalisco Nueva Generacion (CJNG). The CJNG is also designated under E.O. 14059. OFAC described timeshare fraud typology, explaining that schemes often involve third-party scammers who claim to have ready buyers and make unsolicited purchase offers to timeshare owners. If these offers are accepted, the scammers ask timeshare owners to pay advance fees and taxes to “facilitate or expedite the sale with assurances of reimbursement upon closing.” However, timeshare owners, after making multiple payments, eventually realize that the offers do not exist and lose their money, OFAC said. In conjunction with the sanctions, OFAC issued an alert warning that perpetrators of timeshare fraud may falsely claim to represent OFAC to appear legitimate and further their fraud.
As a result of the sanctions, all property and interests in property of the designated persons located in the U.S. or held by U.S. persons is blocked and must be reported to OFAC. Further, “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 an OFAC-issued general or specific license, or exempt. OFAC further warned that “U.S. persons may face civil or criminal penalties for violations of E.O. 14059 and the Kingpin Act.”
OFAC issues supplemental guidance on humanitarian sanctions exceptions
On February 27, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued supplemental guidance for the provision of humanitarian assistance. As previously covered by InfoBytes, last December OFAC implemented a carveout from the asset freeze provisions of UN sanctions programs by issuing or amending several general licenses to ease the delivery of humanitarian aid and ensure a baseline of authorizations for the provision of humanitarian support across many sanctions programs. The 2023 fact sheet provides information for the U.S. government, international organizations and entities, nongovernmental organizations, persons involved in the distribution of food, agricultural commodities, medicine, and medical devices, and financial institutions and other service providers who support or facilitate these transactions. The action reflects “Treasury’s work to limit the unintended impact of sanctions by providing greater consistency and clarity across U.S. sanctions programs to help legitimate humanitarian assistance and related trade reach at-risk populations through transparent financial channels.”
OFAC sanctions Mexican arms trafficker for supplying weapons to cartel
On February 28, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order (E.O.) 14059 against a Mexican national for his role in providing, or having attempted to provide, financial, material, or technological support for, or goods or services in support of, the Cartel de Jalisco Nueva Generacion (CJNG). The CJNG is also designated under E.O. 14059. According to OFAC, the sanctions are part of a whole-of-government effort to combat global threats posed by illicit drug trafficking into the U.S. The agency stressed it will continue to coordinate with federal government partners and foreign counterparts to target and pursue accountability for foreign illicit drug actors. As a result of the sanctions, the designated individual’s property located in the U.S. or held by U.S. persons is blocked and must be reported to OFAC. Further, “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 an OFAC-issued general or specific license, or exempt. OFAC further warned that “U.S. persons may face civil or criminal penalties for violations of E.O. 14059 and the Kingpin Act.”