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Financial Services Law Insights and Observations


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  • OFAC sanctions persons for human rights violations in China’s Xinjiang region

    Financial Crimes

    On July 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13818 against a Chinese government entity and four current or former government officials for alleged corruption violations of the Global Magnitsky Human Rights Accountability Act. According to OFAC, the sanctioned persons are connected to serious human rights abuse against ethnic monitories in the Xinjiang region. The sanctions follow an advisory issued by the U.S. Departments of State, Treasury, Commerce, and Homeland Security advising “[b]usinesses with potential exposure in their supply chain to entities that engage in human rights abuses in Xinjiang or to facilities outside Xianjiang. . .[to consider] the reputational, economic, and legal risks of involvement with such entities.” As a result of the sanctions, all property and interests in property of the designated persons within U.S. jurisdiction must be blocked and reported to OFAC. OFAC notes that its regulations “generally prohibit” U.S. persons from participating in transactions with these individuals and entities. The prohibitions also “include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any blocked person or the receipt of any contribution or provision of funds, goods or services from any such person.”

    Financial Crimes OFAC Department of Treasury Sanctions China Of Interest to Non-US Persons

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  • Treasury designates Chinese GSA for providing support to Iranian airline

    Financial Crimes

    On May 19, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) designated a China-based company pursuant to Executive Order (E.O.) 13224 for allegedly acting as a general sales agent (GSA) for or on behalf of an Iranian airline. According to OFAC, this is the seventh time a GSA has been designated to the airline since 2018, which was previously designated under E.O.s 13224 and E.O, 13382 for providing support to Iran’s Islamic Revolutionary Guard Corps-Qods Force. OFAC emphasized that entities operating in the airline industry “should conduct due diligence to avoid performing services, including GSA services, for or on behalf of a designated person, which may be sanctionable,” and referred the industry to a 2019 advisory that outlined potential civil and criminal consequences for providing unauthorized support to or for designated Iranian airlines.

    As a result of the sanctions, “all property and interests in property of [the GSA] 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 property or interests in property of blocked or designated persons,” and warned foreign financial institutions that knowingly facilitating significant transactions or providing significant financial services to designated individuals may subject them to U.S. correspondent account or payable-through sanctions.

    Financial Crimes OFAC Sanctions Department of Treasury Of Interest to Non-US Persons China Iran

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  • U.S. imposes denial of export privileges on Chinese telecom giant for violating prior settlement agreement

    Financial Crimes

    On April 16, the U.S. Department of Commerce imposed a denial of export privileges on Chinese telecommunications equipment corporation for violating a previous settlement relating to illegally shipping telecommunications equipment to Iran and North Korea. As previously covered in InfoBytes, in March 2017, the company agreed to a combined civil and criminal penalty and to forfeiture of over $1.1 billion for shipping the equipment, making false statements, and obstructing justice. As part of the settlement, the company agreed to a seven-year suspended denial of export privileges, which would trigger if the agreement was not met or if the company committee further violations.

    The Department imposed the denial after determining that the company made false statements during the 2016 settlement negotiations and again during the probationary period in 2017 related to disciplinary actions against senior employees that the company said it was taking or had already taken. The false statements covered up the fact that the company had actually failed to issue letters of reprimand and paid full bonuses to the employees who had engaged in illegal conduct.

    Financial Crimes Settlement Department of Commerce North Korea China International

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  • President Trump’s Executive Order Imposes New Sanctions Against North Korea

    Financial Crimes

    On September 21, President Trump announced the issuance of new sanctions targeting individuals, companies, and financial institutions that finance or facilitate trade with North Korea, in addition to tightening trade restrictions. The Executive Order approves broad limitations on any foreign financial institution that knowingly conducts “significant” transactions involving North Korea. This includes transactions that “originate from, are destined for, or pass through a foreign bank account that has been determined by the Secretary of the Treasury to be owned or controlled by a North Korean person, or to have been used to transfer funds in which any North Korean person has an interest.” These funds “are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in.” The restrictions also prohibit dealing with persons involved in North Korea’s “construction, energy, financial services, fishing, information technology, manufacturing, medical, mining, textiles, or transportation industries,” and further authorizes the Secretary of the Treasury to restrict U.S.-based correspondent and payable-through accounts.

    These sanctions are in addition to those previously passed by President Trump in August. (See previous InfoBytes coverage here.) Separately, as previously covered in InfoBytes, last month the Treasury Department’s Office of Foreign Assets Control (OFAC) imposed sanctions against certain Chinese and Russian entities and individuals, among others, for allegedly aiding North Korea’s efforts to develop weapons of mass destruction.

    In response to President Trump’s latest sanctions, OFAC released updates to its FAQs concerning the additional sanctions. OFAC also issued General License 10 concerning the authorization restrictions to certain vessels and aircraft, and General License 3-A, which addresses permitted “normal service charges.”

    Financial Crimes Trump Sanctions Executive Order OFAC Department of Treasury North Korea China Russia

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  • OFAC Imposes Sanctions on Chinese and Russian Entities and Individuals for Aiding North Korea

    Financial Crimes

    On August 22, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced it was imposing sanctions on ten entities and six individuals from China, Russia, Singapore, and Namibia for their roles in supporting North Korea’s efforts to develop weapons of mass destruction, violations of United Nations Security Council Resolutions, and attempted evasion of U.S. sanctions. The sanctions prohibit any U.S. individual from dealing with the designated entities and individuals, and further states that “any property or interests in property of the designated persons in the possession or control of U.S. persons or within the United States must be blocked, and U.S. persons are generally prohibited from dealing with them.” OFAC’s notice identified entities and individuals that (i) assisted already-designated persons supporting North Korea’s nuclear and ballistic missile programs; (ii) dealt in the North Korean energy trade; (iii) facilitated overseas labor to North Korea; and (iv) enabled sanctioned North Korean entities to access the U.S. and international financial systems. Targets include three Chinese coal companies allegedly responsible for importing nearly half a billion dollars' worth of North Korean coal, as well as three Russians individuals and two Singapore-based companies OFAC claimed were involved in providing oil to North Korea.

    Financial Crimes Sanctions Department of Treasury OFAC China Russia North Korea

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