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On June 10, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Syria General License (GL) 21A, Venezuela GL 39A, and Iran GL N-1, “Authorizing Certain Activities to Respond to the Coronavirus Disease 2019 (COVID-19) Pandemic.” Each GL authorizes certain Covid-19-related transactions through June 17, 2023. Additionally, OFAC updated Frequently Asked Questions regarding the purposes of the GLs and provided clarifying information.
On May 27, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $225,937 settlement with a Puerto Rican bank for allegedly violating the Venezuela Sanctions Regulations. According to OFAC’s web notice, the bank allegedly processed 337 transactions totaling $853,126 on behalf of two low level employees of the Government of Venezuela (GoV). The apparent violations allegedly resulted from the bank’s maintenance of four personal accounts operated by these two employees that should have been blocked by Executive Order (E.O.) 13884 (which blocks property and interests in property of the GoV, including “‘any person owned or controlled, directly or indirectly,’ by the GoV, and ‘any person who has acted or purported to act directly or indirectly for or on behalf of’ any such entity”). OFAC stated that the two GoV individuals also did not meet the criteria for authorized transaction exemptions under General License 34A and found that the bank failed to identify the customers for 14 months following the issuance of E.O. 13884.
In arriving at the settlement amount, OFAC considered various aggravating factors, including, among other things, that (i) the bank maintained documentation showing that the two individuals were low-level GoV employees but delayed identifying them; and (ii) the bank has more than $61 billion in assets. OFAC also considered various mitigating factors, including that the bank (i) took remedial action to ensure compliance with OFAC sanctions; (ii) created more robust sanctions-related procedures; (iii) developed additional resources and guidance in connection to sanctions alert review and disposition; (iv) added staff to oversee OFAC sanctions matters; (v) reviewed policies and procedures for identifying, reviewing, and reporting transactions that violate OFAC’s regulations; and (vi) enhanced its sanctions screening trainings. The bank also voluntarily self-disclosed the apparent violations to OFAC and cooperated with OFAC’s investigation.
Providing context for the settlement, OFAC stated that this action “demonstrates the importance of financial institutions conducting timely due diligence…following the issuance of new sanctions prohibitions.”
On May 27, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order (E.O.) 13382 against one individual, two banks, and a trading company connected to the Democratic People’s Republic of Korea’s (DPRK) development of weapons of mass destruction (WMD) and ballistic missile programs and to the U.S.-designated DPRK national airline. According to OFAC, the U.S. is “committed to seeking dialogue and diplomacy with the DPRK but will continue to address the threat posed by the DPRK’s unlawful WMD and ballistic missile programs to the United States and the international community.” As a result of the sanctions, all property and interests in property of the sanctioned individuals and entities subject to U.S. jurisdiction 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 person, 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 or entities may be subject to U.S. correspondent account or payable-through account sanctions.
The same day, OFAC issued Venezuela- related General License 8J, which authorizes certain transactions involving Petróleos de Venezuela, S.A. (PDVSA) that were previously prohibited under prior Executive Orders to the extent such transactions and activities are “necessary for the limited maintenance of essential operations in Venezuela or the wind down of operations in Venezuela for certain entities,” among other things.
On January 20, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Venezuela-related General License (GL) 5I, which supersedes GL 5H and authorizes certain transactions otherwise prohibited under Executive Orders 13835 and 13857 related to, or that provide financing for, dealings in the Petróleos de Venezuela, S.A. 2020 8.5 Percent Bond on or after January 20, 2023. Concurrently, OFAC updated a Venezuela-related frequently asked question regarding GL 5I. Additionally, OFAC amended the definition of “applicable schedule amount” contained in appendix A to 31 CFR part 501. The amendment became effective January 21.
On November 24, the U.S. Treasury Department’s Office of Foreign Assets Control issued Venezuela-related General License (GL) 8I, which extends the authorization of certain transactions that were in effect prior to July 26, 2019, involving Petróleos de Venezuela, S.A. that are necessary for the limited maintenance of essential operations in Venezuela or the wind-down of operations in Venezuela for certain entities that would otherwise be prohibited by Executive Order 13850 (as amended), as incorporated into the Venezuela Sanctions Regulations. (Covered by InfoBytes here.) Effective through June 1, 2022, GL 8I replaces GL 8H, which was issued June 1.
On September 30, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the publication of a new Iran-related FAQ. FAQ 932 clarifies that “transactions ordinarily incident to travel to or from Iran by U.S. persons are within an exemption under the Iranian Transactions and Sanctions Regulations (ITSR), 31 C.F.R. part 560, and therefore generally are not prohibited.” OFAC also noted that U.S. persons could be prohibited from engaging in transactions associated with persons blocked by sanctions programs or authorities outside the scope of the ITSR.
The same week, on October 1, OFAC announced the publication of a new Venezuela-related FAQ. FAQ 933 clarifies that authorizations in paragraph (a) of Venezuela-related General Licenses 7C and 20B, respectively, have not expired.
On September 10, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Venezuela General License (GL) 5H, which supersedes GL 5G and authorizes certain transactions otherwise prohibited under Executive Orders 13835 and 13857 related to, or that provide financing for, dealings in the Petróleos de Venezuela, S.A. 2020 8.5 Percent Bond on or after January 22, 2022. Concurrently, OFAC amended a Venezuela-related frequently asked question regarding GL 5H.
On July 20, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Venezuela-related General License (GL) 5G, “Authorizing Certain Transactions Related to the Petróleos de Venezuela, S.A. 2020 8.5 Percent Bond on or After October 21, 2021,” which replaces and supersedes GL 5F. GL 5G, however, does not authorize any transactions or activities otherwise prohibited by the Venezuela Sanctions Regulations. OFAC also amended related FAQ 595, which reminds parties that, until October 21, 2021, “transactions related to the sale or transfer of CITGO shares in connection with the PdVSA 2020 8.5 percent bond are prohibited, unless specifically authorized by OFAC.”
On July 12, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued General License (GL) 40, “Authorizing Certain Transactions Involving the Exportation or Reexportation of Liquefied Petroleum Gas to Venezuela.” GL 40 permits transactions and activities otherwise prohibited by Executive Order 13884 (covered by InfoBytes here) involving “the Government of Venezuela, Petróleos de Venezuela, S.A. (PdVSA), or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest.” OFAC also published two new FAQs, 914 and 915, related to GL 40.
On June 17, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued three general licenses, Iran GL N, Syria GL 21, and Venezuela GL 39, (referred to as the “COVID-19-related GLs”) to expand upon Treasury’s existing authorizations for Covid-19-related transactions and activities. As previously covered by InfoBytes, OFAC published a Fact Sheet providing guidance to ensure humanitarian-related trade and assistance reaches at-risk populations through legitimate and transparent channels during the global Covid-19 pandemic. The recently released COVID-19-related GLs build on longstanding humanitarian exemptions, exceptions, and authorizations to cover Covid-19-related transactions and activities, which include, among others, “transactions and activities involving the delivery of face masks, ventilators and oxygen tanks, vaccines and the production of vaccines, COVID-19 tests, air filtration systems, and COVID-19-related field hospitals.” These GLs are also part of the Biden Administration’s efforts designated in National Security Memorandum – 1, which directs certain government agencies to review existing U.S. and “multilateral financial and economic sanctions to evaluate whether they are unduly hindering responses to the COVID-19 pandemic worldwide.” According to OFAC, these new authorizations will continue to support the effort by governments, international organizations, non-governmental organizations, and private sector actors in providing Covid-19-related assistance to people in certain sanctioned jurisdictions. OFAC also published six FAQs related to the COVID-19-related GLs (see 906, 907, 908, 909, 910, and 911).
- Jedd R. Bellman to discuss “The CFPB’s crackdown on collection junk fees and the growing anti-CFPB rhetoric” at an Accounts Recovery webinar
- Benjamin W. Hutten to discuss “Latest on AML regulations and impact of economic sanctions” at a Mortgage Bankers Association webinar
- Benjamin W. Hutten to discuss “Fundamentals of financial crime compliance” at the Practicing Law Institute
- Benjamin W. Hutten to discuss “Ongoing CDD: Operational considerations” at NAFCU’s Regulatory Compliance & BSA Seminar