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On May 1, the Department of Justice announced the indictment of a Honduran national for trying to launder more than $1.3 million in bribes that had been paid to his brother, the former Executive Director of the Honduran Institute of Social Security. The bribes had been paid by two Honduran businessmen for the benefit of the Executive Director. The indictment alleges that he conspired with his brother to launder the funds through international wire transfers and the purchase of real estate in the New Orleans area. The indictment further alleges that he also used his brother’s high-ranking position to profit from lucrative Honduran government contracts and that he impeded an official proceeding by lying to the U.S. government about the source of the funds. He was arrested on the same day the indictment was announced.
On May 7, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) made additions to the Specially Designated Nationals List under the Foreign Narcotics Kingpin Designation Act. OFAC’s additions to the list include a former Venezuelan financial intelligence service official, two of his aides, and 20 companies located in Venezuela and Panama, owned or controlled by the three individuals. The designations identify persons who have materially assisted in, or provided financial or technological support for or to, the former official’s international narcotics trafficking activities, which include the laundering of narcotics proceeds and other illicit funds. As a result, all assets belonging to the identified individuals and entities subject to U.S. jurisdiction are blocked and must be reported to OFAC, and U.S. persons are generally prohibited from dealing with them.
See here for continuing InfoBytes coverage of Venezuelan actions.
On May 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Ukraine-/Russia-related General License 12B (GL 12B) authorizing specified wind-down activities, which would be otherwise prohibited by Ukraine-related Sanctions Regulations, through June 5. According to a Treasury announcement, GL 12B—which replaces and supersedes General License 12A in its entirely—permits “originating and intermediary U.S. financial institutions to process funds transfers that they would otherwise block to an account held by a blocked U.S. person at a U.S. financial institution,” and allows the release of “such funds for authorized maintenance and wind-down purposes.”
The same day, OFAC also issued Ukraine-/Russia-related General License 13A (GL 13A) to replace and supersede General License 13 (GL 13) in its entirety. (See previous InfoBytes coverage on GL 13 here.) GL 13A authorizes certain divestiture transactions with specified blocked persons to a non-U.S. person, and allows the facilitation of transfers of debt, equity, or other holdings involving listed blocked persons, including entities owned 50 percent or more and issued by the named persons. GL 13A is effective through June 6.
Visit here for additional InfoBytes coverage on Ukraine/Russian sanctions.
On April 27, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued General License No. 2E (GL 2E) to extend the authorization allowing nine Belarusian entities to enter into transactions otherwise prohibited by Executive Order 13405. GL 2E replaces and supersedes in its entirety General License No. 2D, and authorizes transactions with any entities that are owned 50 percent or more by the nine named entities. All property and interests in property of these entities, if blocked, remain blocked, and U.S. persons must report authorized transactions or any series of transactions exceeding $50,000 to the U.S. Department of State no later than 30 days after execution. The authorization expires on October 30, unless otherwise extended or revoked.
Visit here for additional InfoBytes coverage on Belarus General Licenses.
U.S. imposes denial of export privileges on Chinese telecom giant for violating prior settlement agreement
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.
On March 23, the Treasury Department’s Office of Foreign Assets Control (OFAC), in coordination with the DOJ, imposed additional sanctions on an Iranian entity and 10 Iranian nationals, pursuant to Executive Order 13694, for conducting malicious cyberattacks against hundreds of U.S. and third-country universities for private financial gain. Nine of the identified individuals are connected to the Mabna Institute and are accused of misappropriating “economic resources or personal identifiers” to aid Iran’s Islamic Revolutionary Guard Corps. Pursuant to these sanctions, all property or interests in property of the designated persons within U.S. jurisdiction are blocked, and U.S. persons are “generally prohibited” from participating in transactions with these individuals and entities. Additionally, as reported in a DOJ press release, the nine Iranians have also been indicted for engaging in malicious cyber-enabled activities. A tenth Iranian national was sanctioned for engaging in cyber-related actions targeting a U.S. media company.
Visit here for additional InfoBytes coverage on Iranian sanctions.
On March 15, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced its decision to sanction an additional five entities and 19 individuals, pursuant to Countering America’s Adversaries Through Sanctions Act of 2017 (CAATSA) and Executive Order 13694 (E.O. 13694). The CAATSA sanctions target “cyber actors” who carried out cyber attacks on behalf of the Russian government, while E.O. 13694 designations target entities and individuals who interfered with the 2016 U.S. election. Pursuant to OFAC’s sanctions, all property or interests in property of the designated persons within U.S. jurisdiction are blocked, and U.S. persons are “generally prohibited” from participating in transactions with these individuals and entities. As part of the announcement, Treasury Secretary Steven Mnuchin stated that “Treasury intends to impose additional CAATSA sanctions, informed by our intelligence community, to hold Russian government officials and oligarchs accountable for their destabilizing activities by severing their access to the U.S. financial system.”
The same day, OFAC amended General License No. 1, “Authorizing Certain Transactions with the Federal Security Service” and reissued it as “Cyber General License No. 1A” (GL 1A). OFAC also published four updated FAQs relating to the agency’s sanctions and GL 1A and CAATSA.
Visit here for additional InfoBytes coverage on Russian sanctions.
President Trump issues Executive Order prohibiting Venezuelan cryptocurrency transactions; OFAC sanctions additional Venezuelan officials
On March 19, President Trump issued an Executive Order (E.O.) prohibiting transactions within the U.S. that involve any digital currency issued by, for, or on behalf of the Venezuelan government since January 9, and authorizing the U.S. Treasury Department to “employ all powers” necessary to carry out the E.O.’s provisions. President Trump issued the E.O. in conjunction with E.O. 13692 and E.O. 13808 and because of recent steps taken by Venezuelan President Maduro to “circumvent U.S. sanctions” by issuing a digital currency that the Venezuelan legislature “denounced as unlawful.” The E.O. took effect on March 19 at 12:15 p.m. EDT.
On the same day, the Treasury’s Office of Foreign Assets Control (OFAC) announced additional sanctions pursuant to E.O. 13692 against four current or former Venezuelan government officials as part of “ongoing efforts to highlight the economic mismanagement and endemic corruption that have been the defining features of the Maduro regime.” Pursuant to OFAC’s sanctions, all assets belonging to the designated persons within U.S. jurisdiction are blocked, and U.S. persons are “generally prohibited” from participating in transactions with these individuals. OFAC also published answers to several related FAQs concerning President Trump’s E.O., as well as new FAQs related to virtual currency.
Visit here for additional InfoBytes coverage on Venezuelan sanctions.
On March 12, the Federal Reserve Board (Fed) entered into a consent order with a Chinese bank (bank) and its New York branch (branch) in connection with alleged Bank Secrecy Act and anti-money laundering (BSA/AML) violations. According to the Fed’s order, a recent examination identified “significant deficiencies” in the branch’s BSA/AML compliance and risk management controls. The consent order requires, among other things, the bank and branch submit within 60 days: (i) a written governance plan to achieve compliance with BSA/AML requirements; (ii) a system to identify and assess risks associated with all products and customers, including “politically exposed persons”; (iii) an enhanced customer due diligence program plan; and (iv) a compliance program to ensure accurate suspicious activity monitoring and reporting. The bank and branch are further required to engage an independent third party acceptable to the Fed to review their dollar-clearing transaction activity in the second half of 2016 “to determine whether suspicious activity involving high-risk customers or transactions” was properly flagged. The order imposes no financial penalty.
On March 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) published a final rule in the Federal Register to amend and reissue the North Korea Sanctions Regulations in their entirety. The final rule implements Executive Orders 13687, 13722, and 13810, references the North Korea Sanctions and Policy Enhancement Act of 2016 and the Countering America’s Adversaries Through Sanctions Act of 2017, and provides the Treasury Secretary, “in consultation with the Secretary of State, additional tools to disrupt North Korea’s ability to fund its weapons of mass destruction and ballistic missile programs.” All property and interests in property of the Government of North Korea and the Workers’ Party of Korea are blocked, transactions by U.S. persons involving the sanctioned entities are generally prohibited, and “all transactions within the United States, including all financial transactions that transit the U.S. financial system, must comply with OFAC regulations.” Among other things, the final rule (i) incorporates several general licenses previously only available on OFAC’s North Korea Sanctions page; (ii) adds several new general licenses; (iii) adds and expands provisions to provide the public with a more comprehensive set of regulations; (iv) updates certain regulatory provisions; and (v) makes other technical and conforming changes. The final rule takes effect March 5, 2018. Also released the same day were updates to OFAC’s North Korea-related FAQs.
See here for previous InfoBytes coverage on North Korean sanctions.
- Jonice Gray Tucker to join CFPB panel at CBA’s Washington Forum
- Jonice Gray Tucker to moderate “Pandemic relief response and lasting impacts on access, credit, banking, and equality” at the American Bar Association Business Law Section Spring Meeting
- Jeffrey P. Naimon to discuss "Post-pandemic CFPB exam preparation" at the Mortgage Bankers Association Spring Conference & Expo
- Jonice Gray Tucker to discuss "Making fair lending work for you" at the Mortgage Bankers Association Spring Conference & Expo
- Jonice Gray Tucker to discuss "Reading the tea leaves of President Biden’s initial financial appointees" at LendIt Fintech
- Moorari K. Shah to discuss “CA, NY, federal licensing and disclosure” at the Equipment Leasing & Finance Association Legal Forum
- Jonice Gray Tucker to discuss "Compliance under Biden" at the WSJ Risk & Compliance Forum
- Jonice Gray Tucker to discuss “The future of fair lending” at the Mortgage Bankers Association Legal Issues and Regulatory Compliance Conference