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  • OFAC adds members of Venezuelan President Maduro’s inner circle to Specially Designated Nationals List

    Financial Crimes

    On September 25, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) made additions to the Specially Designated Nationals List pursuant to Executive Order 13692. OFAC’s additions to the list include four members of Venezuelan President Maduro’s inner circle, along with a “front network” identified as acting for or on behalf of a sanctioned member of the Maduro regime. According to OFAC, the additional sanctions are issued in response to the Maduro regime's continued “corruption and gross mismanagement.” As a result, all assets belonging to the identified individuals and entities subject to U.S. jurisdiction are blocked, and U.S. persons generally are prohibited from dealing with them.

    OFAC also referenced FinCEN advisories issued August and September 2017 (see previous InfoBytes coverage here and here) as a source for additional information on “the methods that Venezuelan senior political figures, their associates, and front persons use to move and hide corrupt proceeds,” including the potential for exploitation within the U.S. financial system and real estate market.

    See here for continuing InfoBytes coverage of actions related to Venezuela.

    Financial Crimes Department of Treasury OFAC Sanctions Venezuela

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  • OFAC issues temporary extensions of Ukraine-related General Licenses

    Financial Crimes

    On September 21, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the issuance of Ukraine-related General Licenses (GL) 13D, 14A, and 16A, which amend previous licenses and extend the expiration date of those licenses from October 23 to November 12 for wind-down transactions relating to a specific list of companies and subsidiaries that otherwise would be prohibited by Ukraine-Related Sanctions Regulations. GL 13D supersedes GL 13C (see previous InfoBytes coverage here) and authorizes, among other things, (i) the divestiture of the holdings of specific blocked persons to a non-U.S. person; and (ii) the facilitation of transfers of debt, equity, or other holdings involving specified blocked persons to a non-U.S. person. GL 14A, which supersedes GL 14, relates to specific wind-down activities involving a Russian aluminum producer sanctioned last April (see previous InfoBytes coverage here). Finally, GL 16A supersedes GL 16 and authorizes, as previously covered by InfoBytes, the maintenance or wind down of operations, contracts, or other agreements that were in effect prior to April 6, 2018 and that involve a specific list of entities.

    Visit here for additional InfoBytes coverage on Ukraine sanctions.

    Financial Crimes OFAC Department of Treasury Sanctions Ukraine

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  • President Trump issues Executive Order delegating sanctions implementation authority; OFAC issues new CAATSA - Russia-related FAQ

    Financial Crimes

    On September 20, President Trump announced the issuance of Executive Order 13849 (E.O. 13849), “Authorizing the Implementation of Certain Sanctions Set Forth in the Countering America’s Adversaries Through Sanctions Act (CAATSA),” pursuant to national emergencies previously declared in Executive Orders 13660, 13694, and 13757. E.O. 13849 grants authority to the Secretary of the Treasury to take certain actions to implement the sanctions against identified persons, including the promulgation of regulations. Among other things, E.O. 13849 prohibits: (i) any U.S. financial institution from making loans or extending credits to sanctioned persons “totaling more than $10,000,000 in any 12-month period, unless the person is engaged in activities to relieve human suffering and the loans or credits are provided for such activities”; (ii) any foreign exchange transactions, subject to U.S. jurisdiction, in which the sanctioned person has any interest; and (iii) transfers of credit or payments between, by, or through financial institutions for the benefit of a sanctioned person subject to U.S. jurisdiction. E.O. 13849 further describes the actions that can be taken to implement the sanctions.

    In response to E.O. 13849, the U.S. Treasury Department’s Office of Foreign Assets Control published a new CAATSA - Russia-related FAQ providing additional clarifying information.

    Find continuing InfoBytes covered on CAATSA-related sanctions here.

    Financial Crimes Department of Treasury OFAC CAATSA Russia Executive Order

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  • OFAC publishes new Ukraine-related FAQs providing guidance on “maintenance” related to wind-down activities

    Financial Crimes

    On September 14, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the publication of two new FAQs to provide additional guidance on “maintenance” as that term is used in General Licenses (GLs) 1415, and 16. As previously covered in InfoBytes (see posts here, here, and here), the GLs authorize specified wind-down activities otherwise prohibited by Ukraine-related sanctions regulations. According to OFAC, maintenance “generally includes all transactions and activities ordinarily incident to performing under a contract or agreement in effect prior to April 6, 2018, provided that the level of performance is consistent with the terms of the general license and consistent with past practices that existed between the party and the blocked entity prior to April 6, 2018.”

    Visit here for additional InfoBytes coverage on Ukraine/Russia-related sanctions.

    Financial Crimes OFAC Department of Treasury Ukraine Russia

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  • President Trump issues Executive Order authorizing sanctions in the event of foreign interference in U.S. elections

    Financial Crimes

    On September 12, President Trump announced the issuance of Executive Order 13848 (E.O.), which authorizes sanctions against foreign persons found to have engaged in, assisted, or otherwise supported foreign interference in U.S. elections. Should an intelligence assessment determine such activity has occurred, Section 2 of the E.O. requires that transactions in property and interests of such interfering persons that are in the U.S. or under control of a U.S. person be blocked, and Section 3 of the E.O. directs the Secretaries of State and Treasury—in consultation with the heads of other appropriate agencies—to recommend to the President additional sanctions against “the largest business entities licensed or domiciled in a country whose government authorized, directed, sponsored, or supported election interference, including at least one entity from each of the following sectors: financial services, defense, energy, technology, and transportation.” Such additional sanctions may include, with respect to the targeted entities, (i) blocking all transactions related to property and interests subject to U.S. jurisdiction; (ii) prohibitions on U.S. financial institutions making loans or extending credit to identified entities; (iii) prohibitions on transfers of credit or payments between, by, or through financial institutions for the benefit of such an entity; and (iv) prohibitions on U.S. persons investing in equity or debt of such entities.

    Financial Crimes OFAC Department of Treasury Sanctions Executive Order Trump

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  • OFAC reaches $1.5 million settlement with electronics company for alleged Iranian sanctions violations

    Financial Crimes

    On September 13, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $1.5 million settlement with a California-based electronics company for alleged violations of the Iranian Transactions and Sanctions Regulations when it sold equipment to a Dubai-based distributor it knew or had reason to know distributed most, if not all, of its products to Iran. The settlement resolves litigation between the California company and OFAC stemming from a 2014 lawsuit challenging OFAC’s initial $4.07 million civil penalty. While the lower count ultimately granted summary judgment in favor of OFAC after finding enough evidence that the company knew the distributor’s business was primarily in Iran at the time the shipments were made, upon appeal, the D.C. Circuit reached a split decision in May 2017 setting aside OFAC’s initial penalty. While the appellate court affirmed that 34 of 39 shipments in question were in violation of the sanctions regulations, the company had produced emails indicating that the other shipments were intended for a retail store in Dubai. Because the penalty was calculated in such a way that the two shipments categories were “intertwined,” the court remanded the matter to OFAC for further consideration of the total penalty calculation.

    In arriving at the settlement amount, OFAC considered the following aggravating factors: (i) “the [a]lleged [v]iolations constituted or resulted in a systematic pattern of conduct”; (ii) the company exported goods valued at over $2.8 million; and (iii) the company had no compliance program in place at the time of the alleged violations. However, OFAC also considered mitigating factors such as the company’s status as a small business, the company not receiving a penalty or finding of a violation in the five years prior to the transactions at issue, and some cooperation with OFAC. OFAC further noted that following litigation, the company “took additional remedial actions to address the conduct that led to the [a]lleged [v]iolations, including terminating its relationship with [the Dubai-based distributor] and instituting an OFAC sanctions compliance program.”

    Financial Crimes Department of Treasury Sanctions OFAC Iran Courts Appellate Civil Money Penalties

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  • OFAC adds North Korea-controlled information technology companies in China and Russia to Specially Designated Nationals List

    Financial Crimes

    On September 13, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced that it made additions to the Specially Designated Nationals List pursuant to Executive Order (E.O.) 13722 and E.O. 13810. These additions identify one individual and two entities connected to illicit revenue earned by North Korea from overseas information technology (IT) workers. According to OFAC, the China and Russia-based front companies were actually managed and controlled by North Koreans, while the designated North Korean individual acted on behalf of the Chinese company. All designees were purported to have (i) “engaged in, facilitated, or been responsible for the exportation of workers from North Korea, including exportation to generate revenue for the Government of North Korea or the Workers’ Party of Korea”; and (ii) operated in the North Korean IT industry. As a result, all assets belonging to the identified individual and entities subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with them.

    See here for previous InfoBytes coverage on North Korean sanctions.

    Financial Crimes OFAC Department of Treasury Sanctions North Korea

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  • OFAC adds Syrians to Specially Designated Nationals List

    Financial Crimes

    On September 6, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) added five entities and four individuals to OFAC’s Specially Designated Nationals and Blocked Persons List for facilitating financial transactions and shipments of fuel and weapons in support of the Syrian government’s regime. The new sanctions, issued pursuant to Executive Order 13582, generally prohibit transactions by U.S. persons with those listed, and all assets belonging to the designated persons subject to U.S. jurisdiction are blocked and must be reported to OFAC.

    Visit here for continuing InfoBytes coverage on Syrian sanctions.

    Financial Crimes OFAC Department of Treasury Syria Sanctions

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  • OFAC adds North Koreans to Specially Designated Nationals List

    Financial Crimes

    On September 6, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) made additions to the Specially Designated Nationals List pursuant to Executive Order (E.O.) 13722. OFAC’s additions to the designations identify one individual and one entity found to have “engaged in significant activities undermining cybersecurity through the use of computer networks or systems against targets outside of North Korea” on behalf of the Government of North Korea. OFAC cites to the individual’s participation in a 2016 cyber-enabled fraudulent transfer of $81 million, a 2017 ransomware attack, and the 2014 cyber-attack against a U.S. entertainment company. As a result, all assets belonging to the identified individual and entity subject to U.S. jurisdiction are blocked and must be reported to OFAC, and U.S. persons are generally prohibited from engaging in transactions with them.

    See here for previous InfoBytes coverage on North Korean sanctions.

    Financial Crimes OFAC Department of Treasury International North Korea Sanctions Executive Order

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  • OCC seeks stakeholder feedback on modernizing the Community Reinvestment Act

    Agency Rule-Making & Guidance

    On August 28, the OCC issued an advance notice of proposed rulemaking (ANPR) seeking input from stakeholders on ways to transform or modernize the Community Reinvestment Act (CRA) regulatory framework. According to OCC Bulletin 2018-24, the ANPR seeks comments on several issues including:

    • encouraging more lending and services in areas where there is the most need, such as low- and moderate-income areas;
    • clarifying and expanding the types of activities eligible for CRA consideration;
    • reviewing and updating how assessment areas are delineated and used;
    • establishing measurable CRA rating metric-based thresholds;
    • increasing the transparency of a bank’s CRA performance;
    • improving the timeliness of CRA regulatory decisions; and
    • reducing the cost and regulatory burden associated with CRA evaluations.

    In its press release, the OCC stated that modernizing CRA regulations will “better achieve the statute’s original purpose, increase lending and investment where it is needed most, and reduce the burden associated with reporting and assessing CRA performance.” Additionally, the OCC noted in the ANPR that many stakeholders believe that aspects of current CRA regulations may only be “sufficient for certain locally focused and less complex banks,” as banking practices and the financial services industry continue to evolve.

    As previously covered by InfoBytes, in April the Treasury Department released a memorandum of recommendations addressing findings from Treasury’s comprehensive assessment of the CRA framework. The memorandum focused on four key areas: assessment areas, examination clarity and flexibility, the examination process, and bank performance. According to the OCC, comments on the ANPR “may inform the development of more specific policy proposals or future rulemakings.” The OCC will accept comments for 75 days following publication in the Federal Register.
     

    Agency Rule-Making & Guidance OCC CRA Department of Treasury

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