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On November 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the issuance of Ukraine-related General Licenses (GL) 13G, 14C, 15B, and 16C, which amend previous licenses related to permissible wind-down transactions that otherwise would be prohibited by Ukraine-Related Sanctions Regulations with respect to the subject entities. OFAC extended the expiration dates of the licenses from December 12 to January 7, 2019, while reviewing the sanctioned entities’ proposed “substantial corporate governance changes” that may result in significant changes in their control.
GL 13G supersedes GL 13F and authorizes, among other things, activities “ordinarily incident and necessary” to (i) divest or transfer debt, equity, or other holdings in the specified blocked entities to a non-U.S. person; or (ii) facilitate the transfers of debt, equity, or other holdings in those entities by a non-U.S. person to another non-U.S. person. GL 14C, which supersedes GL 14B, relates to specific wind-down activities involving a Russian aluminum producer sanctioned last April as previously covered by InfoBytes here. GL 15B and GL 16C supersede GL 15A and GL 16B, respectively, and authorize permissible activities relating to the maintenance or wind-down of operations, contracts, and agreements with designated entities and subsidiaries that were effective prior to April 6.
Visit here for additional InfoBytes coverage on Ukraine sanctions.
On November 8, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced its decision to sanction an additional three individuals and nine entities, pursuant to the Countering America’s Adversaries Through Sanctions Act of 2017 (CAATSA) and Executive Orders (E.O.) 13685 and 13661, for supporting Russia’s occupation of Crimea and parts of eastern Ukraine and its continued “malign activity and destabilizing behavior.” According to OFAC, two of the individuals and one of the entities placed on the Specially Designated Nationals and Blocked Persons List (SDN List) allegedly engaged in serious human rights abuses in “territories forcibly occupied or otherwise controlled by Russia” under the Support for the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act of 2014, as amended by CAATSA Section 228. Additionally, pursuant to E.O. 13685, OFAC imposed sanctions on eight entities and one individual allegedly responsible for helping Russia advance its interests by operating in the Crimea region of Ukraine. OFAC further noted that one of the eight entities is also designated for being owned or controlled by, directly or indirectly, a sanctioned Russian bank and a Russian national whose property and interests in property are blocked pursuant to E.O. 13661. As a result, all property and interests in property belonging to the identified individuals and entities subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from entering into transactions with them.
Visit here for additional InfoBytes coverage on Russia sanctions.
On November 5, the Federal Financial Institutions Examination Council (FFIEC) members issued a joint statement alerting financial institutions to the potential impact that the U.S. Treasury Department’s Office of Foreign Assets Control’s (OFAC) recent actions under its Cyber-Related Sanctions Program may have on financial institutions’ risk management programs. OFAC implemented the Cyber-Related Sanctions Program in response to Executive Order 13694 to address individuals and entities that threaten national security, foreign policy, and the economy of the U.S. by malicious cyber-enabled activities. FFIEC’s press release announcing the joint statement references OFAC’s June action against five Russian entities and three Russian individuals who, through “malign and destabilizing cyber activities,” provided material and technological support to Russia’s Federal Security Service (previously covered by InfoBytes here), noting that these entities may offer services to financial institutions operating in the U.S.
The joint statement reminds financial institutions to ensure that their compliance and risk management processes address possible interactions with an OFAC sanctioned entity. The statement notes that continued use of products or services from a sanctioned entity may cause the financial institution to violate the OFAC sanctions. Additionally, use of software or technical services from a sanctioned entity may increase a financial institution’s cybersecurity risk. The statement encourages financial institutions to take appropriate corrective action, as well as to ensure their third-party service providers comply with OFAC’s requirements.
The OCC also released Bulletin 2018-40, which corresponds with the FFIEC’s joint statement.
OFAC announces several actions related to the “snap-back” of sanctions on Iran, effective November 5
On November 5, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced several actions in conjunction with the full re-imposition of sanctions on Iran effective immediately. As previously covered by InfoBytes, President Trump announced his decision to withdraw from the Joint Comprehensive Plan of Action (JCPOA) on May 8. Following the end of the wind-down period, which authorized certain activities through November 4, OFAC issued FAQs related to the “snap-back” of Iranian sanctions. OFAC also updated its Specially Designated Nationals (SDN) list to add over 700 persons, including persons previously removed from the SDN list during the U.S.’s participation in the JCPOA and persons previously identified on the Executive Order 13599 list. OFAC additionally provided a technical notice containing details related to the SDN list changes.
OFAC’s announcement also refers to an amendment effective November 5 to the Iranian Transactions and Sanctions Regulations (ITSR), in connection with President Trump’s decision to cease U.S. participation in the JCPOA. The newly issued amendment reflects sanctions re-imposed by Executive Order 13846, as covered by InfoBytes here, in addition to changes to certain sanctions lists maintained by OFAC. OFAC also announced it is “amending an existing general license in the ITSR to authorize U.S. persons to sell personal property in Iran and transfer the proceeds to the [U.S.],” if the personal property was either: (i) acquired before the individual became a U.S. person; or (ii) inherited from persons in Iran.
See here for continuing InfoBytes coverage on Iranian sanctions.
President Trump issues new Venezuela Executive Order targeting gold sector; OFAC publishes related FAQs
On November 1, President Trump issued Executive Order 13850 (E.O. 13850) authorizing the imposition of sanctions on persons who operate in Venezuela's gold sector “or in any other sector of the Venezuelan economy as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State.” The sanctions come in response to the actions of Venezuelan President Maduro’s regime and associated persons in allegedly “plunder[ing] Venezuela's wealth for their own corrupt purposes.” Among other things, the sanctions specifically block the acquisition or retention of property and interests in the United States by persons who “operate in the gold sector of the Venezuelan economy” or “have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, any activity or transaction” involving deceptive practices or corruption in conjunction with the Venezuelan government.
The same day, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) released a set of FAQs connected to the issuance of E.O. 13850, stating that it “expects to use its discretion to target in particular those who operate corruptly in the gold or other identified sectors of the Venezuela economy, and not those who are operating legitimately in such sectors.”
On October 25, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced that it made three additions to the Specially Designated Nationals (SDNs) List pursuant to Executive Order 13551, which empowers the United States to block the property of certain persons with respect to North Korea. OFAC said the decision was designed to reinforce the U.S.’s ongoing “commitment to safeguard the international financial system and implement existing UN Security Council [ ] resolutions.” OFAC’s additions identify one Singaporean individual and two Singapore-based entities found to have helped North Korea evade U.S. sanctions—either directly or indirectly—by allegedly engaging in money laundering, counterfeiting goods or currency, smuggling bulk cash, trafficking narcotics, or engaging in other forms of illicit economic activity involving or supporting the North Korean government or any senior official. 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.
In a related action, the DOJ unsealed a federal indictment against the Singaporean individual who was charged with fulfilling millions of dollars in commodities contracts for North Korea and defrauding several financial institutions in hiding those illicit transactions using international front companies, including entities previously identified as SDNs for supporting the North Korean regime’s illicit activities. The indictment’s charges include conspiracies to (i) violate international sanctions; (ii) commit bank fraud; (iii) commit money laundering; and (iv) defraud the U.S. The charges also include counts of bank fraud and money laundering.
See here for previous InfoBytes coverage on North Korean sanctions.
On October 19, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the issuance of Ukraine-related General Licenses (GL) 13F and 15A, which extend the expiration date of previous Ukrainian-based general licenses to December 12 for wind-down transactions for certain companies that otherwise would be prohibited by Ukraine-Related Sanctions Regulations.
GL 13F supersedes GL 13E and authorizes, among other things, activities “ordinarily incident and necessary” for (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 15A, which supersedes GL 15, relates to permissible activities with the designated company and its subsidiaries, and applies to the maintenance and wind-down of operations, contracts, and agreements that were effective prior to April 6.
Visit here for additional InfoBytes coverage on Ukraine sanctions.
On October 12, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced the issuance of Ukraine-related General Licenses (GL) 13E, 14B, and 16B, which amend previous licenses and extend the expiration date of those licenses from November 12 to December 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 13E supersedes GL 13D 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 14B, which supersedes GL 14A, relates to specific wind-down activities involving a Russian aluminum producer sanctioned last April (see previous InfoBytes coverage here). Finally, GL 16B supersedes GL 16A and authorizes the maintenance or wind-down of operations, contracts, or other agreements that were in effect prior to April 6 and that involve a specific list of entities.
Visit here for additional InfoBytes coverage on Ukraine sanctions.
On October 11, the Financial Crimes Enforcement Network (FinCEN) issued an advisory for financial institutions on ways to help better detect and report the Iranian regime's efforts to evade U.S. sanctions through potentially illicit transactions. The advisory outlines deceptive practices used by the Iranian regime to evade sanctions, including front companies, fraudulent documents, transactions involving exchange houses, falsified shipping documents, and the use of virtual currencies, and warns financial institutions that FinCEN expects Iran to expand use of these practices following the November 5 return of sanctions previously suspended as part of the Joint Comprehensive Plan of Action. (See previous InfoBytes coverage here on Executive Order 13846, issued last August reimposing sanctions against Iran.) The advisory also includes a series of red flags to help banks identify possible deceptive activity, and provides information for filing suspicious activity reports. FinCEN advises foreign financial institutions to consult the advisory to “better understand the obligations of their U.S. correspondents, to avoid exposure to U.S. sanctions, and to address the Anti-Money Laundering/Combating the Financing of Terrorism risks that Iranian activity poses to the international financial system.”
See here for continuing InfoBytes coverage of actions related to Iran.
On October 5, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced an approximate $5.3 million settlement with a national bank for alleged violations of the Cuban Assets Control Regulations, the Iranian Transactions and Sanctions Regulations, and the Weapons of Mass Destruction Proliferators Sanctions Regulations. According to OFAC, the settlement resolves the bank’s potential civil liability for, among other things, allegedly processing net settlement payments for bank clients between January 2008 and February 2012, for which only 0.14 percent were attributable to interests of non-U.S. person entity members that were at various times identified on OFAC’s Specially Designated Nationals List, sanctioned, or located in countries subject to OFAC’s sanctions programs.
In arriving at the settlement amount, OFAC considered factors such as (i) prior to January 2012, the bank did not appear to have in place a process to independently assess participating member entities of the non-U.S. person entity for OFAC sanctions risk, despite allegedly receiving red flag notifications regarding OFAC-sanctioned members; (ii) staff members processing the net settlement transactions may have had actual knowledge of the members; and (iii) the bank is a large, commercially sophisticated financial institution.
OFAC also considered numerous mitigating factors, including (i) managers and supervisors were not aware of the conduct; (ii) the total harm caused was “significantly less than the total value of the transactions”; (iii) the bank cooperated with the investigation and entered into a retroactive agreement to toll the statutes of limitations; and (iv) the bank has implemented several steps as part of its risk-based compliance program to prevent future violations. OFAC also noted that the bank voluntary disclosed the violations, and that the violations constitute a non-egregious case.
- Tina Tchen to deliver keynote address at the American Bar Association Professional Success Summit
- Jeffrey P. Naimon and Jonice Gray Tucker to discuss "Enforcement and litigation trends" at the American Bankers Association General Counsel Meeting
- Andrea K. Mitchell to discuss "Developments in fair lending law" at the Mortgage Bankers Association Summit on Diversity and Inclusion
- David S. Krakoff to discuss "The DOJ corporate enforcement policy and your disclosure calculus one year in: Are companies benefitting?" at the American Conference Institute International Conference on the Foreign Corrupt Practices Act
- Moorari K. Shah to discuss "Legal & regulatory issues" at the Opal Group Marketplace Lending & Alternative Financing Summit
- Jonice Gray Tucker to discuss "Hot topics in consumer financial services" at the Practising Law Institute Banking Law Institute
- Daniel P. Stipano to discuss "New CDD Rule: Pitfalls in compliance" at the American Bankers Association/American Bar Association Financial Crimes Enforcement Conference
- Daniel P. Stipano to discuss "Anti-money laundering/OFAC compliance" at the Institute of International Bankers U.S. Regulatory/Compliance Orientation Program