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  • OFAC Fines Global Risk Mitigation Firm for Violating Iranian Sanctions

    Financial Crimes

    On August 10, the Treasury’s Office of Foreign Assets Control (OFAC) announced it had reached a settlement with a global company that provides services in regulatory risk mitigation for alleged violations of OFAC sanctions against Iran. OFAC claimed that, beginning in 2012, on 44 separate occasions, the firm imported Iranian-origin services into the U.S., and on 28 different occasions, engaged in “transactions or dealings related to Iranian-origin services by approving and facilitating its foreign subsidiaries’ payments to providers of Iranian-origin services.” In establishing the penalty, OFAC considered that the firm failed to exercise a minimal degree of caution—and senior management allegedly knew or had reason to know the transactions related to services of Iranian-origin—and that the transactions giving rise to the apparent violations were not eligible for OFAC authorization and yielded economic benefits to Iran. Furthermore, OFAC claimed the “frequency and duration of the apparent violations constitute a pattern or practice of conduct,” and that the firm’s ineffective compliance program failed to recognize the risks of engaging in the aforementioned transactions. OFAC maintained the firm violated the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560. OFAC also considered the company’s prior history of not being sanctioned; its significant remedial measures; and substantial cooperation with OFAC’s investigation.

    The settlement requires the firm to pay more than $250,000 to settle the claims, which the firm did not voluntarily self-disclose to OFAC.

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  • OFAC Imposes Sanctions on Eight Additional Venezuelans Connected to Venezuelan President Maduro

    Financial Crimes

    On August 9, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced that it was imposing sanctions on eight Venezuelan individuals for their role in supporting the “Constituent Assembly,” which was instituted under President Nicolas Maduro in order to allegedly undermine the democratic process by “rewrit[ing] the Venezuelan constitution and dissolv[ing] Venezuelan state institutions.” Seven of the individuals sanctioned are current or former officials of the Venezuelan government, and one was an active participant in identified “anti-democratic” actions. All assets belonging to the identified individuals subject to U.S. jurisdiction are frozen, and U.S. persons are prohibited from having any dealings with them. As previously reported in InfoBytes, sanctions were imposed on President Maduro on July 31.

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  • President Trump Signs Into Law New Sanctions Against North Korea, Iran, and Russia

    Federal Issues

    On August 2, President Trump signed into law a bipartisan bill placing new sanctions on Iran, Russia, and North Korea. The House passed the sanctions by a vote of 419-3, while the Senate cleared it 98-2. The Countering America's Adversaries Through Sanctions Act (H.R.3364) is comprised of three bills:

    • Korean Interdiction and Modernization of Sanctions Act. The sanctions modify and increase President Trump’s authority to impose sanctions on persons in violation of certain United Nations Security Council resolutions regarding North Korea. Specifically, U.S. financial institutions shall not “knowingly, directly or indirectly,” facilitate or maintain correspondent accounts with North Korean or other foreign financial institutions that provide services to North Korea, or execute a transfer of funds or property “that materially contributes to any violation of an applicable United National Security Council resolution.” A foreign government that provides to or receives from North Korea a defense article or service is prohibited from receiving certain types of U.S. foreign assistance. The sanctions concern: (i) shipping and cargo restrictions; (ii) cooperation between North Korea and Iran pertaining to the countries’ weapon programs; (iii) forced labor and trafficking victims, including goods produced by forced labor; and (iv) foreign persons that employ North Korean forced laborers. Furthermore, the Secretary of State is directed to submit a determination regarding whether North Korea meets the criteria for designation as a state sponsor of terrorism no later than 90 days after the Act has been enacted.
    • Countering Iran's Destabilizing Activities Act of 2017. The sanctions—intended to deter Iranian activities and threats affecting the U.S. and key allies—include: (i) assessments of Iran’s conventional force capabilities such as its ballistic missile or weapons of mass destruction programs; (ii) prohibitions on the sale or transfer of military equipment and sanctions against Iran’s Islamic Revolutionary Guard Corps and any affiliated foreign persons; (iii) programs to be undertaken by the U.S. and other foreign governments to counter destabilizing activities; and (iv) prohibitions on any activity that provides “financial, material, technological, or other support for goods or services in support” of the identified programs or persons. The sanctions also block any property or interests in property of any designated person “if such property and interests in property are in the [U.S.], come within the [U.S.], or are or come within the possession or control of a [U.S.] person.” The law allows President Trump to impose sanctions against persons committing human rights violations against Iranian citizens, and also grants him the ability to “temporarily waive the imposition or continuation of sanctions under specified circumstances.”
    • Countering Russian Influence in Europe and Eurasia Act of 2017. Under the new sanctions, notwithstanding sanctions passed under President Obama’s administration, Congress will review President Trump’s proposed actions to terminate or waive sanctions with respect to Russia and determine whether the actions will or will not “significantly alter [U.S.] foreign policy with regard to the Russian federation.” Additionally, the President may, at his discretion, waive specified cyber- and Ukraine-related sanctions if submitted to the appropriate congressional committees and “is in the vital national security interests of the [U.S.].” The sanctions concern the following: (i) cybersecurity; (ii) crude oil projects; (iii) Russian and foreign financial institutions; (iv) corruption; (v) human rights abuses; (vi) evasion of sanctions; (vii) transactions with Russian intelligence or defense sectors; (viii) pipeline developments; (ix) privatization of state-owned assets by the Russian federation; and (v) arms and related material transfers to Syria. The sanctions further detail financial transaction loan and credit restrictions between U.S. and international financial institutions and sanctioned persons—including directives related to financing new debt—and place prohibitions on sanctioned financial institutions. Among other things, the sanctions direct the development of a national strategy for combating the financing of terrorism and other types of illicit financing.

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  • OFAC Imposes Sanctions on Venezuelan President Maduro

    Financial Crimes

    On July 31, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced that it was imposing sanctions on Venezuelan President Nicolás Maduro, pursuant to Executive Order 13692, for undermining the country’s democracy and rule of law after recent elections and committing widespread human rights abuses. The sanctions prohibit any U.S. individual from dealing with President Maduro and freezes all assets belonging to him subject to U.S. jurisdiction. Treasury Secretary Steven T. Mnuchin explained that the July 30 “illegitimate elections confirm that Maduro is a dictator who disregards the will of the Venezuelan people. By sanctioning Maduro, the United States makes clear our opposition to the policies of his regime and our support for the people of Venezuela who seek to return their country to a full and prosperous democracy.”

    The July 31 sanctions follow an announcement on July 26 in which OFAC announced it was imposing sanctions against 13 current or former Venezuelan government officials associated with election corruption and human rights violations. As a result, all assets subject to U.S. jurisdiction are frozen and U.S. persons are prohibited from dealing with any of the individuals on the list.

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  • OFAC Fines International Technology Subsidiary More Than $12 Million for Violating Iranian Sanctions

    Financial Crimes

    On July 27, the Treasury’s Office of Foreign Assets Control (OFAC) announced it had reached a settlement with a subsidiary of a Singapore-based international technology group for alleged violations of OFAC sanctions against Iran. OFAC claimed that between August 25, 2010 and November 5, 2011, the subsidiary entered into contracts with multiple Iranian companies, engaged several third-party vendors to provide goods and services for the contracts, and caused “at least six separate financial institutions to engage in the unauthorized exportation or re-exportation of financial services from the [U.S.] to Iran.” Furthermore, the subsidiary made a statement to a non-U.S. financial institution in Singapore (the Bank) stating, “In consideration of [the Bank] agreeing to continue providing banking services in Singapore to our company, we . . . hereby undertake not to route any transactions related to Iran through [the Bank], whether in Singapore or elsewhere.” However, the subsidiary began originating USD funds transfers through the Bank related to Iranian business transactions. Moreover, its actions provided “significant economic benefit” to Iran and individuals on OFAC’s List of Specially Designated Nationals and Blocked Persons. Specifically, OFAC maintained the subsidiary violated the following sanctions programs: (i) the International Emergency Economic Powers Act and (ii) the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560.

    The settlement requires the company to pay more than $12 million to settle the claims, which the company did not voluntarily self-disclose to OFAC.

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  • OFAC Assesses $2 Million Penalty Against International Oil and Gas Company for Violations of Ukraine-Related Sanctions

    Financial Crimes

    On July 20, the Treasury’s Office of Foreign Asset Control (OFAC) announced a $2 million civil money penalty assessed against an international oil and gas company, including two of its U.S. subsidiaries, for alleged violations of OFAC’s Ukraine-Related sanctions regulations. OFAC claims that, in May 2014, the company impermissibly dealt in services of a senior official of the Government of the Russian Federation who had been placed on the List of Specially Designated Nationals and Blocked Persons (SDNs) by signing eight legal documents related to oil and gas projects in Russia with the individual. Although the company claimed that it believed such actions were permissible, OFAC noted that the “plain language of the Ukraine-Related Sanctions” clearly indicates otherwise. In particular, OFAC stated that the sanctions blocked “any property and interests in property, and prohibited any dealing in any property and interests in property, of a person so designated.” In addition, the sanctions expressly forbid U.S. persons from “any contribution or provision of funds, goods, or services from any such person,” and, according to OFAC, do not differentiate between an individual’s “personal” and “professional” capacity—a distinction the company tried to make.

    Thus, concluded OFAC, information available at the time of the alleged violations “clearly put [the company] on notice that OFAC would consider executing documents with an SDN to violate the prohibitions in the Ukraine-Related Sanctions Regulations.” The $2 million penalty was the largest that OFAC could impose under statute. OFAC imposed the penalty based on the following factors: (i) the company did not voluntarily self-disclose the violations; (ii) the company demonstrated reckless disregard for U.S. sanctions requirements by disregarding clear warning signs; (iii) the company’s senior-most executives knew of the official’s status as an SDN when it executed the legal documents; (iv) the company caused significant harm to the sanctions program by dealing with a senior official of the Russian Federation; and (v) the company is a sophisticated and experienced oil company that has global operations and routinely deals in goods, services and technology subject to U.S. economic sanctions and export controls.

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  • President Trump Issues Executive Order Extending OFAC Review Period of Sudanese Policies and Actions

    Federal Issues

    On July 11, President Trump announced an extension to the review period established by Executive Order 13761 (EO). EO 13761, issued by President Barack Obama, provided additional time for OFAC to review the policies and actions of Sudan to allow the opportunity to revoke certain sanctions based on positive findings regarding the Sudanese government’s actions. President Trump’s new EO extends the review period to October 12, 2017. For additional information regarding EO 13761, please see OFAC’s Frequently Asked Questions.

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  • OFAC Settles with International Insurance Group over Charges of Violating Sanctions Programs

    Financial Crimes

    On June 26, the Treasury’s Office of Foreign Asset Control (OFAC) reached a settlement with an international financial services and insurance company based in New York for alleged violations of OFAC sanctions programs. OFAC claimed that the company “issued policies and insurance certificates, and/or processed claims and other insurance-related transactions that conferred economic benefit to sanctioned countries or persons and undermined the policy objectives of several U.S. economic sanctions programs.” Specifically, OFAC maintained the company violated the following sanctions programs: (i) Iranian Transactions and Sanctions Regulations, 31 C.F.R. Part 560 (ITSR); (ii) Weapons of Mass Destruction Proliferators Sanctions Regulations, 31 C.F.R. Part 544 (WMDPSR); (iii) Sudanese Sanctions Regulations, 31 C.F.R. Part 538 (SSR); and (iv) Cuban Assets Control Regulations, 31 C.F.R. Part 515 (CACR). The settlement requires the company to pay $148,698 to settle the claims, which the company voluntarily self-disclosed to OFAC.

    For others to avoid these issues, OFAC suggested that “the best and most reliable approach for insuring global risks without violating U.S. sanctions law is to insert in global insurance policies an explicit exclusion for risks that would violate U.S. sanctions laws.”

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  • OFAC Updates: New Sanction Designations and Additions to Specially Designated Nationals List

    Financial Crimes

    Recently, OFAC announced implementation of sanctions against several entities and individuals designated for, among others, materially assisting, sponsoring, or providing financial support to certain foreign entities. In addition, OFAC updated its list of Specially Designed Nations (SDN) and announced a settlement agreement with a Canadian-based motor vehicle finance company.

    North Korea Suppliers of Weapons Proliferation Programs. On June 1, OFAC announced it was taking action against six entities and three individuals in response to their involvement in North Korea’s continued efforts to develop weapons of mass destruction (WMD). The announcement targets the country’s military, nuclear, and WMD programs, in addition to its overseas financial operations. The sanctions prohibit any U.S. individual from dealing with the designees, 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.” John E. Smith, the Director of OFAC, stated, “Treasury is working with our allies to counter networks that enable North Korea’s destabilizing activities, and we urge our partners to take parallel steps to cut off their funding sources.” These sanctions are in addition to those imposed earlier in April on eleven North Koreans and one associated entity (see previous InfoBytes coverage here).

    Iraq-Based Chemical Weapons Developers. On June 12, OFAC announced, for the first time, designations against individuals involved in the development of ISIS’ chemical weapons. The sanctions were pursuant to Executive Order 13224, which “provides a means by which to disrupt the financial support network for terrorists and terrorist organizations by authorizing the U.S. government to designate and block the assets of foreign individuals and entities that commit, or pose a significant risk of committing, acts of terrorism.” The property and interests in property of the two individuals identified in the designations, subject to U.S. jurisdiction, are blocked, and “U.S. persons are generally prohibited from engaging in transactions with them.”

    Settlement Agreement with Motor Vehicle Finance Company. On June 8, OFAC announced it had reached a settlement with a motor vehicle finance company as a result of transactions by its Canadian based subsidiary. The enforcement action claims the majority-owned subsidiary, which “specializes in various forms of financing in the [U.S.] for purchasers, lessees, and authorized independent [auto] dealers,”—between 2011 and 2014—allegedly violated 13 Cuban Assets Control Regulations by leasing vehicles to the Cuban Embassy in violation of OFAC’s Blocked Persons and SDN list, which prohibited transactions with Cuban government entities. The company voluntarily self-disclosed the alleged violations and agreed to remit $87,255 to settle its potential civil liability.

    Foreign Narcotics Kingpin Sanctions. On May 24 and 25, OFAC made additions to the SDN list, which designates individuals and companies who are prohibited from dealing with the U.S. and whose assets are blocked. Transactions are prohibited if they involve transferring, paying, exporting, or otherwise dealing in the property or interest in property of an entity or individual on the SDN list. Additions to the list were made under the Foreign Narcotics Kingpin Sanctions Regulations against several Mexican and Colombian individuals and entities.

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  • OFAC Updates: New Sanction Designations and Additions to Specially Designated Nationals List

    Financial Crimes

    In May, OFAC announced implementation of sanctions against several entities and individuals designated for, among others, materially assisting, sponsoring, or providing financial support to certain foreign entities. In addition, OFAC updated its list of Specially Designated Nationals.

    Pakistan-Based ISIS Financial Facilitators. On May 11, OFAC imposed sanctions against three Pakistani individuals and one entity for their roles in assisting ISIS’s financial networks and their “connections with terrorist groups that are a direct threat to the security of both the [U.S.] and Pakistan.” The designations block the individuals and entity—each of whom has been designated as providing the identified networks with material and financial support—from participating in the global financial system, and further state that “all property and interests in property . . . subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with” those listed.

    Syrian Government Supporters. On May 16, OFAC announced it was taking action against five individuals and five entities in response to the Syrian Government’s continued acts of violence committed against its own citizens. The sanctions came as a reaction to three Executive Orders: (i) E.O. 13572—targeting persons responsible for human rights abuses in Syria, their supporters, and supporters of senior officials or certain activities related to public corruption; (ii) E.O. 13582—targeting the Government of Syria and its supporters; and (iii) E.O. 13382—targeting proliferators of weapons of mass destruction and their supporters. The new sanctions prohibit transactions by U.S. persons with those listed and “any property or interest in property of the identified persons in the possession or control of U.S. persons or within the United States must be blocked.”

    Yemen-Based Financial Facilitators and Arms Trafficker. On May 19, OFAC imposed sanctions against two Yemen-based financial facilitators for their roles in assisting al-Qa’ida leaders in the Arabian Peninsula. The designations block the individuals, both of whom were designated as engaging in actions through weapon trafficking, from the global financial system, and further state that “all property and interests in property . . . subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with” the identified individuals.

    Foreign Narcotics Kingpin Sanctions. On May 19, OFAC made additions to the Specially Designated Nationals (SDN) list, which designates individuals and companies who are prohibited from dealing with the U.S. and whose assets are blocked. Transactions are prohibited if they involve transferring, paying, exporting, or otherwise dealing in the property or interest in property of an entity or individual on the SDN list. Additions to the list were made under the Foreign Narcotics Kingpin Sanctions Regulations against two two Peruvian individuals and three Peruvian entities.

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