Skip to main content
Menu Icon Menu Icon
Close

InfoBytes Blog

Financial Services Law Insights and Observations
Section Content

Upcoming Events

Filter

Subscribe to our InfoBytes Blog weekly newsletter for news affecting the financial services industry.

  • 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.

    Financial Crimes Sanctions Treasury Department OFAC

    Share page with AddThis
  • 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.

    Federal Issues Executive Order Sanctions OFAC Treasury Department

    Share page with AddThis
  • 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.”

    Financial Crimes Federal Issues OFAC Insurance Sanctions Risk Management

    Share page with AddThis
  • Credit Reporting Agency Assessed Damages of $60 Million for FCRA Violations

    Courts

    On June 20, a federal jury found that a major international credit reporting agency had violated the Fair Credit Reporting Act (FCRA), awarding damages of $60 million. When performing credit checks, the agency allegedly had failed to distinguish law-abiding citizens from drug traffickers, terrorists, and other criminals with similar names found on the Treasury Department’s Office of Foreign Assets Control database, sometimes confusing plaintiffs with individuals on the watch list. The jury determined that the company (i) “willfully fail[ed] to follow reasonable procedures to assure the maximum possible accuracy of the OFAC information it associated with members of the class’’; (ii) “willfully failed to clearly and accurately disclose OFAC information in the written disclosures it sent to members of the class”; and (iii) “failed to provide class members a summary of their FCRA rights with each written disclosure made to them.” The class members were awarded just under the maximum for statutory damages, in addition to punitive damages of more than six times the statutory amount.

    Courts Fair Credit Reporting Act Treasury Department OFAC

    Share page with AddThis
  • 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.

    Financial Crimes Sanctions OFAC Treasury Department Enforcement Auto Finance

    Share page with AddThis
  • 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.

    Financial Crimes OFAC Sanctions

    Share page with AddThis
  • OFAC Updates: New Sanction Designations and Additions to Specially Designated Nationals List

    Agency Rule-Making & Guidance

    In April, OFAC announced implementation of three new 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 (SDN) and Blocked Persons.

    Libya-Based ISIS Financial Facilitators / Algerian ISIS Supporter and Arms Trafficker. On April 13, OFAC imposed sanctions against certain Libyan and Algerian financial facilitators for their roles in assisting ISIS’s financial operations in Libya. The designations block the individuals, one of whom was 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.

    Syrian “Research Center” Accused of Developing Weapons. On April 24, OFAC announced it was taking action against 271 employees of a Syrian research center for “developing and producing non-conventional weapons and the means to deliver them.” The sanctions came as a reaction to the widely- reported April 4 sarin gas attack against civilians, and followed sanctions announced January 12 against 18 officials, five branches of the Syrian military, and associated entities for their participation in a chemical weapons program responsible for attacks in 2014 and 2015. The 271 named individuals are “designated for materially assisting, sponsoring, or providing financial, material, or technological support for, or goods or services in support of, and having acted or purported to act for or on behalf of, directly or indirectly, the Government of Syria.” The new sanctions block U.S. persons from dealing with these employees.

    Foreign Narcotics Kingpin Sanctions. 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 deal in the property or interest in property of an entity or individual on the SDN list. Additions to the list include Foreign Narcotics Kingpin Sanctions Regulations against two Mexican entities, and Global Terrorism Sanctions Regulations against a Saudi individual.

    Agency Rule-Making & Guidance Financial Crimes OFAC Sanctions

    Share page with AddThis
  • Upon Review, NYDFS Requires International Bank to Continue Independent Monitoring

    State Issues

    On April 21, the New York Department of Financial Services (NYDFS) announced it had entered into a supplemental consent order with an international bank to modify its 2012 and 2014 consent orders. In 2012, the bank agreed to engage an independent on-site monitor for 24 months to evaluate the New York branch’s BSA/AML and OFAC compliance programs and operations. The bank was also issued a $340 million civil money penalty. The 2014 consent order outlined the monitor’s findings including reports of significant failures in the bank’s transaction monitoring. The 2014 order extended the engagement of the monitor for another two years, outlined remedial measures to address continued deficiencies, and required the bank to pay an additional $300 million civil money penalty.

    While NYDFS acknowledged in the 2017 supplemental consent order that the bank has made significant improvements in its BSA/AML compliance program, the engagement of the monitor has been extended until December 31, 2018 with all the other terms and conditions of the 2012 and 2014 consent orders remaining in full effect.

    State Issues Financial Crimes Anti-Money Laundering Bank Secrecy Act OFAC

    Share page with AddThis
  • OCC Issues Consent Order to U.S. Branch of International Bank, Requires Development of BSA/AML Program

    Financial Crimes

    As previously reported in InfoBytes, on March 17 the OCC released its list of enforcement actions taken in February against national banks, federal savings associations, and current and former affiliated individuals. Among those actions is a consent order issued on February 13 against a U.S. branch of a Curacao-based subsidiary of a United Arab Emirates bank for allegedly failing to comply with the Bank Secrecy Act’s anti-money laundering (BSA/AML) rules and requirements, failing to timely file suspicious activity reports (SARs), and failing to conduct adequate due diligence on foreign correspondent accounts. The consent order, among other things, requires the U.S. branch to: (i) create and submit a comprehensive BSA/AML compliance action plan; (ii) appoint a BSA officer who will “ensure compliance with the requirements of the BSA and the Office of Foreign Assets Control (OFAC)”; (iii) review, update, and implement an enhanced written ongoing BSA/AML Risk Assessment and a separate OFAC Risk Assessment process to timely identify and analyze risk categories; (iv) acquire an independent third-party consultant to conduct a “Look Back” plan to determine whether suspicious activity was timely identified and reported by the branch; (v) develop and implement a written program to ensure the timely review of BSA/AML suspicious activity alerts and filing of SARs; and (vi) create a comprehensive training program for “appropriate operational and supervisory personnel.”

    Financial Crimes Bank Secrecy Act OCC OFAC Anti-Money Laundering

    Share page with AddThis
  • OFAC Sanctions a Coal Company and 11 “Agents” Linked to North Korea’s WMD Proliferation and Financial Networks

    Financial Crimes

    On March 31, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced that it was imposing sanctions on eleven North Koreans and one associated entity involved in that country’s efforts to develop weapons of mass destruction. The sanctions prohibit any U.S. individual from dealing with the designated North Koreans, 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.” Treasury Secretary Steven Mnuchin explained that the “sanctions are aimed at disrupting the networks and methods that the Government of North Korea employs to fund its unlawful nuclear, ballistic missile, and proliferation programs.”

    Financial Crimes OFAC Sanctions International

    Share page with AddThis

Pages