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OFAC sanctions individuals and entities tied to ISIS
On January 5, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13224 against a key financial facilitation network of the Islamic State of Iraq and Syria (ISIS), which includes four individuals and two entities in Türkiye who are connected to the group’s recruitment and financial transfers to and from Iraq and Syria. According to OFAC, the designated network has “played a key role in money management, transfer, and distribution for ISIS in the region.” The Turkish Ministry of Treasury and Finance, in collaboration with the Ministry of Interior, also implemented an asset freeze against members of this network. As a result of the sanctions, all property and interests in property belonging to the sanctioned persons subject to U.S. jurisdiction are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more” by one or more blocked persons are also blocked. U.S. persons are also generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons. Persons that engage in certain transactions with the designated individuals or entities may themselves be exposed to secondary sanctions, OFAC warned, adding that “OFAC can prohibit or impose strict conditions on the opening or maintaining in the United States of a correspondent account or a payable-through account of a foreign financial institution that has knowingly conducted or facilitated any significant transaction on behalf of a Specially Designated Global Terrorist (SDGT).”
OFAC sanctions suppliers of Iranian UAVs used in Russia’s war against Ukraine
On January 6, the U.S. Treasury Department’s Office of Foreign Assets Control announced sanctions pursuant to Executive Order 13382 against six executives and board members of a U.S.-designated Iranian defense manufacturer allegedly responsible for designing and producing unmanned aerial vehicles (UAVs) that are being transferred by Iran for use in Russia’s war against Ukraine. The director of a key organization responsible for overseeing Iran’s ballistic missile programs has also been sanctioned. OFAC further announced that it is updating the defense manufacturer’s entry on the Specially Designated Nationals and Blocked Persons List to include its new alias. As a result of the sanctions, all property and interests in property belonging to the sanctioned individuals and entities that are in the U.S. or in the possession or control of U.S. persons are blocked and must be reported to OFAC. Further, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons. Persons that engage in certain transactions with the designated individuals or entities may themselves be exposed to sanctions, and “any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the individuals or entities designated today pursuant to E.O. 13382 could be subject to U.S. sanctions.”
OFAC settles with Danish company for routing prohibited financial transactions though a U.S. bank
On December 30, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a more than $4.3 million settlement with a multinational Danish manufacturer to resolve allegations that its wholly owned United Arab Emirates (UAE)-based subsidiary directed customers in Iran, Syria, and Sudan to make payments to its bank account at the UAE branch of a U.S. financial institution. According to OFAC’s enforcement release, between November 2013 and August 2017, the subsidiary sold products to customers in Sudan, Syria, and Iran. Customers were instructed to remit payments to at least three accounts at banks located in the UAE, including the parent company’s U.S. branch account. OFAC further contended that the subsidiary used third-party payers to make five transfers (disguising the originator or beneficiary of the transactions) from its U.S. branch account to parties in Syria and Iran, which prevented the bank’s transactional screen filters from stopping the payments. The total value of all the transfers was roughly $16,959,683, OFAC said, claiming that by causing a U.S. financial institution to facilitate prohibited financial transactions and export financial services, the parent company violated the Iranian, Syrian, and Sudanese sanctions regulations.
While OFAC found no evidence that the parent company willfully engaged third-party payers to evade sanctions, it determined that the subsidiary “was aware since at least 2011 that using a U.S. financial institution to send or receive payments related to sanctioned jurisdictions could be prohibited.” Moreover, the subsidiary allegedly received communications from the parent company and various financial institutions regarding concerns flagged in its banking activity but continued to use the U.S. branch account to collect payments from customers in sanctioned jurisdictions. These alleged violations, OFAC stated, occurred primarily due to deficiencies in the parent company’s global sanctions compliance program.
OFAC noted that while the parent company disclosed the alleged violations, the agency was already in possession of the relevant information and therefore the submission did not qualify as a voluntary self-disclosure. However, OFAC considered various mitigating factors, including that the parent company had not received a penalty notice from OFAC in the preceding five years, and the parent company took quick action to determine the root causes of the alleged conduct and undertook significant remedial measures to prevent future violations.
Providing context for the settlement, OFAC stated that the “enforcement action highlights the risks to multinational companies, including to non-U.S. entities, that involve the U.S. financial system in commercial activity involving an OFAC- sanctioned country, region, or person,” and emphasized that “[c]ommercial activity that might not otherwise violate OFAC regulations—such as the sale of non-U.S. goods by a non-U.S. person to an entity in an OFAC-sanctioned country—can nonetheless cause a violation when the financial transactions related to that activity are processed through or involve U.S. financial institutions.”
OFAC issues preliminary guidance on price cap policy implementation
On December 30, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced preliminary guidance on the implementation of the price cap policy for petroleum products of Russian Federation origin. As previously covered by InfoBytes, in November, OFAC published a Determination Pursuant to Executive Order (E.O.) 14071 stating that the prohibitions of E.O. 14071 apply to U.S. persons providing covered services (including (i) trading/commodities brokering; (ii) financing; (iii) shipping; (iv) insurance, including reinsurance and protection and indemnity; (v) flagging; and (vi) customs brokering) as they relate to the maritime transport of Russian Federation crude oil, provided, however, that such covered services are authorized if the Russian oil is purchased at or below the price cap. OFAC also published guidance on the implementation of a policy for crude oil of Russian Federation origin to provide an overview of the determination and the price cap. OFAC noted that it anticipates publishing final, combined guidance for both Russian oil and Russian petroleum products before February 5.
Treasury implements humanitarian sanctions exceptions
On December 21, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced that it co-led, with Ireland, the development of UNSCR 2664, which implements a carveout from the asset freeze provisions of UN sanctions programs. OFAC noted that to implement the policy across U.S. sanctions programs, it issued or amended general licenses (GLs) to ease the delivery of humanitarian aid and ensure a baseline of authorizations for the provision of humanitarian support across many sanctions programs. The GLs being issued or amended provide authorizations in: (i) the official business of the U.S. government (see here); (ii) the official business of certain international organizations and entities (see here); (iii) certain humanitarian transactions in support of activities of nongovernmental organizations (NGOs), such as disaster relief, health services, and activities to support democracy, education, environmental protection, and peacebuilding (see here); and (iv) the provision of agricultural commodities, medicine, and medical devices, as well as replacement parts and components and software updates for medical devices, for personal, non-commercial use (see here). OFAC also noted that it is separately updating a regulatory interpretation in several sanctions programs’ regulations to explain that the property and interests in property of an entity are blocked if one or more blocked persons own, whether individually or in the aggregate, directly or indirectly, a 50 percent or greater interest in the entity. These changes are effective immediately. OFAC is also publishing four new Frequently Asked Questions (FAQs 1105, 1106, 1107 and 1108), which provide further guidance on the action and the authorizations being issued or amended, including guidance for financial institutions facilitating activity for NGOs and OFAC’s due diligence expectations. According to OFAC, these historic steps “further enable the flow of legitimate humanitarian assistance supporting the basic human needs of vulnerable populations while continuing to deny resources to malicious actors.”
OFAC sanctions Iranian officials
On December 21, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13553 against the prosecutor general and key military and paramilitary officials in Iran, as well as a company manufacturing and providing Iran’s Law Enforcement Forces with anti-riot equipment. According to OFAC, the designations target the senior official overseeing the prosecution of protestors, as well as leaders of military and paramilitary organizations accused of violently cracking down and detaining protestors, and a company that procures and provides security forces with tools of suppression. As a result of the sanctions, all property and interests in property belonging to the sanctioned persons subject to U.S. jurisdiction are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are also generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons. Persons that engage in certain transactions with the individuals designated today may themselves be exposed to designation. Additionally, OFAC warned that “any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the persons designated today could be subject to U.S. sanctions.”
OFAC publishes illicit drug trade sanctions regulations
On December 19, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced it is adding regulations to implement Executive Order (E.O.) 14059 of December 15, 2021, Imposing Sanctions on Foreign Persons Involved in the Global Illicit Drug Trade. As previously covered by InfoBytes, the E.O. was issued due to the threat of drug trafficking into the U.S of illicit drugs, which “is causing the deaths of tens of thousands of Americans annually, as well as countless more non-fatal overdoses with their own tragic human toll.” Among other provisions, the E.O authorizes the Treasury Department to impose certain sanctions on any foreign person determined to have engaged in activities contributing to the international proliferation of drugs or to have knowingly received property derived from drug proliferation. According to the notice, the regulations are being published in abbreviated form to provide immediate guidance, and OFAC intends to add a more comprehensive set of regulations, which may include additional interpretive guidance and definitions, general licenses, and other regulatory provisions.
OFAC announces Russia-related sanctions
On December 9, the U.S. Treasury Department’s Office of Foreign Assets Control announced sanctions against 18 entities related to the Russian Federation’s financial services sector. According to OFAC, the sanctions are taken in conjunction with the Department of State, which is concurrently designating a prominent oligarch in Russia, his network, and more than 40 additional persons linked to the Russian government as part of the U.S. government’s efforts to further limit Russia's ability to fund its war against Ukraine. As a result of the sanctions, all property and interests in property belonging to the sanctioned persons that are in the U.S. or in the possession or control of U.S. persons are blocked and must be reported to OFAC. Further, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons, unless exempt or authorized by a general or specific OFAC license.
OFAC issues sanctions, GL, and FAQ on countering narcotics
On December 14, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 14059 against an individual for being involved in activities or transactions that materially contributed to, or pose a significant risk of materially contributing to, the international proliferation of illicit drugs or their means of production. According to OFAC, the designated individual is the leader of a Dominican Republic-based criminal organization engaged in various illicit activities, and his organization controls several drug trafficking routes into the U.S. As a result of the sanctions, all property and interests in property belonging to the sanctioned persons subject to U.S. jurisdiction are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are also generally prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons.
The same day, OFAC issued Counter Terrorism General License (GL) 21A, Authorizing Limited Safety and Environmental Transactions Involving Certain Vessel. GL 21 authorizes all activities otherwise prohibited by the Global Terrorism Sanctions Regulations (GTSR), 31 CFR part 594, that are ordinarily incident and necessary to the limited safety and environmental activities described in paragraph (a) of GL 21A involving certain blocked persons and vessels through January 14, 2023. Additionally, OFAC announced it is amending a Counter Terrorism Frequently Asked Question 1097, which clarifies GL 21A.
OFAC designates over 150 vessels
On December 9, the U.S. Treasury Department’s Office of Foreign Assets Control announced sanctions pursuant to Executive Order 13818 against two individuals and the networks of entities they control, along with eight other affiliated entities. Additionally, this action identifies 157 People’s Republic of China flagged fishing vessels in which these entities have an interest. According to OFAC, the designations “demonstrates the U.S. government’s ongoing effort to impose tangible and significant consequences on those engaged in serious human rights abuse, including on those vessels engaged in illegal, unreported, and unregulated (IUU) fishing.” OFAC also noted that this is the first time Treasury has designated an entity listed on the NASDAQ stock exchange. As a result of the sanctions, all property and interests in property belonging to the sanctioned persons that are in the U.S. or in the possession or control of U.S. persons are blocked and must be reported to OFAC. Further, “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” U.S. persons are prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons, unless exempt or authorized by a general or specific OFAC license.