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  • Anti-ISIS coalition emphasizes international cooperation

    Financial Crimes

    On June 16, the Counter ISIS Finance Group (CIFG) of the Global Coalition to Defeat ISIS released a joint statement by the CIFG co-leads (the US, Italy, and Saudi Arabia), which coordinates efforts to isolate the Islamic State of Iraq and Syria (ISIS) from the international financial system and eliminate its revenue sources. CIFG held its eighteenth meeting on June 7, and during the meeting attendees discussed ISIS’s presence in Africa and partner countries presented on actions taken to disrupt ISIS financing. The presentations also “demonstrated how coordinated action and information-sharing among states, non-governmental organizations (NGOs), and the private sector amplify the impact of law enforcement investigations, targeted sanctions, prosecutions, and other measures against ISIS financing networks.” The CIFG co-leads also mentioned that international cooperation has been vital in disrupting ISIS transactions outside of the formal financial system especially, amongst other things, amid the increasing use of virtual assets and mobile payment systems. CIFG members and observers are seeking, among other things: (i) support from counterterrorism partners, NGOs, and the private sector to increase information sharing; (ii) cooperation from countries prone to exploitation by ISIS financers; (iii) to assist vulnerable jurisdictions in their efforts against money laundering and terrorism financing; (iv) to urge Global Coalition members, particularly in Africa, to support their military to combat ISIS insurgency; and (v) to assist in a risk-based approach to implementing effective regulations, especially in the case of mobile payment platforms and virtual asset service providers. With a focus on international cooperation, CIFG members said they will continue to closely work with counterterrorism partners to disrupt ISIS funding sources and methods.

    Financial Crimes Of Interest to Non-US Persons OFAC OFAC Designations OFAC Sanctions ISIS Anti-Money Laundering Combating the Financing of Terrorism

  • OFAC clarifies impact of sanctions on humanitarian assistance and trade

    Financial Crimes

    On June 14, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued a Fact Sheet for “Provision of Humanitarian Assistance and Trade to Combat COVID-19.” The Fact Sheet, among other things, highlights Treasury’s humanitarian-related or other general licenses (GL) issued to support people impacted by Covid-19 across Iran, Venezuela, North Korea, Syria, Cuba, and Russia. Relatedly, OFAC issued Iran-related GL N-2, Venezuela-related GL 39B, and Syria-related GL 21B to authorize transactions and activities related to the prevention, diagnosis, or treatment of Covid-19, as well as several amended FAQs.

    Financial Crimes Of Interest to Non-US Persons Department of Treasury OFAC OFAC Designations OFAC Sanctions Iran Syria North Korea Cuba Russia Venezuela Covid-19

  • OFAC sanctions Syrian financial facilitators allied with IRGC-QF

    Financial Crimes

    On May 30, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions, pursuant to Executive Order 13582 and the Caesar Syrian Civilian Protection Act of 2019 (Caesar Act), against two Syrian money service businesses and the three owners and operators of Al-Fadel Exchange, which have secretly helped the Syrian regime under Bashar al-Assad and its Hizballah and Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) allies maintain access to the international financial system in violation of international sanctions. Both E.O. 13582 and the Caesar Act underscore the gravity of enabling violent regimes to circumvent sanctions. These sanctions come on the heels of OFAC’s March 28 designation, also pursuant of the Caesar Act, of individuals involved in Syria’s drug production and trafficking (previously covered by InfoBytes here). As a result of these sanctions, “all property and interests in property of these persons which are in or come within the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. In addition, 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. Additionally, “persons that engage in certain transactions with the persons designated today may themselves be exposed to sanctions or subject to an enforcement action.”

    Financial Crimes Of Interest to Non-US Persons Department of Treasury OFAC OFAC Designations OFAC Sanctions SDN List Syria

  • OFAC, Turkey sanction terrorist financing facilitators

    Financial Crimes

    On May 2, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced, pursuant to Executive Order 13224, a joint action with the Republic of Turkey to designate two financial facilitators of Syria-based terrorist groups. The terrorist groups have both been sanctioned by the U.S. and the United Nations. The action demonstrates OFAC’s continued cooperation with Turkey to restrict the financing of terrorist groups that perpetuate violence and instability throughout the region. According to the announcement, the Turkish Ministry of Treasury and Finance and the Turkish Ministry of Interior concurrently implemented an asset freeze against the sanctioned individuals. As a result of the sanctions, all property interests 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, as well as “any entities that are owned, directly or indirectly, 50 percent or more by them, individually, or with other blocked persons.” U.S. persons are generally prohibited from engaging in any dealings involving the property interests of blocked or designated persons, and persons that engage in certain transactions with the designated individuals may themselves be exposed to sanctions. OFAC further stated that it “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 knowingly conducted or facilitated any significant transaction on behalf of a Specially Designated Global Terrorist.”

    Financial Crimes Of Interest to Non-US Persons OFAC OFAC Sanctions OFAC Designations SDN List Turkey

  • OFAC reaches $7.6 million settlement with online digital-asset trading platform

    Financial Crimes

    On May 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a roughly $7.6 million settlement with a Massachusetts-based online trading and settlement platform to resolve potential civil liability stemming from allegations that the platform allowed customers in sanctioned jurisdictions to engage in digital asset-related transactions. According to OFAC’s web notice, between January 2014 and November 2019, the platform allegedly permitted customers to make more than $15.3 million in trades, deposits, and withdrawals, despite having reason to know that the customers’ locations—based on both Know Your Customer (KYC) information and internet protocol address data—were in jurisdictions subject to comprehensive OFAC sanctions. OFAC noted that although the platform implemented a sanctions compliance program to screen new customers, it did not retroactively screen existing customers, thus allowing these customers to continue to conduct trading activity. While the platform made efforts to identify and restrict accounts with a nexus to certain sanctioned jurisdictions, compliance deficiencies resulted in the platform processing 65,942 online digital asset-related transactions for 232 customers apparently located predominantly in Crimea, but also in Cuba, Iran, Sudan, and Syria.

    In arriving at the settlement amount, OFAC considered, among other things, that the platform failed to exercise due caution or care for its sanctions compliance obligations and had reason to know that certain customers were located in sanctioned jurisdictions. Additionally, the settlement amount reflects that the platform did not voluntarily disclose the apparent violations. OFAC also considered several mitigating factors, including that: (i) the platform was a small start-up when most of the apparent violations occurred; (ii) the platform has not received a penalty notice from OFAC in the preceding five years; (iii) the platform cooperated with OFAC during the investigation and undertook numerous remedial measures; and (iv) the volume of apparent violations represented a very small percentage of the total volume of transactions conducted on the platform annually.

    Providing context for the settlement, OFAC said the “action highlights that online digital asset companies—like all financial service providers— are responsible for ensuring that they do not engage in transactions prohibited by OFAC sanctions, such as providing services to persons in comprehensively sanctioned jurisdictions. To mitigate such risks, online digital asset companies should develop a tailored, risk-based sanctions compliance program.”

    Financial Crimes Of Interest to Non-US Persons OFAC Digital Assets Department of Treasury Enforcement OFAC Sanctions OFAC Designations Settlement

  • Multinational tech company to pay $3.3 million for OFAC and BIS violations

    Financial Crimes

    On April 6, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), in consultation with the Department of Commerce’s Bureau of Industry and Security (BIS), announced a $3.3 million settlement with a multinational technology company to resolve potential civil liabilities stemming from the exportation of services or software from the United States to sanctioned jurisdictions and to Specially Designated Nationals (SDNs) or blocked persons. The settlement comprised an agreement with OFAC to pay a civil penalty of $2,980,264.86 and an administrative penalty of $624,013 with BIS. In light of the related OFAC action, the company was given a $276,382 credit by BIS contingent upon the company fulfilling its requirements under the OFAC settlement agreement, resulting in a combined overall penalty amount of $3,327,896.86.

    According to OFAC’s web notice, the conduct underlying the administrative penalty imposed by BIS stemmed from certain conduct involving the company’s Russian subsidiary. The conduct underlying the settlement with OFAC took place between July 2012 and April 2019, when the company and certain subsidiaries allegedly “sold software licenses, activated software licenses, and/or provided related services from servers and systems located in the United States and Ireland to SDNs, blocked persons, and other end users located in Cuba, Iran, Syria, Russia, and the Crimea region of Ukraine.” The total value of the 1,339 apparent violations was more than $12 million. OFAC alleged that the causes of these apparent violations stemmed from a lack of complete or accurate information on end customers for the company’s products, and that during the relevant time period, there were shortcomings in the company’s restricted-party screening controls. Among other things, OFAC alleged that the company’s screening architecture did not aggregate identifying information across its various databases to identify SDNs or blocked persons, failed to screen and evaluate pre-existing customers in a timely fashion, and missed common variations of restricted party names.

    In arriving at the $2,980,265.86 settlement amount, OFAC considered various mitigating factors, including that (i) evidence did not show that persons located in U.S. offices or management were aware of the alleged activity at the time (the apparent violations were revealed during a self-initiated look back); (ii) upon identifying the apparent violations, the company self-disclosed the matter to OFAC, conducted a retrospective review of thousands of past transactions, cooperated with OFAC throughout the investigation, terminated the accounts of the SDNs or blocked persons, and updated internal procedures to disable access to products or services upon discovery of a sanctioned party; and (iii) the company “undertook significant remedial measures and enhanced its sanctions compliance program through substantial investment and structural changes.” OFAC outlined several compliance considerations for companies conducting business through foreign-based subsidiaries, distributors, and resellers, and reminded businesses that OFAC’s SDN List is dynamic, and that when changes to the list are made, “companies should evaluate their pre-existing trade relationships to avoid dealings with prohibited parties.”

    Financial Crimes Of Interest to Non-US Persons OFAC Department of Treasury OFAC Sanctions OFAC Designations Enforcement Settlement Department of Commerce Cuba Iran Syria Ukraine Russia

  • OFAC sanctions individuals involved in Syria’s drug production and trafficking

    Financial Crimes

    On March 28, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) designated key individuals for supporting the regime of Syrian President Bashar al-Assad and the regime’s billion-dollar illicit drug production and trafficking enterprise. Taken in coordination with the UK, the designations, issued pursuant to Executive Orders 13572, 13582, and 13224, “also highlight the important role of Lebanese drug traffickers—some of whom maintain ties to Hizballah—in facilitating the export of Captagon[,]” the dangerous amphetamine at issue. 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 sanctions or subject to an enforcement action, OFAC warned.

    Financial Crimes Of Interest to Non-US Persons OFAC Department of Treasury OFAC Sanctions OFAC Designations Syria SDN List UK

  • OFAC issues sanctions compliance guidance for transactions related to Syrian earthquake disaster relief

    Financial Crimes

    On February 21, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued sanctions compliance guidance for authorized transactions related to Syrian earthquake disaster relief. The OFAC Compliance Communique: Guidance on Authorized Transactions Related to Earthquake Relief Efforts in Syria responds to questions from nongovernmental organizations and the general public on how to provide assistance and funding to earthquake relief efforts in Syria that would otherwise be prohibited by the Syrian Sanctions Regulations. As previously covered by InfoBytes, earlier in February, OFAC issued Syria General License (GL) 23 to authorize certain transactions ordinarily prohibited by OFAC sanctions. Among other things, GL 23 informed U.S. financial institutions and U.S. registered money transmitters that they “may rely on the originator of a funds transfer with regard to compliance” for transactions related to earthquake relief efforts in Syria, provided that the financial institution does not know or have reason to know that the funds transfer is not related to such efforts.

    Financial Crimes Of Interest to Non-US Persons Department of Treasury OFAC OFAC Sanctions OFAC Designations Syria

  • OFAC authorizes certain transactions to aid Syrian earthquake disaster relief

    Financial Crimes

    On February 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Syria General License (GL) 23 to authorize, for 180 days, all transactions related to earthquake relief efforts that would ordinarily be prohibited by the Syrian Sanctions Regulations (SySR). Specifically, authorizations under GL 23 include “the processing or transfer of funds on behalf of third-country persons to or from Syria in support of” transactions related to earthquake relief efforts in the country. Additionally, “U.S. financial institutions and U.S. registered money transmitters may rely on the originator of a funds transfer with regard to compliance” for transactions related to earthquake relief efforts in Syria, provided that the financial institution does not know or have reason to know that the funds transfer is not related to such efforts. GL 23 does not permit any transactions prohibited under the SySR related to the importation of petroleum or petroleum products of Syrian origin into the U.S., or any transactions involving persons “whose property and interests in property are blocked pursuant to the SySR, other than persons who meet the definition of the term Government of Syria, as defined in section 542.305(a) of the SySR, unless separately authorized.” Additionally, OFAC advised financial institutions and others who may be engaged in disaster relief activities for Syria to contact OFAC directly to seek specific licenses or guidance should they believe their activities are not covered by existing authorizations or exemptions.

    Financial Crimes Of Interest to Non-US Persons Department of Treasury OFAC OFAC Sanctions OFAC Designations Syria Money Service / Money Transmitters

  • OFAC sanctions individuals and entities tied to ISIS

    Financial Crimes

    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).”

    Financial Crimes Of Interest to Non-US Persons Department of Treasury OFAC OFAC Sanctions OFAC Designations SDN List Iraq Syria ISIS

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