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  • Treasury supports resolution establishing humanitarian carveout across UN sanctions regimes

    Financial Crimes

    On December 9, Secretary of the Treasury Janet L. Yellen issued a statement on the adoption of United Nations Security Council Resolution 2664, which establishes a standardized humanitarian carveout across UN sanctions regimes. Yellen explained that while sanctions are an important tool for globally combating key threats such as money laundering and terrorist financing, Treasury also recognized the potential for unintended consequences and strongly recommended streamlining humanitarian authorizations across sanctions programs. Resolution 2664 “further enables the flow of legitimate humanitarian assistance supporting the basic human needs of vulnerable populations while continuing to deny resources to malicious actors,” Yellen said.

    Financial Crimes Of Interest to Non-US Persons OFAC Department of Treasury OFAC Sanctions OFAC Designations U.N.

  • OFAC designates sanctions evasion network connected to IRGC-QF

    Financial Crimes

    On December 8, the U.S. Treasury Department’s Office of Foreign Assets Control announced sanctions pursuant to Executive Order 13224 against a sanctions evasion network for facilitating and concealing the sale and shipment of hundreds of millions of dollars’ worth of oil for Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF). According to OFAC, the designated individual’s companies “established international sales contracts for Iranian oil with foreign purchasers, arranged shipments of oil, and helped launder the proceeds, obscuring the oil’s Iranian origin and the IRGC-QF’s interest in the sales.” The action supplements designations announced in May, which targeted an element of this network responsible for facilitating millions of dollars’ worth of Iranian oil sales for both the IRGC-QF and Hizballah, backed by senior levels of the Russian Federation government and state-run entities (covered by InfoBytes here). As a result, all property, and interests in property of the designated individuals and entities, “and of any entities that are owned, directly or indirectly, 50 percent or more by them, individually, or with other blocked persons, that are in the United States or in the possession or control of U.S. persons, must be blocked and reported to OFAC.” U.S. persons are generally prohibited from engaging in transactions with the designated persons unless authorized by a general or specific OFAC license or are otherwise exempt. OFAC further warned that “engaging in certain transactions with the individuals and entities designated today entails risk of secondary sanctions.”

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

  • OFAC sanctions over 40 individuals and entities in nine countries

    Financial Crimes

    On December 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against 40 individuals and entities that are connected to corruption or human rights abuse across nine countries, in recognition of International Anti-Corruption Day and Human Rights Day. According to OFAC, throughout 2022, Treasury “took numerous actions to promote accountability for human rights abusers and corrupt actors across the world, including sanctions on dozens of individuals and entities including in the Western Balkans, Belarus, Liberia, Guatemala, the Russian Federation, Burma, and Iran. Treasury utilized various tools and authorities — including Executive Order 13818, which builds upon and implements the Global Magnitsky Human Rights Accountability Act — to demonstrate the U.S. government’s focus on promoting respect for human rights and countering corruption.” As a result of the sanctions, all transactions by U.S. persons or in the U.S. that involve any property or interests in property of designated or otherwise blocked persons are generally prohibited. Additionally, “any entities that are owned, directly or indirectly 50 percent or more by them, individually, or with other blocked persons, that are in the United States or in the possession or control of U.S. persons, must be blocked and reported to OFAC.” U.S. persons are generally 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.

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

  • Treasury official flags “de-risking” as a concern in combating illicit financial risks

    Financial Crimes

    On December 5, Assistant Secretary for Terrorist Financing and Financial Crimes at the U.S. Department of Treasury Elizabeth Rosenberg outlined key illicit finance risks impacting the broader financial system during the ABA/ABA Financial Crimes Enforcement Conference. Rosenberg noted that for many nations, the illicit finance threat posed by Russia related to its invasion into Ukraine is a top priority. She commented that more than 30 countries immediately implemented sanctions or other economic measures against Russia, and that since then, the U.S. and other countries have created an expansive, multilateral web of restrictions targeting Russia’s ability to fund its war. Rosenberg also recognized that by reassessing their understanding of Russian illicit financial risks and implementing adaptive measures, companies and financial institutions play an important role in providing critical insight into emerging threats. Rosenberg also discussed Treasury’s risk-based approach to crafting policy responses, including those related to beneficial ownership transparency, investment adviser misuse, and the use of residential and commercial real estate to hide and grow illicit funds.

    Rosenberg warned, however, that there are challenges in implementing a truly risk-based approach. She pointed to observations made by the Financial Action Task Force, which showed that while many countries and their financial institutions “are keenly aware of where enhanced due diligence is needed,” many “often can not readily identify the inverse: places where simplified due diligence should be expected and permitted.” She cautioned that focusing on high-risk areas rather than lower-risk parts “is not without costs,” and illustrated a common form of de-risking that occurs “when financial institutions categorically cut off relationships or services to avoid perceived risks—for example, certain geographic regions—rather than applying a nuanced, risk-based approach.” Doing so can lead to “deleterious effects,” she warned, such as excluding businesses based on their location or status, or impacting emerging markets that could serve underbanked populations. Rosenberg said Treasury intends to study these concerns through the Anti-Money Laundering Act of 2020, and will develop a strategy for addressing de-risking, including recommendations on ways to improve public-private engagement on the issue, regulatory guidance and adjustments, and international supervision.

    Financial Crimes Of Interest to Non-US Persons OFAC Department of Treasury Risk Management Russia Ukraine Invasion FATF Anti-Money Laundering Act of 2020 Beneficial Ownership Illicit Finance

  • FinCEN’s Das discusses agency’s priorities

    Financial Crimes

    On December 6, FinCEN acting Director Himamauli Das spoke before the ABA/ABA Financial Crimes Enforcement Conference about how FinCEN is addressing new threats, new innovations, and new partnerships, in addition to its efforts to implement the AML Act. Das first began by speaking about beneficial ownership requirements of the Corporate Transparency Act (CTA). He noted that a final rule was issued in September, which implemented the beneficial ownership information reporting requirements (covered by InfoBytes here). He also stated that a second rulemaking, concerning access protocols to the beneficial ownership database by law enforcement and financial institutions, may be released before the end of the year, and that work is currently underway on a third rulemaking concerning revisions to the customer due diligence rule. With regard to anti-corruption, Das noted that the agency has been working with the Biden administration, and highlighted three alerts issued by FinCEN in 2022 that highlight “the risks of sanctions and export controls evasion by Russian actors, including through real estate, luxury goods, and other high-value assets.” Das explained that the alerts “complement ongoing U.S. government efforts to isolate sanctioned Russians from the international financial system.”

    Transitioning into discussing effective AML/CFT programs, Das said that the “AML Act’s goal of a strengthened, modernized, and streamlined AML/CFT framework will ultimately play out over a series of steps as we implement all of the provisions of the AML Act.” He then described how the AML Act requires FinCEN to work with the FFIEC and law enforcement agencies to establish training for federal examiners in order to better align the examination process. He further noted that the AML/CFT priorities and their incorporation into risk-based programs as part of the AML Program Rule are “crucial” for providing direction to examiners on approaches that improve outcomes for law enforcement and national security.

    Das also highlighted the digital asset ecosystem as a key priority area for FinCEN and acknowledged that the area has seen “continuing evolution” since 2013 and 2019, when the agency released its latest related guidance documents on the topic. Das explained that FinCEN is taking a “close look” at the elements of its AML/CFT framework applicable to virtual currency and digital assets to determine whether additional regulations or guidance are necessary, which “includes looking carefully at decentralized finance and its potential to reduce or eliminate the role of financial intermediaries that play a critical role in our AML/CFT efforts.”

    Financial Crimes Department of Treasury FinCEN Digital Assets Of Interest to Non-US Persons Decentralized Finance Customer Due Diligence Corporate Transparency Act FFIEC Examination Anti-Money Laundering Combating the Financing of Terrorism

  • OFAC sanctions Haitian politicians

    Financial Crimes

    On December 2, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 14059 against two Haitian politicians for their involvement in activities or transactions that have materially contributed to, or pose a significant risk of materially contributing to, the international proliferation of illicit drugs or their means of production. 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 or entities designated today may themselves be exposed to sanctions or subject to enforcement. Additionally, OFAC warned that engaging in certain transactions with the designated individuals could expose entities to sanctions or subject them to an enforcement action.

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

  • OFAC sanctions officials connected to DPRK

    Financial Crimes

    On December 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against three North Korean officials for providing support to the Democratic People’s Republic of Korea’s (DPRK) development of weapons of mass destruction (WMD) and ballistic missiles. According to OFAC, the designations are “in line with wider multilateral efforts to impede the DPRK’s ability to advance its unlawful WMD and ballistic missile programs that threaten regional stability.” As a result of the sanctions, all property and interests in property of the sanctioned entity that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC, as well as “any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons.” OFAC noted that its regulations prohibit U.S. persons from participating in transactions with designated persons unless authorized by a general or specific license issued by OFAC.

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

  • Treasury announces price cap on Russian crude oil

    Financial Crimes

    On December 2, the U.S. Treasury Department announced an agreement entered into by the 27 member states of the European Union and the members of the G7 (collectively, the “Price Cap Coalition”), which adopts a price cap on seaborne Russian crude oil in an effort to restrict Russian revenue streams for its war in Ukraine. According to the announcement, beginning next week, the Price Cap Coalition will impose a ban on a range of services, including maritime insurance and trade finance, related to the maritime transport of Russian crude oil unless purchasers buy the oil at or below the $60/barrel cap. Starting February 5, 2023, this ban will also extend to the maritime transport of Russian-origin petroleum products unless they are sold at or below a yet-to-be-announced price cap. As previously covered by InfoBytes, last month OFAC published guidance on the price cap policy for Russian crude oil. According to Treasury’s announcement, the guidance clarifies that the price cap policy’s “‘safe harbor’ for service providers through the recordkeeping and attestation process is designed to shield such service providers from strict liability for breach of sanctions in cases where service providers inadvertently deal in the purchase of Russian oil sold above the price cap owing to falsified or erroneous records provided by those who act in bad faith or make material misrepresentations.” OFAC also publishedDetermination Pursuant to Executive Order 14071 officially announcing the price cap on December 5.

    Financial Crimes Of Interest to Non-US Persons OFAC Department of Treasury OFAC Sanctions OFAC Designations Russia Ukraine Ukraine Invasion

  • OFAC sanctions Hizballah accountants and weapons facilitator

    Financial Crimes

    On December 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13224 against two individuals and two companies based in Lebanon for providing financial services to Hizballah. OFAC also designated another individual for actively working to procure weapons for Hizballah. According to OFAC, the designations target persons that manage and enable Hizballah’s financial operations throughout Lebanon, including Hizballah’s “quasi-financial institution” and its central finance unit. As a result, all property, and interests in property of the designated persons, “and of any entities that are owned, directly or indirectly, 50 percent or more by one or more blocked persons are also blocked.” OFAC regulations generally prohibit all transactions by U.S. persons or within the United States (including transactions transiting the United States) that involve any property or interests in property of designated persons. OFAC cautioned that “persons that engage in certain transactions with the persons designated today may themselves be exposed to sanctions or subject to an enforcement action.” Additionally, OFAC warned that a foreign financial institution that knowingly conducts or facilitates a significant transaction on behalf of any of the designated persons could be subject to U.S. sanctions.

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

  • Brown urges Yellen to coordinate efforts to combat crypto risks

    Federal Issues

    On November 30, Senator Sherrod Brown (D-OH) sent a letter urging Treasury Secretary Janet Yellen to join forces on drafting legislation that will “create authorities for regulators to have visibility into, and otherwise supervise, the activities of the affiliates and subsidiaries of crypto asset entities.” Recognizing the “troubling risks” within the crypto asset markets and pointing to the recent collapse of a major crypto exchange, Brown suggested that Treasury develop a broad framework for all crypto assets to ensure risks “are contained and do not spillover into traditional financial markets and institutions.” Copying the heads of the SEC, CFTC, Federal Reserve Board, NCUA, CFPB, FDIC, and OCC, Brown encouraged the agencies to enforce existing laws as well as supervisory and regulatory authorities in order to “take on the significant noncompliance with current law among crypto asset firms and minimize, if not eliminate, the opportunities for regulatory arbitrage.” Brown further asked the regulators to “assess the impact of vertical integration in crypto asset markets,” and to coordinate efforts to improve entity and crypto-asset disclosures, market integrity, and transparency.

    Federal Issues Digital Assets U.S. Senate Department of Treasury Cryptocurrency Fintech

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