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OFAC sanctions al-Qa’ida facilitator
On October 19, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) designated an al-Qa’ida facilitator based in Australia and the company he owns for “having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of” the terrorist organization, pursuant to Executive Order 13224. Specifically, OFAC alleges that the individual and his company are involved in gemstone dealings, which provide the ability to move funds internationally for the benefit of al-Qa’ida. As a result of the sanctions, all property and interests in property of the designated persons that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. OFAC further warned foreign financial institutions that knowingly facilitating significant transactions or providing significant financial services to the designated person or entity may subject them to U.S. correspondent account or payable-through sanctions.
OFAC sanctions Nicaraguan bank and government officials
On October 9, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13851 against a Nicaraguan financial institution, as well as two government officials for supporting the Ortega regime, which “continue[s] to undermine Nicaragua’s democracy.” According to OFAC, the financial institution served as a tool for Ortega to “siphon money from [] $2.4 billion in oil trusts and credit portfolios…in order to remain in power and pay a network of patronage.” As a result, all property and interests in property of the sanctioned individuals and entities, and any entities owned 50 percent or more by such persons subject to U.S. jurisdiction, are blocked and must be reported to OFAC. U.S. persons are also generally prohibited from entering into transactions with the sanctioned persons.
OFAC sanctions 18 major Iranian banks
On October 8, the U.S. Treasury Department announced that the Secretary of the Treasury, in consultation with the Secretary of State, sanctioned 18 major Iranian banks, consistent with E.O. 13902, which identified Iran’s financial sector “as an additional avenue that funds the Iranian government’s malign activities.” E.O. 13902 provides Treasury with the authority to sanction any Iranian financial institution. The sanctioned banks include 16 banks operating in Iran’s financial sector and one bank that is owned or controlled by a sanctioned Iranian bank. In addition, OFAC sanctioned an Iranian military-affiliated bank under Treasury’s counter-proliferation authority pursuant to E.O. 13382. “Today’s action to identify the financial sector and sanction eighteen major Iranian banks reflects our commitment to stop illicit access to U.S. dollars,” Treasury Secretary Steven T. Mnuchin stated. OFAC noted that the sanctions under E.O. 13902 do not affect existing authorizations and exceptions for humanitarian trade (covered by a Buckley Special Alert), “which remain in full force and effect for these seventeen banks.”
As a result, all property and interests in property of the designated entities that are in the U.S. or in the possession or control of U.S. persons must be blocked and reported to OFAC. U.S. persons are also generally prohibited from engaging in transactions with the designated entities. OFAC is providing a 45-day period for non-U.S. persons to wind down non-humanitarian transactions that may become subject to sanctions as a result of the designations. OFAC further warned that “financial institutions and other persons that engage in certain transactions or activities with the sanctioned entities after a 45-day wind-down period may expose themselves to secondary sanctions or be subject to an enforcement action.”
Concurrent with the action, OFAC issued General License L, which outlines transactions and activities involving the sanctioned entities “that are authorized, exempt, or otherwise not prohibited under the Iranian Transactions and Sanctions Regulations.” Additional guidance is also provided in recently issued FAQs.
OFAC reaches $5.8 million settlement to resolve Cuban Assets Control Regulations violations
On October 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a more than $5.8 million settlement with a New York-incorporated travel assistance services company to resolve 2,593 apparent violations of the Cuban Assets Control Regulations (CACR). According to OFAC’s web notice, from roughly June 2010 to January 2015, the company formally codified an indirect payment process in its procedures manual, in which it “intentionally referred” Cuba-related payments to a Canadian affiliate to avoid “processing reimbursement payments directly to Cuban parties and to travelers while they were located in Cuba.” Reimbursements were then sent from the company to the Canadian affiliate for those payments. While the company had a sanctions compliance policy during the time of the apparent violations to screen for individuals or entities on OFAC’s List of Specially Designated Nationals and Blocked Persons, it allegedly failed to comply with screening requirements for countries and regions subject to OFAC prohibitions.
In arriving at the settlement amount, OFAC considered various aggravating factors, including that the company (i) knew it was illegal to make direct payments to Cuban service providers and therefore formalized the aforementioned referral process; (ii) provided “prohibited post-travel claim reimbursements directly to unauthorized Canadian subscribers who travelled to Cuba”; and (iii) knew of the conduct at issue because the indirect payment process was codified and approved by its CEO.
OFAC also considered various mitigating factors, including that (i) the CACR was later amended to authorize some of the apparent violations; (ii) the company enhanced its sanctions compliance program by, among other things, implementing a formal structure for compliance personnel and conducting sanctions training for all employees; (iii) the company voluntarily disclosed the violations and signed a tolling agreement, including multiple extensions; and (iv) the company terminated the conduct leading to the apparent violations and has undertaken remedial measures to minimize the risk of similar violations from occurring in the future.
OFAC issues amended Venezuela-related general license and FAQ
On October 6, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Venezuela General License (GL) 5E, which supersedes GL 5D and authorizes certain transactions otherwise prohibited under Executive Orders 13835 and 13857 related to, or that provide financing for, dealings in the Petróleos de Venezuela, S.A. 2020 8.5 Percent Bond on or after January 19, 2021. Concurrently, OFAC amended a Venezuela-related frequently asked question regarding GL 5E.
OFAC sanctions Syrian government officials
On September 30, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced three individuals and 13 entities were added to the Specially Designated Nationals and Blocked Persons List, pursuant to Syria sanctions authorities. As a result, all property and interests in property belonging to the designated individuals and entities subject to U.S. jurisdiction are blocked and must be reported to OFAC. OFAC further noted that its regulations “generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked or designated persons,” and warned that non-U.S. persons that engage in transactions with the designated persons may expose themselves to designation.
Moreover, OFAC issued a new Syria General License 20, “Authorizing Transactions and Activities Necessary for Wind Down of Transactions with Emma Tel LLC,” and updated the FAQs to reflect the new issuance.
OFAC settles Iranian Transactions and Sanctions Regulations violations
On September 24, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a $473,157 settlement with a California-based equipment and software company for six apparent violations of the Iranian Transactions and Sanctions Regulations (ITSR). According to OFAC’s web notice, from roughly January 2016 to June 2016, the company—through a former subsidiary it had since merged with—allegedly reexported U.S. export-controlled test measurement equipment to Iran. Among other things, OFAC noted that prior to the merger, the subsidiary “committed to cease all existing and future business” with certain sanctioned countries, including Iran. However, after the acquisition, certain subsidiary personnel continued to engage in transactions with Iran, with three employees taking “measures to obfuscate from [the company] their dealings with Iran.”
In arriving at the settlement amount, OFAC considered various aggravating factors, including that (i) the subsidiary willfully violated the ITSR by shipping products in order to bypass the company’s directive to cease Iran-related business; and (ii) some of the subsidiary’s senior branch and sales managers knowingly participated in the apparent violations.
OFAC also considered various mitigating factors, including that the company (i) fully cooperated with OFAC’s investigation; (ii) undertook several remedial measures, such as terminating the appropriate employees; (iii) “assess[ed] past and current transactions for compliance with OFAC regulations, implement[ed] mechanisms to halt current transactions, and ensur[ed] that no further transactions involved restricted countries”; and (iv) enhanced its sanctions compliance program to minimize the risk of similar violations from occurring in the future.
OFAC amends CACR to restrict revenue sources to the Cuban regime
On September 23, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced a final rule amending the Cuban Assets Control Regulations (CACR) to further implement portions of the President’s foreign policy to deny the Cuban regime sources of revenue. Among other things, the final rule (i) amends an interpretive provision and several general licenses regarding lodging and related transactions at certain properties in Cuba identified on the State Department’s “Cuba Prohibited Accommodations List,” including those owned or controlled by the Cuban government; (ii) amends four general licenses to restrict the importation of Cuban-origin alcohol and tobacco products into the U.S.; (iii) amends a general license to eliminate the authorization for U.S. persons to attend or organize professional meetings or conferences in Cuba (specific licenses may be issued on a case-by-case basis for certain transactions); and (iv) eliminates a general license that authorizes U.S. persons “to participate in or organize certain public performances, clinics, workshops, other athletic or non-athletic competitions, and exhibitions, and replaces it with a specific licensing policy” (again permitting the authorization of specific activities via specific license on a case-by-case basis). The final rule also makes several technical and conforming changes, and is effective September 24.
OFAC sanctions individuals for supporting Maduro regime
On September 22, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against five key individuals for allegedly “facilitate[ing] the illegitimate Maduro regime’s efforts to undermine democracy in Venezuela.” The sanctions, issued pursuant to Executive Order 13692, reflect Treasury’s continued efforts to hold persons who offer support to the Maduro regime accountable. As a result, all property and interests in property belonging to the identified individuals subject to U.S. jurisdiction are blocked, and “any entities that are owned, directly or indirectly, 50 percent or more by the designated individuals, are also blocked.” U.S. persons are generally prohibited from dealing with any property or interests in property of blocked or designated persons.
OFAC issues Iran nuclear and ballistic missile program sanctions
On September 21, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) designated three high-ranking individuals of the Atomic Energy Organization of Iran (AEOI), numerous AEOI subsidiaries, equipment supply companies, and various senior officials working on Iran’s missile programs pursuant to Executive Order (E.O.) 13382, which allows for sanctions for engaging in or supporting the proliferation of weapons of mass destruction (WMD). As a result of the sanctions, all property and interests in property of the designated persons that are in the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC. OFAC further warned foreign financial institutions that knowingly facilitating significant transactions or providing significant support to the designated entities may subject them to sanctions and could sever access to the U.S. financial system.
In addition, the U.S. Department of Treasury announced a new Executive Order titled, "Blocking Property of Certain Persons with Respect to the Conventional Arms Activities of Iran,” which authorizes the Secretary of the Treasury, in conjunction with the Secretary of State, to impose asset blocking sanctions on any person engaged in any activity that materially contributes to the supply, sale, or transfer of destabilizing conventional weapons and acquisition of arms and related materiel by Iran.