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OFAC sanctions oil shipping network connected to IRGC-QF and Hizballah
On November 3, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13224 against members of an international oil smuggling network for allegedly facilitating oil trades and generating revenue for Hizballah and the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF). Included are “several key individuals and numerous front companies and vessels involved in blending oil to conceal the Iranian origins of the shipments and exporting it around the world in support of Hizballah and the IRGC-QF.” According to Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson, the responsible individuals “use a web of shell companies and fraudulent tactics including document falsification to obfuscate the origins of Iranian oil, sell it on the international market, and evade sanctions” in order to generate revenue to enable Hizballah and IRGC-QF terrorist activities. The sanctions follow the designation of another Iranian oil smuggling network earlier in May (covered by InfoBytes here). 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 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.” Unless authorized by general or specific OFAC licenses or otherwise exempt, 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 individuals. OFAC further warned that “engaging in certain transactions with the individuals and entities designated today entails risk of secondary sanctions.” Additionally, OFAC warned that a foreign financial institution that knowingly conducts or facilitates a significant transaction on behalf of a Specially Designated Global Terrorist could be subject to U.S. correspondent or payable-through account sanctions.
FinCEN reports significant increase in ransomware-related BSA filings in 2021
On November 1, FinCEN reported that ransomware continues to pose a significant threat to U.S. infrastructure, businesses, and the public, with ransomware-related Bank Secrecy Act (BSA) filings in 2021 accounting for nearly $1.2 billion. Issued pursuant to the Anti-Money Laundering Act of 2020, FinCEN’s Financial Trend Analysis examines ransomware activities for calendar year 2021, with a particular focus on ransomware trends in BSA data from July-December 2021. According to FinCEN, reported ransomware-related incidents have substantially increased from 2020, with roughly 75 percent of these incidents reported during the second half of 2021 emanating from or connected to actors in Russia. Highlights from the report include: (i) the number and total U.S. dollar value for ransomware-related incidents during 2021 far exceeds data for any previous year, with FinCEN reporting a 188 percent increase from 2020 to 2021 (possibly reflecting either an increase of ransomware-related incidents or improved reporting and detection); (ii) an average of 132 and a median of 136 ransomware-related incidents per month were reported during the review period (Treasury’s October 2021 measures to combat ransomware — covered by InfoBytes here — and potentially associated reporting obligations may have contributed to the overall rise in 2021 filings, FinCEN noted); and (iii) of the 793 ransomware-related incidents reported during the second half of 2021, 594 (roughly 75 percent) pertained to Russia-related variants.
The same day, Deputy Secretary of the Treasury Wally Adeyemo hosted participants from 36 countries during the second International Counter Ransomware Initiative Summit where attendees examined the challenges presented by ransomware and discussed the U.S.’s whole-of-government approach for responding to serious threats posed by bad actors.
OFAC sanctions terrorist weapons trafficking network tied to ISIS-Somalia
On November 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13224 against the Islamic State in Somalia (ISIS-Somalia) — marking the first time this affiliate of the Islamic State of Iraq and Syria (ISIS) is being designated. The action follows designations taken by OFAC earlier in the month against a network of financial facilitators who hold leadership roles and are key interlocutors between the group and local companies in Somalia (covered by InfoBytes here). According to OFAC, the designated persons serve as “critical nodes for a weapons trafficking network that is closely integrated with ISIS-Somalia,” and maintain “strong ties to al-Qa’ida in the Arabian Peninsula (AQAP) and al-Shabaab.” Addressing the significance of the sanctions, Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson said “[t]oday, we take direct aim at the networks funding and supplying both ISIS-Somalia and al-Shabaab that support their violent acts. The involvement of those designated today in other criminal activity, including piracy and illegal fishing, demonstrates the extent of ISIS-Somalia’s integration with illicit networks and other terrorist organizations operating in the region.” “Treasury is committed to working with partners in the region to disrupt the financing of ISIS and al-Shabaab,” Nelson said.
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 designation, OFAC warned, adding that foreign financial institutions that knowingly facilitate significant transactions or provide significant financial services to any of the sanctioned persons could also be subject to U.S. sanctions.
OFAC clarifies guidance on Russian oil price cap
On October 31, the U.S. Treasury Department’s Office of Foreign Assets Control published Russia-related frequently asked question 1094, to clarify when Russian Federation origin crude oil will be subject to a price cap announced earlier in September. As previously covered by InfoBytes, Treasury recently issued preliminary guidance on implementing a maritime services policy and related price exception for seaborne Russian oil, which is intended to establish a framework for Russian oil to be exported by sea under a capped price, as well as a ban on services for any shipments of seaborne Russian oil above the capped price. The policy, which relates to a broad range of services in connection with the maritime transportation of Russian Federation origin crude oil and petroleum products, will become effective December 5, 2022, for the maritime transportation of crude oil and on February 5, 2023, for the maritime transportation of petroleum products.
FinCEN issues statements on its lists of jurisdictions with AML/CFT/CPF deficiencies
On October 31, FinCEN announced that the Financial Action Task Force (FATF) issued public statements updating its lists of jurisdictions with strategic deficiencies in anti-money laundering (AML), countering the financing of terrorism (CFT), and countering the financing of proliferation of weapons of mass destructions (CPF). FATF’s statements include (i) Jurisdictions under Increased Monitoring, “which publicly identifies jurisdictions with strategic deficiencies in their AML/CFT/CPF regimes that have committed to, or are actively working with, the FATF to address those deficiencies in accordance with an agreed upon timeline,” and (ii) High-Risk Jurisdictions Subject to a Call for Action, “which publicly identifies jurisdictions with significant strategic deficiencies in their AML/CFT/CPF regimes and calls on all FATF members to apply enhanced due diligence, and, in the most serious cases, apply counter-measures to protect the international financial system from the money laundering, terrorist financing, and proliferation financing risks emanating from the identified countries.”
FinCEN’s announcement also informed members that FATF added Burma to the list of High-Risk Jurisdictions Subject to a Call for Action, and advised jurisdictions to apply enhanced due diligence proportionate to the risks. Moreover, U.S. financial institutions should continue to refer to existing FinCEN and Office of Foreign Assets Control guidance on engaging in financial transactions with Burma. Removed from the list of jurisdictions subject to increased monitoring are Nicaragua and Pakistan. With respect to high-risk jurisdictions subject to a call for action — the Democratic People’s Republic of Korea and Iran — “financial institutions must comply with the extensive U.S. restrictions and prohibitions against opening or maintaining any correspondent accounts, directly or indirectly, for North Korean or Iranian financial institutions,” FinCEN said, adding that “[e]xisting U.S. sanctions and FinCEN regulations already prohibit any such correspondent account relationships.”
FinCEN renews and expands real estate GTOs
On October 26, FinCEN renewed and expanded its Geographic Targeting Orders (GTOs). The GTOs require U.S. title insurance companies to identify the natural persons behind shell companies that pay “all cash” (i.e., the transaction does not involve external financing) for residential real estate in certain counties within the following major metropolitan areas: “Boston; Chicago; Dallas-Fort Worth; Las Vegas; Los Angeles; Miami; New York City; San Antonio; San Diego; San Francisco; Seattle; the District of Columbia, Northern Virginia, and Maryland (DMV) area; as well as the City and County of Baltimore; the County of Fairfield, Connecticut; and the Hawaiian islands of Honolulu, Maui, Hawaii, and Kauai.” FinCEN also expanded the geographic coverage of the GTOs to counties encompassing Houston and Laredo, Texas, after the agency—in conjunction with law enforcement partners—identified the regions as presenting greater risks for illicit finance activity through non-financed purchases of residential real estate. The purchase amount threshold remains set at $300,000 for residential real estate purchased in the covered areas, with the exception of the City and County of Baltimore for which the purchase threshold is $50,000. The renewed GTOs take effect October 27 and end April 24, 2023. The effective period for the newly added areas begins on November 25.
FinCEN FAQs regarding the GTOs are available here.
OFAC sanctions individuals and entities connected to Russia’s corruption in Moldova
On October 26, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Orders 13818 and 14024 against nine individuals and 12 entities in an attempt to counter the Russian Federation’s “persistent malign influence campaigns and systemic corruption in Moldova.” Included among the sanctioned persons are “oligarchs widely recognized for capturing and corrupting Moldova’s political and economic institutions and those acting as instruments of Russia’s global influence campaign, which seeks to manipulate the United States and its allies and partners, including Moldova and Ukraine,” OFAC said in the announcement. Notably, the designations also include a former Moldovan government official “who engaged in state capture by exerting control over and manipulating key sectors of Moldova’s government, including the law enforcement, electoral, and judicial sectors.” 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, individually or in the aggregate, 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. Additionally, OFAC warned that financial institutions and other persons that engage in certain transactions or activities with the sanctioned persons may themselves be exposed to sanctions or be subject to an enforcement action.
OFAC sanctions Iranian leaders
On October 26, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13553 against 10 Iranian officials related to the ongoing crackdown on nationwide protests in Iran and internet censorship, as well as two Iranian intelligence actors and two Iranian entities involved in the Iranian government’s efforts to disrupt digital freedom. As previously covered by InfoBytes, on October 6, OFAC sanctioned seven senior leaders within Iran’s government and security apparatus for the shutdown of Iran’s internet access. OFAC also sanctioned Iran’s Morality Police along with seven senior leaders who oversee Iran’s security organizations (covered by InfoBytes here). According to OFAC, the recently announced sanctions “coupled with additional initiatives such as the release of Iran General License D-2, which expands and clarifies the range of U.S. software and internet services available to Iranians under OFAC’s sanctions program, demonstrate the United States’ commitment to support the Iranian people’s call for accountability and justice, as well as their right to freely exchange information, including online.” 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 must be blocked and reported to OFAC. U.S. persons are also prohibited from engaging in any dealings involving the property or interests in property of blocked or designated persons, and “persons that engage in certain transactions with the individuals or entities designated today may themselves be exposed to sanctions,” OFAC said. Additionally, OFAC warned that “any foreign financial institution that knowingly facilitates a significant transaction or provides significant financial services for any of the individuals or entities designated today could be subject to U.S. correspondent or payable-through account sanctions.”
FAFT restricts Russia’s membership, takes action on corruption and drug trafficking
On October 20, the U.S. Treasury Department announced that the Financial Action Task Force (FATF) concluded its first plenary of the Singaporean presidency, in which it, among other things, took steps to combat corruption and illegal fentanyl trafficking and enhance financial transparency. During the meeting, FATF agreed to seek public input on draft guidance for implementing the FATF standard on beneficial ownership transparency for legal persons. The efforts to improve transparency in beneficial ownership “seek to improve the ability of law enforcement to trace, report, and seize illicit proceeds, and to make it harder for criminals and others to exploit opaque legal structures such as shell companies to hide and launder the proceeds of their crimes.” FATF also adopted a U.S.-led report on money laundering related to the illicit trafficking of synthetic opioids, including fentanyl, which provides information and best practices so that law enforcement and financial investigators around the world can expand their work on complex, cross-border money laundering investigations involving the proceeds of drug trafficking. The FATF also agreed to additional restrictions on the membership rights of the Russian Federation due to its war against Ukraine, including by barring them from participating in current and future FATF project teams.
OFAC sanctions Nicaraguan mining authority; Biden issues new E.O. expanding Treasury’s authority to hold Nicaraguan regime accountable
On October 24, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order (E.O.) 13851 against the Nicaraguan mining authority General Directorate of Mines and a Government of Nicaragua official. OFAC stated that the mining authority is “being designated for being owned or controlled by, or having acted or purported to act for or on behalf of, directly or indirectly,” the Nicaraguan Minister of Energy and Mines whose property and interests in property were blocked in 2021. As a result of the sanctions, all property and interests in property belonging to the sanctioned persons in the U.S. are blocked and must be reported to OFAC. Additionally, “any entities that are owned, directly or indirectly, 50 percent or more in the aggregate by one or more of such 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.
The same day, President Biden signed a new E.O., Taking Additional Steps to Address the National Emergency With Respect to the Situation in Nicaragua, to amend E.O. 13851 and, according to the announcement, expand Treasury’s “authority to hold the Ortega-Murillo regime accountable for its continued attacks on Nicaraguans’ freedom of expression and assembly.” The new E.O. grants Treasury authority to target certain persons operating or that have operated in Nicaragua’s gold sector, as well as other sectors identified by Treasury in consultation with the State Department. According to OFAC’s announcement, the E.O. “provides expanded sanctions authorities that could be used to prohibit new U.S. investment in certain identified sectors in Nicaragua, the importation of certain products of Nicaraguan origin into the United States, or the exportation, from the United States, or by a United States person, wherever located, of certain items to Nicaragua.” In conjunction with the E.O., OFAC issued Nicaragua-related General License 4, which authorizes the wind down of transactions involving the Directorate General of Mines of the Nicaraguan Ministry of Energy and Mines that are otherwise normally prohibited by the Nicaragua Sanctions Regulations, and issued one related frequently asked question regarding that General License.