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  • U.S.-EU release statement on Joint Financial Regulatory Forum

    Financial Crimes

    On March 1 and 2, EU and U.S. participants, including officials from the Treasury Department, Federal Reserve Board, CFTC, FDIC, SEC, and OCC, participated in the U.S. – EU Joint Financial Regulatory Forum to continue their ongoing financial regulatory dialogue. Matters discussed focused on six themes: “(1) market developments and current assessment of financial stability risks, (2) operational resilience and digital finance, (3) sustainable finance and climate-related financial risks, (4) regulatory and supervisory cooperation in capital markets, (5) multilateral and bilateral engagement in banking and insurance, and (6) anti-money laundering and countering the financing of terrorism (AML/CFT).”

    While acknowledging that both the U.S. and EU are “experiencing robust economic recoveries,” participants warned that significant uncertainty and risks are created by the current geopolitical situation, as well as challenges stemming from the ongoing Covid-19 pandemic, high energy prices, and supply-chain bottlenecks. “[C]ooperative international engagement to mitigate financial stability risks remains essential,” participants stressed. During the meeting, participants also discussed recent developments related to crypto-assets, digital finance, and so-called stablecoins, as well as the potential for a central bank digital currency, and “acknowledged the importance of ongoing international work on digital finance and recognized the benefits of greater international supervisory cooperation with a view to promote responsible innovation globally.”

    In addition, participants discussed various topics, including those related to third-party providers; climate-related financial risks and challenges, including sustainability reporting standards; the transition from LIBOR; and progress made in strengthening their respective AML/CFT frameworks.

    Financial Crimes Digital Assets Of Interest to Non-US Persons Department of Treasury EU Central Bank Digital Currency Stablecoins Anti-Money Laundering Combating the Financing of Terrorism Fintech Covid-19 Climate-Related Financial Risks LIBOR

  • OFAC sanctions Hizballah financiers in Guinea

    Financial Crimes

    On March 4, the U.S. Treasury Department’s Office of Foreign Assets Control announced sanctions pursuant to Executive Order 13224, as amended, against two Hizballah-affiliated financial facilitators operating in Guinea. The action is intended to disrupt Hizballah’s business network in West Africa, which relies on bribes and other corrupt activity, OFAC stated, and is part of “Treasury’s ongoing efforts to target the terrorist group’s international commercial activities and its global network of financiers, supporters, donors, and facilitators, which enable Hizballah to persistently threaten the security, stability, and prosperity of Lebanon and other jurisdictions.” 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 the designated persons are 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. OFAC further warned that the agency “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 Department of Treasury OFAC OFAC Sanctions OFAC Designations SDN List Guinea

  • FATF to strengthen beneficial ownership transparency

    Financial Crimes

    On March 4, the U.S. Treasury Department announced that the Financial Action Task Force (FATF) concluded its sixth plenary meeting, in which it, among other things, “agreed upon a revised standard to combat the misuse of anonymous shell companies and set the stage for its members and the broader global FATF network to be held accountable to more stringent standards.” FATF adopted amendments on beneficial ownership transparency for legal persons, which will “enhance the quality of beneficial ownership information (BOI) collected by governments,” and will “enable efficient access by law enforcement to this information and require improved international cooperation.” FATF also agreed upon a new updated Mutual Evaluation Methodology and an updated Mutual Evaluation Procedures. FATF will publish a report on migrant smuggling, which is intended to “raise awareness to the importance of developing a comprehensive understanding of the financial component of this criminal activity among both the public and private sectors.” Additionally, FATF is planning to launch a public consultation on updated Risk Based Guidance for the real estate sector this spring.

    Financial Crimes Department of Treasury Of Interest to Non-US Persons FATF Beneficial Ownership Risk Management Real Estate

  • Special Alert: Latest developments in OFAC sanctions against Russia

    Financial Crimes

    Beginning February 21, the U.S. Department of the Treasury’s Office of Foreign Assets Control has issued significant sanctions in response to the Russian Federation’s military invasion of Ukraine and its recognition of Ukraine’s separatist regions.

    Since Buckley’s last update on February 25, there have been a number of developments in the sanctions against Russia, which include:

    Financial Crimes Digital Assets OFAC Department of Treasury OFAC Sanctions OFAC Designations Ukraine Ukraine Invasion Russia Special Alerts DOJ FinCEN Biden NYDFS Of Interest to Non-US Persons Cryptocurrency

  • OFAC, DOJ measures aim for stronger compliance with Russian sanctions

    Financial Crimes

    On March 2, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) and the DOJ announced new measures to strengthen compliance with Russia-related sanctions in response to the situation in Ukraine. OFAC observed that in the past few days, Russia has taken measures “to use exporters to act as their agents and help them raise resources to prop up their currency and fund their priorities.” In response, OFAC reiterated that such actions taken on behalf of Russia’s Central Bank are prohibited. Newly issued and updated frequently asked questions address enhanced sanctions compliance measures and further explain recent sanctions, including prohibitions imposed pursuant to Directive 4 under Executive Order (E.O.) 14024, “Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation.” (Covered by InfoBytes here.) Additionally, the updated FAQs clarify, among other things, that energy payments can and should continue. As explained in OFAC’s announcement, General License (GL) 8A permits “U-turn transactions” so that energy payments may be processed through non-sanctioned, third-country financial institutions to allow the continuation of transactions that support the flow of energy to the market. OFAC also issued new FAQs and general licenses (see GLs 9A, 10A, 13, and 14) related to E.O. 14065, “Blocking Property of Certain Persons and Prohibiting Certain Transactions With Respect to Continued Russian Efforts to Undermine the Sovereignty and Territorial Integrity of Ukraine” to further clarify the stipulated prohibitions.

    The same day, the DOJ launched Task Force KleptoCapture, “an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export restrictions, and economic countermeasures that the United States has imposed, along with allies and partners,” in order to “isolate Russia from global markets.” “The Justice Department will use all of its authorities to seize the assets of individuals and entities who violate these sanctions,” Attorney General Merrick B. Garland stated. The Task Force will be staffed with DOJ prosecutors, agents, analysts, and professional staff with expertise in sanctions and export control enforcement, anticorruption, asset forfeiture, anti-money laundering, tax enforcement, national security investigations, and foreign evidence collection. According to the announcement, the Task Force will use data analytics, cryptocurrency tracing, foreign intelligence sources, and information from financial regulators and private sector partners to investigate and prosecute violations of new and future sanctions (both those related to the Ukraine invasion as well as those imposed for prior instances of Russian aggression and corruption), and “combat[] unlawful efforts to undermine restrictions taken against Russian financial institutions,” including prosecuting persons who attempt to evade know-your-customer and anti-money laundering measures. The Task Force will also target efforts to use cryptocurrency to launder foreign corruption proceeds and sanctions evasion and “us[e] civil and criminal asset forfeiture authorities to seize assets belonging to sanctioned individuals or assets identified as the proceeds of unlawful conduct.”

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

  • Treasury publishes risk assessments for money laundering, terrorist financing, and proliferation financing

    Financial Crimes

    On March 1, the U.S. Treasury Department published the 2022 National Risk Assessments on money laundering, terrorist financing, and proliferation financing, which highlight significant illicit finance threats, vulnerabilities, and risks facing the United States.

    The 2022 National Money Laundering Risk Assessment found that “[c]riminals continue to use a wide range of money laundering techniques, including traditional ones, to move and conceal illicit proceeds depending on what is available or convenient to them.” Crimes generating the largest amount of laundered illicit proceeds in or through the U.S. include fraud, drug trafficking, cybercrime, human trafficking and smuggling, and corruption. The assessment found that continued and emerging money laundering risks involve, among other things, the persistent misuse of legal entities, a lack of transparency in certain real estate transactions, merchants and professionals that misuse their positions or businesses, and compliance and supervision weaknesses at some regulated U.S. financial institutions. Additionally, operators of virtual asset service providers (VASPs) are reminded that violating the Bank Secrecy Act or neglecting regulatory requirements, “such as failing to establish effective AML programs or report suspicious activities,” present vulnerabilities to the financial system.

    The findings of the 2022 National Terrorist Financing Risk Assessment, according to the press release, included that, with respect to foreign terrorist groups, “the most common form of financial support from U.S.-based individuals continues to be the transfer of small sums (several hundred to tens of thousands of dollars) to facilitators outside of the U.S. working on behalf of ISIS and its affiliates, Al-Qaida and its affiliates, and Hizballah.” For the first time, the assessment also analyzed funding methods used to support domestic violent extremists.

    The 2022 National Proliferation Financing Risk Assessment found that most significant proliferation finance threats are posed by the Democratic People’s Republic of Korea followed by Iran. These networks misuse correspondent banking relationships and create front/shell companies to facilitate financial activity and conduct trade, and they generate significant revenue from the maritime sector. The press release stated that the assessment further found that these networks are beginning to “increasingly exploit[] the digital economy, including through the systematic mining and trading of virtual assets, and the hacking of virtual asset service providers.” In the upcoming weeks, Treasury will release the 2022 National Strategy for Combatting Terrorist and Other Illicit Finance, which will be informed by the analysis contained in these risk assessments and will share recommendations for addressing these highlighted threats.

    Financial Crimes Of Interest to Non-US Persons Department of Treasury Anti-Money Laundering Combating the Financing of Terrorism

  • OFAC targets Russian wealth, imposes sanctions on Putin and Lavrov

    Financial Crimes

    During February and March, as conflict continued to escalate in Ukraine, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) imposed significant new sanctions, including most recently designations targeting numerous Russian elites and their family members for continuing to provide direct and indirect support to the Russian government through their business empires, wealth, and other resources. (See also General License 15.) The sanctions also targeted six of the individuals companies, one of Russia’s largest privately-owned aircraft, and one of the world’s largest superyachts. The actions were taken in close coordination with the EU, UK, Canada, Japan, the ROK, and Australia as part of a “transatlantic effort to further deny Russian elites the benefits of their kleptocracy” and to ensure the effective implementation of recently announced financial sanctions. An additional 26 Russia- and Ukraine-based individuals and seven Russian entities connected with the Russian government’s efforts to promulgate disinformation and influence perceptions were also sanctioned by OFAC, while the Department of State imposed substantial costs on 22 Russian defense-related firms. OFAC also released three new Russian harmful foreign activities sanctions FAQs.

    OFAC also imposed significant sanctions against the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation, as well as three entities that manage one of Russia’s key sovereign wealth funds: the Russian Direct Investment Fund, its management company, and one of the managing company’s subsidiaries. Sanctions were also imposed against Russian President Vladimir Putin and Minister of Foreign Affairs Sergei Lavrov, along with directors of the Foreign Intelligence Service, the Federal Security Service and the Federal Service of National Guard Troops, the interior minister, and other top government officials (see announcements here and here). As a result of the sanctions, all property and interests in property belonging to the sanctioned individuals and entities, and “any entities that are owned, directly or indirectly, 50 percent or more” by the blocked persons that are subject to U.S. jurisdiction are blocked and must be reported to OFAC. 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 Financial Industry Regulatory Authority also sent a regulatory notice alerting members of recent sanctions-related developments and advising members to continue to monitor OFAC’s website for relevant information.

    OFAC also issued Directive 4 under Executive Order (E.O.) 14024, which prohibits related transactions involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation, unless otherwise authorized by OFAC. Entities subject to Directive 4 can be found in OFAC’s updated list of Specially Designated Nationals or on OFAC's Non-SDN Menu-Based Sanctions List. Additionally, OFAC issued Russia-related General License 8A to authorize certain energy transactions with specified entities through 12:01 a.m. eastern daylight time, June 24, 2022.

    OFAC further announced that it is adding regulations to implement E.O. 14024 related to specified harmful foreign activities of the Russian government (covered by InfoBytes here). OFAC stated it plans to supplement these regulations with a more comprehensive set of regulations that may include additional interpretive guidance and definitions, general licenses, and other regulatory provisions.

    Additionally, President Biden, along with leaders of the European Commission, France, Germany, Italy, the UK, and Canada, issued a joint statement imposing further restrictive economic measures to further isolate Russia from the international financial system. The leaders agreed to block certain Russian banks from accessing the SWIFT global messaging system in order to harm the banks’ ability to operate globally and announced their commitment to “restrictive measures” against the Russian Central Bank to prevent the deployment of its international reserves in a manner that undermines the impact of these sanctions. The announcement further noted that the leaders plan to launch a transatlantic task force to ensure financial sanctions are effectively implemented through the identification and freezing of assets belonging to sanctioned individuals and companies that exist within their countries’ jurisdictions. Actions will include “employing sanctions and other financial and enforcement measures on additional Russian officials and elites close to the Russian government, as well as their families, and their enablers.”

    Find continuing InfoBytes coverage on the U.S. sanctions response to Russia’s invasion of Ukraine here.

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

  • OFAC sanctions ISIS facilitators

    Financial Crimes

    On March 1, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Order 13224 against four Islamic State of Iraq and Syria (ISIS) and ISIS-Mozambique financial facilitators based in South Africa for allegedly supporting the transfer of funds from the top of the ISIS hierarchy to branches across Africa or for serving as leaders of ISIS cells. As a result of the sanctions, all property and interests in property of the designated individuals within U.S. jurisdiction must be blocked and reported to OFAC. OFAC further noted that its regulations “generally prohibit” U.S. persons or persons within the United States from participating in transactions with the designated persons and warned foreign financial institutions that if they knowingly facilitate significant transactions for any of the designated individuals, OFAC may prohibit or impose strict conditions on the opening or maintaining of a U.S. correspondent account or payable-through account.

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

  • OFAC sanctions Belarusians for supporting Russian invasion of Ukraine

    Financial Crimes

    On February 24, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions against 24 Belarusian individuals and entities due to Belarus’s support for, and facilitation of, Russia’s invasion of Ukraine. The sanctions focus on Belarus’s defense sector and financial institutions, which have close ties to Russia. OFAC stressed that the “Belarusian economy is highly dependent on key Russian financial institutions and their subsidiaries” and that restrictions imposed against the Public Joint Stock Company Sberbank of Russia, VTB Bank Public Joint Stock Company, and State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank, combined with the new measures taken against Belarusian banks “target nearly one-fifth of the country’s entire financial sector.” Specifically, OFAC designated two significant state-owned banks that directly or indirectly finance or conduct activity on behalf of the Government of Belarus (GoB). “Sanctioning these two GoB-owned banks, in addition to Russia-related restrictions imposed on three other systemically important Belarusian financial institutions, means that a significant portion of the Belarusian financial sector is now subject to U.S. sanctions,” OFAC stated. 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, and “any entities that are owned, directly or indirectly, 50 percent or more” by the blocked persons are blocked and must be reported to OFAC. 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. 

    In conjunction with the sanctions, OFAC issued numerous related directives and general licenses that provide for multiple exceptions, along with several new and updated frequently asked questions. A Buckley Special Alert provides additional details related to the evolving nature of the U.S. sanctions response to Russia’s invasion of Ukraine.

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

  • OFAC issues Afghanistan general license and related FAQs

    Financial Crimes

    On February 25, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued Afghanistan General License (GL) 20, Authorizing Transactions Involving Afghanistan or Governing Institutions in Afghanistan, which authorizes, to the extent required, all transactions involving Afghanistan and its governing institutions that would otherwise be prohibited by U.S. sanctions, excluding financial transfers to certain organizations and any blocked individual who is in a leadership role of a governing institution in Afghanistan, other than for the purpose of effecting the payment of taxes, fees, or import duties, or the purchase or receipt of permits, licenses, or public utility services, provided that such payments do not relate to luxury items or services, which do not support basic human needs. According to OFAC, this action is part of “the Biden Administration’s efforts to help address the substantial challenges facing Afghanistan’s economy.” 

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

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