OFAC Settles With Non-U.S. Company for Apparent Violation of Iran Sanctions

On January 12, Treasury’s Office of Foreign Asset Control (OFAC) announced a $17,500 settlement agreement with Aban Offshoe Limited (“Aban”) of Chennai, India, in connection with an alleged violation of Iranian Transactions and Sanctions Regulations. The alleged violation arises out of events that occurred in June 2008, when Aban’s Singapore subsidiary allegedly placed an order for oil rig supplies from a vendor in the United States with the intended purpose of re-exporting these supplies from the United Arab Emirates to a jack-up oil drilling rig located in the South Pars Gas Fields in Iranian territorial waters. OFAC noted, among other things, that the alleged violation constitutes a non-egregious case, but that Aban did not voluntarily self-disclose the apparent violation.

COMMENTS: Comments Off
POSTED IN: Courts, International

OFAC Amends Executive Order Regarding Significant Malicious Cyber-Enabled Activities to Include Interfering With or Undermining Election Processes

On December 28, 2016, the President announced the issuance of an Executive Order Taking Additional Steps To Address The National Emergency With Respect To Significant Malicious Cyber-Enabled Activities thereby amending Executive Order 13694.  Among other things, the new Executive Order allows for the imposition of sanctions on individuals and entities determined to be responsible for tampering, altering, or causing the misappropriation of information with the purpose or effect of interfering with or undermining election processes or institutions.  Five entities and six individuals have been identified and will be added to OFAC’s SDN List, the latest version of which can be accessed here.


OFAC Release Further Updates to Iran Sanctions Rules

On December 23, OFAC announced it has issued a final rule amending existing Iranian Transactions and Sanctions Regulations to expand the scope of medical devices and agricultural commodities generally authorized for export or re-export to Iran. The amendment also includes new or expanded authorizations relating to training, replacement parts, software and services for the operation, maintenance, and repair of medical devices, as well as certain items that are broken or subject to product recalls or other safety concerns. In addition, this amendment revises the definition of the terms “goods of Iranian origin” and “Iranian-origin goods.” OFAC concurrently published new and updated FAQs pertaining to the amendment.

COMMENTS: Comments Off
POSTED IN: International, Miscellany

House Terror Financing Task Force Releases Results of Two-Year Investigation

On December 20, the House Financial Services Committee’s Task Force to Investigate Terrorism Financing announced the release of a report detailing the results of its two-year investigation into terror financing. The report, entitled Stopping Terror Finance: Securing the U.S. Financial Sector, is intended to “serve as a useful summary of the key points illuminated by Task Force hearings regarding the terrorist financing threat, the necessary components of an effective strategy to address such financing activity, and current efforts to combat it.

Among other things, the Task Force took a more granular look at some less well-publicized terrorist financing methodologies, including: (i) the use of trade-based money laundering; (ii) the use of individual and corporate charitable foundations; (iii) the plundering of arts and antiquities by terrorists, especially by Islamic State of Iraq and Syria (ISIS); and even (iv) drug trafficking.

Moreover, as explained by Task Force Chairman Mike Fitzpatrick (R-Penn), the task force “discovered highly critical vulnerabilities” for which it presented several recommendations and called for further Congressional attention. Among other things, the report highlighted a need for:

  • Better interagency coordination and resource allocation;
  • Better use of and access to information that can identify illicit finance;
  • Adding more overseas Treasury attachés;
  • Continued attention to helping developing countries fight illicit finance;
  • A greater domestic and international focus on stopping trade-based money laundering;
  • Development of a harmonized regulatory and examination procedure for nonbank financial institutions – primarily money service businesses (MSB) but also emerging value transfer technologies – to squeeze out illicit finance and provide banks the comfort necessary for them to again widely offer MSB retail account services;
  • Development of a whole-of-government strategy to combat terror finance and other forms of financial crimes; Beneficial ownership of corporate entities; and
  • Re-animation of the interagency Terrorist Financing Working Group.

Notably, members of the Task Force have already introduced several bipartisan bills aimed at addressing some of the concerns identified in the report, including:

  • H.R. 5594, the “National Strategy for Combatting Terrorists, Underground, and Other Illicit Financing Act,” which passed the House on July 11, 2016 by voice vote, and requires the President, acting through the Treasury Secretary, to develop and publish an annual whole-of-government strategy to combat money laundering and terrorist financing.
  • H.R. 5602, which passed the House on July 11, 2016 by a vote of 356-47, requiring more detailed information to be reported to the Treasury regarding certain types of transactions in a specific area for a limited amount of time.
  • H.R. 5607, the “Enhancing Treasury’s Anti-Terror Tools Act,” which passed the House on July 11, 2016 by a vote of 362-45, enhancing Treasury’s anti-illicit finance tools by addressing issues that came up repeatedly in Task Force Hearings.
  • H.R. 5603, the “Kleptocracy Asset Recovery Act,” which is sponsored by Ranking Member Stephen Lynch (D-MA), and seeks to establish a reward program aimed at helping the U.S. identify, freeze, and, if appropriate, repatriate assets linked to foreign government corruption, which is often an enabler of terrorism.
  • H.R. 5606, the “Anti-Terrorism Information Sharing Is Truth Act,” which is sponsored by Task Force Vice Chairman Pittenger (R-NC) and which seeks to refine “safe harbors” for the sharing of anti-terror information, reaffirming Congressional intent in existing statute to encourage government sharing of terror methodologies with banks to help them better recognize such activity.

OFAC Sanctions Russian Individuals and Companies in Connection with Ukrainian Conflict

On December 20, Treasury’s Office of Foreign Asset Control (OFAC) announced its decision to sanction seven individuals and eight entities in connection with Russia’s occupation of Crimea and the conflict in Ukraine. OFAC also identified 26 subsidiaries of Russian banks as subject to sanctions already in place on their parent companies. Among other things, the sanctions prohibit U.S. residents, citizens, and financial institutions from participating in various financial dealings with the companies. As explained by John E. Smith, acting director of Treasury’s sanctions enforcement office, the sanctions were introduced “in response to Russia’s unlawful occupation of Crimea and continued aggression in Ukraine” in order to “maintain pressure on Russia by sustaining the costs of its occupation of Crimea and disrupting the activities of those who support the violence and instability in Ukraine.” Concurrent with today’s announcement, OFAC also issued a Russia/Ukraine-related General License 11, which authorizes certain transactions “necessary to requesting, contracting for, paying for, receiving, or utilizing a project design review or permit from FAU Glavgosekspertiza Rossii’s office(s) in the Russian Federation.”