OFAC Updates Cuba-Related Frequently Asked Questions

On April 21, OFAC updated its list of frequently asked questions related to Cuba. The updated document includes eight new FAQs clarifying (i)  that Section 515.584(d) of the Cuban Assets Control Regulations (CACR) permits authorized U-turn transactions to originate or terminate at foreign branches and subsidiaries of U.S. banking institutions; (ii) due diligence expectations for banks processing an authorized U-turn transaction from a sanctions compliance perspective; (iii)  that the importation into the United States of goods previously exported to Cuba for servicing requires a specific license; (iv) requirements regarding the export and reexportation of mixed-origin goods to Cuba; (v) that persons subject to U.S. jurisdiction may provide insurance-related services to persons subject to U.S. jurisdiction and engaging in authorized activity in Cuba; (vi) OFAC license requirements for insurance-related services; (vii) that educational grants, scholarships, or awards may be given to a Cuban state-owned entity; and (viii) the circumstances under which  a person subject to U.S. jurisdiction is authorized to purchase or lease real property in Cuba.

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OFAC Issues Hizballah Financial Sanctions Regulations

On April 15, OFAC issued new regulations to implement the Hizballah International Financing Prevention Act of 2015. The regulations authorize the Secretary of the Treasury to prohibit U.S. financial institutions from opening or maintaining correspondent or payable through accounts, or to impose strict conditions on the opening or maintenance of such accounts, for foreign financial institutions determined to knowingly:  (i) facilitate significant transactions for or on behalf of Hizballah or any person whose property or interests in property are blocked due to a connection with  Hizballah; (ii) engage in money laundering to carry out such transactions; or (iii) facilitate or provide significant financial services in relation to transactions described in (i) and (ii). OFAC will publish the names of foreign financial institutions sanctioned under the Hizballah Financial Sanctions Regulations in the Federal Register, and include them in the Hizballah Financial Sanctions Regulations List, a new list maintained on OFAC’s website. The regulations took effect immediately upon issuance.

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OFAC Issues Burundi Sanctions Regulations

On April 14, OFAC issued the Burundi Sanctions Regulations, 31 CFR part 554 to implement the November 22, 2015 Executive Order 13712, “Blocking the Property of Certain persons Contributing to the Situation in Burundi.” OFAC issued the regulations in abbreviated form to provide immediate guidance to the public. The regulations provide limited definitional and interpretive guidance, and contain a number of licenses permitting U.S. persons to engage in activities otherwise prohibited by Executive Order 13712, including, among others, providing legal services and emergency medical services to designated persons. Persons designated pursuant to Executive Order 13712, i.e., those whose property and interests in property are blocked, are published in the Federal Register and incorporated into OFAC’s List of Specially Designated Nationals and Blocked Persons with the identifier ‘[BURUNDI].’” OFAC intends to issue a more comprehensive set of regulations in the future, which may include additional interpretive and definitional guidance, as well as additional general licenses and statements of licensing policy.

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Pakistani Bank Reaches Agreement with NYDFS to Enhance AML Compliance Controls

Recently, the Federal Reserve and NYDFS announced that a New York branch of a Pakistani bank agreed to strengthen its compliance with BSA/AML requirements and OFAC regulations. The NYDFS’s and the NY Federal Reserve Bank’s recent examination into the bank’s branch found deficiencies related to its risk management and compliance with BSA/AML and OFAC regulations. Pursuant the agreement, the bank must submit written plans to the NYDFS and the NY Federal Reserve Bank on its strategy to improve its BSA/AML/OFAC compliance and its suspicious activity reporting. In addition, the bank must submit quarterly progress reports to the aforementioned regulators.

The recently issued agreement comes after a similar agreement earlier this month in which a New York branch of a Korean bank agreed to enhance its BSA/AML/OFAC compliance.

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President Expands North Korean Sanctions

On March 16, the President issued an Executive Order broadening sanctions in response to North Korea’s continuing pursuit of its nuclear and ballistic missile programs. The order blocks the Government of North Korea and the Workers’ Party of Korea; prohibits the exportation of goods, technology and services (including financial services) to North Korea from the United States; prohibits new investment in North Korea by U.S. persons; and establishes nine new criteria for designation as a blocked person. One provision authorizes the Secretary of the Treasury to identify sectors of the North Korean economy to target for asset blocking sanctions. Under this authority, Treasury Secretary Jacob J. Lew determined that persons in the transportation, mining, energy, or financial services sectors of North Korea can be targeted. Read more…

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