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The final quarter of 2021 yielded many new sanctions designations by the United States Department of the Treasury’s Office of Foreign Asset Control. This article highlights some of the key sanctions designations and enforcement actions taken by OFAC.
This final quarter of 2021 yielded many new sanctions designations by the United States Department of the Treasury’s Office of Foreign Asset Control (OFAC). Economic sanctions continue to be a powerful tool used to protect the national security interest of the US. This article highlights some of the key sanctions designations and enforcement actions taken by OFAC against countries, entities and individuals engaged in acts which threaten the national security, foreign, and economic policies of the US, such as human rights violations, drug trafficking, the use of new payment systems and virtual currency exchanges for illicit activities and cybercrimes.
OFAC designated key members of Mexico’s Cartel de Jalisco Nueva Generacion (CJNG), a drug organization involved in trafficking of illicit drugs for distribution in the US, primarily through the port of Manzanillo in Colima, Mexico. E.O. 14059 “Imposing Sanctions on Foreign Persons Involved in the Global Illicit Drug Trade '' in conjunction with the Foreign Narcotics Kingpin Designation Act (“Kingpin Act”) aims to combat international drug trafficking through sanctions regulations.
Pursuant to E.O. 13224, as amended, and E.O. 13382, OFAC issued new sanctions on individuals and entities for providing material support to the Unmanned Aerial Vehicle (UAV) programs of Iran’s Islamic Revolutionary Guard Corps (IRGC) and its expeditionary unit, the IRGC Qods Force (IRGC-QF). Iran terrorist groups have utilized UAV for international shipping attacks which compromise the peace and stability of the US and international community.
OFAC imposed sanctions on two ransomware operators, Ukrainian Yaroslav Vasinskyi (Vasinskyi) and Russian Yevgeniy Polyanin (Polyanin) and a virtual currency exchange provider Chatex, related to the deployment of ransomware acts against several US companies and government entities and the laundering of Cyber ransoms. Kaseya is one the companies targeted by Vasinskyi and Polyanin which resulted in significant disruptions in its computer networks and customer base. Pursuant to E.O. 13694 Chatex was designated by OFAC for facilitating transactions on behalf of ransom actors including transactions related to the darknet and for providing material support to previously designated Suex.
Pursuant to E.O.13848, “Imposing Certain Sanctions in the Event of Foreign Interference in a United States Election,” OFAC sanctioned six Iranian individuals and one Iranian entity for Cyber interference with the 2020 US presidential election. Several Iranian personnel fraudulently obtained American voters information, edited content provided via online US media outlets in an effort to influence voters and undermine the US electoral process.
OFAC expanded sanctions on Belarus in an effort to curb malign behavior; human rights abuses, migrant smuggling and corruption conducted by the Lukashenka regime. The US along with international allies continues to hold the Lukashenka regime accountable for its acts of atrocity, in-order to magnify consequences related to its actions that go against US and foreign economic and political policies.
In conjunction with the observance of International Human Rights Day on December 10th, OFAC imposed sanctions on 15 individuals and 10 entities under multiple executive orders and the Global Magnitsky Human Rights Accountability Act, in connection with serious human rights abuses across multiple countries-the People’s Republic of China’s (PRC), Bangladesh, Burma and the Democratic People’s Republic of Korea (DPRK). As a consequence, all transactions involving U.S persons, including publicly traded securities with the designated persons are strictly prohibited.
Pursuant to Executive Order (E.O.) 13959, as amended by E.O. 14032, OFAC designated eight entities for the repression of members of ethnic and religious minority groups in Xinjiang. U.S persons are prohibited from engaging in transactions involving publicly traded securities in connection with these entities.
Mashreqbank psc (Mashreqbank) processed over $4 Million in transactions between January 4, 2005 and February 6, 2009 through US financial institutions in violation of the now-repealed Sudanese Sanctions Regulations (SSR). Mashreqbank voluntarily entered into a retroactive statute of limitations waiver agreement which resulted in a Finding of Violation (FOV) instead of a civil monetary penalty.
In accordance with a voluntary self-disclosure (VSD) to OFAC, TD Bank, N.A. (“TDBNA”) disclosed that it engaged in unlicensed transactions and maintained banking relationships with employees of the North Korean mission to the United Nations and maintained accounts for individuals on the Specially Designated Nationals (SDN) list. As a result, TDBNA's VSD OFAC deemed the violations non-egregious and agreed to a settlement of $115,000.
As the US continues to focus on disrupting criminal networks, sanctions violators, ransomware actors and human rights violations, it is imperative for companies, particularly financial intuitions, to ensure robust sanctions compliance programs are in place. Unless authorized by OFAC through general licenses, designated individuals and entities are prohibited from engaging in all dealings with U.S. persons or within (or transiting) the United States. Additionally, all property of designated individuals and entities must be blocked and reported to OFAC. Financial institutions have a regulatory obligation to ensure that sanctions regulations are understood, policies and procedures are developed that are implementable, people and technology solutions are in place to accurately assess sanctions risks, and mitigating controls are in place, in order to prevent sanctions violations.
Sia Partners has the capabilities to design and implement sanctions programs and assess enterprise-wide sanctions risks to ensure compliance with OFAC regulatory requirements.