Here are five things that happened this week in the world of economic sanctions that I think you should know about.
This week’s briefing covers the weeks ending 8 and 15 October 2021.
- The US Office of Foreign Assets Control (OFAC) published a guidance document on sanctions compliance aimed at the virtual currency industry. The document looks like a sequel to OFAC’s 2019 “A Framework for OFAC Compliance Commitments” and offers a useful primer for anyone who needs a refresher on sanctions best practices. Meanwhile, the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) published a report on ransomware trends in suspicious activity reports (SARs) filed under the Bank Secrecy Act between January and June 2021.
- OFAC named four individuals in Mexico as Specially Designated Nationals (SDNs) under the Foreign Narcotics Kingpin Designation Act for being members of the Cartel de Jalisco Nueva Generacion (CJNG). According to the Treasury Department news release, the designations resulted from a collaboration between OFAC, the US Drug Enforcement Administration, and Mexico’s Financial Intelligence Unit.
- The European Union adopted sanctions against 8 individuals accused of acting as law enforcement officials “responsible for enforcing Russian law in the illegally-annexed Crimea and Sevastopol.” Meanwhile, Ukraine’s National Security and Defense Council has adopted sanctions against more than 300 individuals since September 2021 for taking part in parliamentary elections in Crimea.
- OFAC removed an Iranian company and its subsidiary from the SDN List. The companies were accused of “providing support to an entity in Iran’s ballistic missile program,” according to a September 2020 Treasury Department news release. (Shout out to Erich Ferrari and the team at Ferrari & Associates for their work on this case.)
- The Commerce Department’s Bureau of Industry and Security (BIS) announced a USD 1,869,372 settlement with a California-based subsidiary of a Vietnamese state-owned telecommunications company for violations of the Export Administration Regulations (EAR). According to the settlement, the company made false statements about the intended end use of items exported from the United States to Vietnam that were controlled under the EAR.
OFAC is putting a lot of effort these days into encouraging virtual currency firms to take sanctions compliance seriously. As mentioned, OFAC issued an updated ransomware guidance and sanctioned a Russian cryptocurrency exchange last month. In December 2020 and February 2021, the agency brought enforcement actions against two US-based exchanges for providing services to users in comprehensively sanctioned territories (info here and here). The new guidance document (in futuristic purple and teal) does not impose any new regulatory obligations on its own. But it does provide a handy benchmark to help banks and others assess the adequacy of their counterparties’ compliance programs. (For more on the new advisory, see my team’s blog post here.)
As to that FinCEN report, the most interesting detail could be how few SARs are being filed in relation to ransomware. According to the report, there were 635 ransomware SARs filed between 1 January and 30 June 2021. For comparison, FinCEN received more than 2.5 million SARs in total last year.
In case you missed it: Bernard Chan, a non-official member of the Hong Kong Executive Council, told Bloomberg that he is “pretty sure” Hong Kong will get an Anti-Foreign Sanctions Law eventually.