The Office of Foreign Assets Control’s historic fine of virtual currency exchange Binance could signal more enforcement action against fintech companies, particularly those that may be cutting corners within their sanctions compliance programs, law firms said this month. They also said the case shows OFAC may specifically be targeting companies that don’t have enough compliance buy-in from senior management.
Six users of the virtual currency mixer Tornado Cash are appealing a U.S. court decision that upheld sanctions against the cryptocurrency service, saying the Treasury Department illegally stretched its authorities “beyond recognition” when it designated Tornado Cash last year. The six people argued that U.S. sanctions laws don’t allow Treasury to designate an “open-source software project” like Tornado Cash because it doesn’t meet the definition of “property” under the International Emergency Economic Powers Act.
The Commerce and Treasury departments earlier this month co-hosted a virtual “exchange” with small to mid-sized financial institutions, law enforcement and government agencies to discuss Russian attempts to evade export controls, the agencies announced Nov. 21. The exchange included officials from the Bureau of Industry and Security, the Office of Foreign Assets Control and the Financial Crimes Enforcement Network, and “exemplified the ongoing U.S. Government effort to further constrain and prevent Russia from accessing the international financial system and conduct economic activity to fund its invasion of Ukraine,” Treasury said. The effort came about a week after BIS and FinCEN issued another set of export control evasion red flags for financial services firms along with a new key term that banks and others can include in their suspicious activity reports (see 2311060055).
John Pisa-Relli, trade compliance counsel with GE Aerospace, will join the Office of Foreign Assets Control next month to serve as the agency’s enforcement liaison to U.S. federal and state law enforcement and regulatory agencies, he announced this week on LinkedIn. Pisa-Relli previously worked as a liaison for OFAC from 2003 to 2005.
The Office of Foreign Assets Control on Nov. 21 announced a $968 million settlement with Binance, the world’s largest virtual currency exchange, for allegedly violating multiple U.S. sanctions programs when the company allowed people who were either subject to sanctions or located in sanctioned jurisdictions to use its platform. OFAC said Binance senior management knew they were illegally allowing sanctioned users to access its online exchange platform and took steps to “undermine” the company’s own compliance procedures.
The Office of Foreign Assets Control this week published four previously issued general licenses under its Russian Harmful Foreign Activities Sanctions Regulations. The full text of each license is available in the notice.
The American and British agencies in charge of sanctions implementation have “worked more closely than ever” during the last year and are planning to share more data, issue additional guidance and better harmonize their sanctions measures, they said last week. They also announced a plan to embed an official within the other country’s agency to help train and learn about each side's respective sanctions procedures.
The Office of Foreign Assets Control this week issued two updated Venezuela-related general licenses, including one that renews the current authorization for certain transactions with the country’s state-owned energy company and another that updated the authorization for certain transactions with the country’s flagship airline.
The Office of Foreign Assets Control on Nov. 16 sanctioned three United Arab Emirates-based companies and three vessels for violating the price cap on Russian oil (see 2310240068). The designations target Kazan Shipping Inc., Progress Shipping Co. Ltd. and Gallion Navigation Inc., the registered owners, respectively, of three vessels: the Kazan, the Ligovsky Prospect and the NS Century.
The Office of Foreign Assets Control this week issued a correction to a sanction designation published in the Federal Register in April 2021. The correction fixed the basis for the designation of Artem Nikolaevich Stepanov, who was sanctioned for having ties to Russian company Yunidzhet, a procurement agent for Yevgeniy Prigozhin, the former leader of the Russian private military company Wagner Group.