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Sanctions This Week: July 25th – 29th, 2016

 

OSFISanctions Pic

There were no updates released from OSFI this week.

Go to the OSFI lists page.

OFAC

The U.S. Department of Treasury’s Branch, The Office of Foreign Asset Control (OFAC), released four updates last week.  One update was related to the publication of Cuba-related Frequently Asked Questions (FAQ), covering some of the recent changes made to the sanctions that had previously been placed on Cuba.  Other updates included the removal of 12 individuals from the Counter Terrorism Designations List, the issuance of a Finding of Violation and the publication of Iran General License J.

OFAC administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals.  The sanctions target countries, regimes, terrorists, international narcotics traffickers, the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the U.S.

The update to the Cuba-related FAQs was for the issuance of a new FAQ (#38) and a revision of an existing FAQ (#39), relating to certain information collection and recordkeeping requirements for persons subject to U.S. jurisdiction who provide authorized carrier or travel services to or from Cuba for specifically licensed travelers.

The update to the Counter Terrorism Designations List included the removal of 12 individuals of Libyan origin who are currently residing in the UK.

The Finding of Violation was issued to Compass Bank, which uses the trade name BBVA Compass, for violations of the Foreign Narcotics Kingpin Sanctions Regulations. From June 12, 2013 to June 3, 2014, Compass maintained accounts on behalf of two individuals on OFAC’s List of Specially Designated Nationals and Blocked Persons (the “SDN List”).

The final update of the week was related to OFAC issuing “General License J”, authorizing the re-exportation of certain civil aircraft to Iran on temporary sojourn and related transactions.

See the Cuba-related FAQ update on OFAC’s website.

See the Counter Terrorism Designations List update on OFAC’s website.

See the issuance of a Finding of Violation to Compass Bank on OFAC’s website.

See the Iran General License J details on OFAC’s website.

See OFAC’s recent actions page.

Need A Hand?

We would love to hear from you.  If there are subjects in this post that you would like to know more about, or if you need assistance with your compliance program, please contact us.

Sanctions This Week: June 27th – July 1st, 2016

Sanctions Pic

OSFI

On June 27th, 2016, the Office of the Superintendent of Financial Institutions (OSFI) released two updates to the United Nations Security Council’s (UNSC’s) Al-Qaida and Taliban regulations sanctions list, amending 8 individuals and 1 entity.

The individuals are subject to the assets freeze, travel ban and arms embargo set out in paragraph 2 of Security Council resolution 2253 (2015) adopted under Chapter VII of the Charter of the United Nations.

All of the individuals are of different nationalities, but all have connections to Al-Qaida and French terrorist groups.  Some of the individuals have been detained and are currently serving out sentences.  Where others have arrest warrants issued by France, which are currently outstanding.

Go to the OSFI UNAQTR update on the OSFI page.

Go to the OSFI lists page.

OFAC

The U.S. Department of Treasury’s Branch, The Office of Foreign Asset Control (OFAC), released three updates last week.  One update was related to the Counter Terrorist Designations list.  The second update was the publication of new Panama-related and Kingpin Act General Licenses and related Frequently Asked Questions (FAQ). The FAQ update is related to recent adjustments made to the sanctions placed on Panama.

OFAC also released the details about the implementation of the Federal Civil Penalties Inflation Adjustment Act, where penalties related to AML failings have increased 150%, the allowable maximum.  The adjustment to the base fine of USD 11,000, has now increased to USD 27,500.  This is based off the Consumer Price Index, and if you are curious about the actual math, see the image below:

OFAC CMP Calculation

OFAC administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals.  The sanctions target countries, regimes, terrorists, international narcotics traffickers, the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the U.S.  The changes to the Counter Terrorism Designations list included the removal of 11 Somali and Djibouti nationals.  The update also included the addition of one individual of Indian nationality with ties to the entity added, which is a section of Al-Qaida operating within India.

See the Counter Terrorism Designations List update on OFAC’s website.

See the Kingpin Act/Panama-related General Licenses and FAQs update on OFAC’s website.

See the Implementation of the Federal Civil Penalties Inflation Adjustment Act update on OFAC’s website.

See OFAC’s Recent Actions page.

Need A Hand?

We would love to hear from you.  If there are subjects in this post that you would like to know more about, or if you need assistance with your compliance program, please contact us.

Sanctions This Week: June 6th – 12th, 2016

OSFISanctions Pic

There were no updates released from OSFI this week.

Go to the OSFI lists page.

OFAC

The U.S. Department of Treasury’s Branch, The Office of Foreign Asset Control (OFAC), released two updates to five sanction lists last week.  The updates, include the following:

  • Release of the 2015 Terrorist Assets Report;
  • Iran-related FAQ;
  • Counter Terrorism Designation;
  • Termination of the OFAC Fax-on-Demand Service; and
  • Kingpin Act/Honduras and Kingpin Act/Panama-related General Licenses and FAQ.

OFAC administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals.  The sanctions target countries, regimes, terrorists, international narcotics traffickers, the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the U.S.

The 2015 Terrorist Assets Report is theTwenty-fourth Annual Report to the Congress on Assets in the United States Relating to Terrorist Countries and International Terrorism Program Designees.  This report cites a number of sanctions-related authorities including executive orders.  All of the legal materials cited in this report may be found in the legal section of OFAC’s website.

The Iran-related FAQ was adding two FAQs related to Financial and Banking Measures  and nine FAQs related to Foreign Entities Owned or Controlled by U.S. Persons.  OFAC added these FAQs to provide further clarity on the scope of the sanctions lifting that occurred on Implementation Day of the Joint Comprehensive Plan of Action (JCPOA).

The Counter Terrorism Designation list update was related to a single entity, Yarmouk Martyrs Brigade, who are known to be operating in Syria.

The termination of the OFAC Fax-on-Demand services was due to a lack of user demand for the service which is effective Friday, June 10, 2016.  General information pertaining to sanctions programs will remain publicly available on OFAC’s website.

The recently published update and FAQ to the Kingpin Act General Licenses, included four new General Licenses related to:

  • General License 1B – Authorizing certain transactions and activities to liquidate and wind down Banco Continental, S.A.;
  • General License 4B – Authorizing certain transactions involving individuals or entities located in the Panamanian Mall and associated complex, Soho Panama, S.A. (a.k.a. Soho Mall Panama);
  • General License 5A – Authorizing certain transactions and activities related to the Panamanian seizure of Balboa Bank & Trust; and
  • General License 6A – Authorizing certain transactions and activities related to the Panamanian intervention in Balboa Securities, Corp.

These General Licenses authorize certain transactions and activities that would otherwise be prohibited pursuant to the Kingpin Act.  OFAC also amended four FAQs related to the above licenses.

See the 2015 Terrorist Assets Report on OFAC’s website.

See the Iran-related FAQ updates on OFAC’s website.

See the Counter Terrorism Designations list update on OFAC’s website.

See the termination of OFAC’s Fax-on-Demand service information on OFAC’s website.

See the Kingpin Act/Honduras and Kingpin Act/Panama-related General Licenses and FAQs update on OFAC’s website.

See OFAC’s recent actions page.

Need A Hand?

We would love to hear from you.  If there are subjects in this post that you would like to know more about, or if you need assistance with your compliance program, please contact us.

Sanctions This Week: May 9th-15th, 2016

OSFISanctions Pic

There were no updates released from OSFI this week.

Go to the OSFI lists page.

OFAC

The U.S. Department of Treasury’s Branch, The Office of Foreign Asset Control (OFAC), released two updates to five sanction lists last week.  The lists that were updated, include the following:

  • Kingpin Act Designations;
  • Counter Narcotics Designations;
  • Libya-related Designations;
  • Panama-related and Kingpin Act General Licenses; and
  • An FAQ related to the Panama-related and Kingpin Act General Licenses.

OFAC administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals.  The sanctions target countries, regimes, terrorists, international narcotics traffickers, the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the U.S.

The Kingpin Act and Counter Terrorism Designations updates included, the addition of a single individual (Kingpin Act), who is related to a previous listing, as well as two changes to current listings (Counter Terrorism), based on new information that came to light.

The Libya-related Designation list update included, the addition of a single individual.  The person appended to the list, is the current President and Speaker of the Libyan House of Representatives.

The Panama-related and Kingpin Act General License and FAQ update, covered certain transactions, related to the maintenance of operations within the country.  Specifically, how to deal with listed Panamanian individuals and entities listed in the General Licenses, and called out specific references to the
Soho Mall Panama and Balboa Bank & Trust.  The update follows last week’s release of the FAQ, based on feedback received.

See the Counter Narcotics and Kingpin Act Designation updates on OFAC’s website.

See the Libya-related Designation list updates on OFAC’s website.

See the Panama-related and Kingpin Act General License and FAQ updates on OFAC’s website.

See OFAC’s recent actions page.

Need A Hand?

We would love to hear from you.  If there are subjects in this post that you would like to know more about, or if you need assistance with your compliance program, please contact us.

Sanctions This Week: April 25th – May 1st, 2016

OSFIOutlier3_032

There were no updates released from OSFI this week.

Go to the OSFI lists page.

OFAC

The U.S. Department of Treasury’s Branch, The Office of Foreign Asset Control (OFAC), released one update to the Belarus-related Executive Order (EO) 13405 sanction list last week.  The original list was replaced and superseded by the new version, which was effective October 30th, 2015.  The EO names nine (9) entities, who are undermining the democratic processes or institutions in Belarus, as well as any entity or individual who directly, or indirectly, owns or controls 50% or more of the listed entities.

OFAC administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals.  The sanctions target countries, regimes, terrorists, international narcotics traffickers, the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the U.S.  The changes to the Belarus-related EO require any U.S. person(s) engaging in transactions involving, directly or indirectly, any of the entities described above, no later than 30 days after the execution of any such transaction in excess of $50,000, or any series of such transactions exceeding $50,000, to file a report with the U.S. Department of State, Office of Eastern European Affairs.  Reports to be filed, must include:

  • The estimated or actual dollar value of the transaction(s), as determined by the value of the goods, services, or contract;
  • The parties involved;
  • The type and scope of activities conducted; and
  • The dates or duration of the activities.

See the Belarus-related Executive Order update on OFAC’s website.

See OFAC’s recent actions page.

Need A Hand?

We would love to hear from you.  If there are subjects in this post that you would like to know more about, or if you need assistance with your compliance program, please contact us.

EFT Reporting Clarification – Field Limitations

Guest Blog

Our guest blogger this week is Jonathan Krumins, Vice-President, AML Risk & Compliance, at vCAMLO Solutions Inc. vCAMLO provides anti money laundering (AML) and counter terrorist financing (CTF) support to Canadian credit unions. You can learn more about vCAMLO at www.vcamlo.ca.

Background

Over the past year, we have a noticed a change in how Electronic Fund Transfer Reports (EFTRs) are interpreted by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).  For entities that are required to report EFTs, any amount valued at CAD 10,000 or more that is sent out of Canada or received from outside of Canada on behalf of a customer is reportable to FINTRAC within 5 business days. During recent exams, FINTRAC has been paying much closer attention to the details of each report, reviewing each field for missing or invalid information. Due to restrictions in how much information can be included in a report, an EFTR can be considered incomplete by FINTRAC, even if all information has been entered by the reporting entity.

Reports that are filed to FINTRAC electronically must meet FINTRAC’s batch reporting specifications, which includes character limits for each field in the report. For example, fields such as “Individual’s Occupation” or “Street Address” are limited to 30 characters. This presents two risks for reporting entities:

  • Descriptions that are longer than the field character limits, and
  • Limitations of third party software.

We have sought additional clarification about these scenarios, and how they may affect your FINTRAC reporting.

Information Longer than the Field Character Limit

Certain information, such as a foreign bank’s street address, can easily be longer than the 30 character limit. We recommend shortening the address as much as possible by using abbreviations, and by trying to ensure that only the bank’s civic address is included in the report.

For example:

If the complete address is: The Example Bank Building, 123 George Washington Street, P.O. Box 456 (69 characters with spaces), the address must be shortened to meet the field limits.

One option for shortening the address is: 123 George Washington St.

Limitations in Third Party Reporting Software

Some third party FINTRAC reporting software does not enforce a field cut off (and the end user may not be notified that some information was cut off). This can result in information that appears to be present in a report, but is actually cut off as it is sent to FINTRAC.

Using the same example, if only the first 30 characters are sent to FINTRAC, the address in the report would read: The Example Bank Building, 123.

Some third party reporting software provides a report “Preview” function, which can show you how the report will actually appear to FINTRAC. If this option is available, be sure to review the “Previewed” report to ensure that all necessary information is contained in the report, and that nothing is cut off.

If your third party reporting software has this limitation, we would recommend contacting the software provider to request that field limits be put in place to match FINTRAC’s reporting specifications.

Need a Hand?

vCAMLO: If you are a credit union or MSB, and have any questions related to EFTR, LCTR or STR reporting, or if you are interested in AML Support Services, please contact us for a complimentary 30 minute compliance discussion.

Outlier: If you need assistance reviewing your technology solution or FINTRAC reporting to be certain that you’re meeting the standard described in this blog, or just someone to chat with to make sure that you’re on the right track please contact us.

Full Text Response

Good afternoon Mr. Krumins,

Thank you for your follow-up inquiry.

As previously stated, the reporting entity is required to include the relevant information to identify the destination or sending institution. It is for the reporting entity to determine the relevant information as this is a question of fact.

For an international or foreign address, there is no specific formula since every country has its own conventions. If no numerical address exists, the reporting entity should take reasonable measures to include the relevant information to help identify the destination or sending institution. When the reporting entity is reporting non-SWIFT Electronic Funds Transfers, and the institution’s information exceeds the character capacity in the given address field, then the reporting entity should consider ways to abbreviate names or words, without deteriorating the quality of the information, as necessary.

Best Regards,

FINTRAC EFT Reporting Clarification

We’ve recently had quite a few conversations with our clients and friends about electronic fund transfer (EFT) reporting.

For entities that EFT 10Kare required to report EFTs, any amount valued at CAD 10,000 or more that is sent out of Canada or received from outside of Canada on behalf of a customer is reportable to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) within 5 business days.  The question that keeps coming up relates to situations that have multiple senders or beneficiaries.

For example:

When Jaques (your customer in Canada) sends the equivalent of CAD 12,000 to his aunt Sally in Europe, this is clearly reportable as an EFT.

But

What if instead of sending the whole amount to his aunt Sally, Jacques instead send three transactions, each equivalent to CAD 4,000 to each of his nephews, Ralph, Jean and Morty?

After hearing different answers from different people, we thought it best to get a policy clarification from FINTRAC.  You can see the full text of that question, and FINTRAC’s answer below.

Outgoing EFTs With Multiple Beneficiaries Are Reportable

In the case that we mentioned above, Jacques’ transactions would be reportable EFTs, provided that all of the transactions happened within the same 24 hour period.  In this case, 3 reports would be sent, adding up to the total amount (which is over CAD 10,000).

Incoming EFTs From Multiple Senders Are Reportable

It stands to reason that if you receive multiple EFTs of behalf of the same beneficiary, the same rules would apply.

In the example above, for instance, let’s say that the money sent to Jacques’ nephews was a loan.  All of the nephews pay pack the loan at the same time, and you receive 3 EFTs for Jacques, each from a different sender, with a value of CAD 4,000 each (CAD 12,000 in total for the three EFTs).  These are also reportable, provided that the transactions all occurred within the same 24-hour period.

What Does It Mean If You’ve Interpreted the Reporting Requirements Differently?

In some cases, this may mean updates to your IT systems, to allow you to detect transactions that are received on behalf of the same beneficiary, or sent on behalf of the same sender.

It may also mean looking back at your transaction data, in order to figure out whether or not there are any EFTs that should have been reported to FINTRAC that were missed.  If this is the case, we recommend that you consider filing a voluntary disclosure with FINTRAC to proactively let them know about the issue, and what you’re doing to fix it.  If this is the case, we’ve created some free resources to help make this process as simple as possible.

Need a Hand?

If you’re not sure what to do next or you need extra hands to review your IT system updates or a package that you’re submitting to FINTRAC, please contact us.

 

Full Text of FINTRAC’s Response

Amber, 

     I am writing further to your e-mail of May 13, 2014, concerning how to report an electronic funds transfer sent by one client but to

multiple beneficiaries.

     As you know, pursuant to the /Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations/ (PCMLTFR),  reporting entities are required to report to FINTRAC electronic funds transfers valued at $10,000 or more (in the course of a single transaction) at the request of a client, along with the information referred to in Schedule 2 or 5, as the case may be; and the receipt from outside Canada of electronic funds transfers, sent at the request of a client, of $10,000 or more in the course of a single transaction, along with the information referred to in Schedule 3 or 6, as the case may be.

     When a client requesting an EFT conducts a transaction with the initial amount of $10,000 or more and instructs that it be divided between multiple beneficiaries, the EFT is still being carried out by one client, and the EFT must be reported using multiple reports (one per beneficiary).  The key to determining the reporting requirement is the instruction given by the client. To better explain this, I have provided two examples below:

     1)  A client instructs that $15,000 be sent via EFT to different beneficiaries, $5000 each. In this instance, the reporting entity would be required to send three different reports, one for each beneficiary, for a total of the $15,000 that the client requested be sent via EFT. When submitting the reports, the 24-hour-rule indicator must be selected, although this is not considered to be a single transaction of $10,000 or more as defined under section 3 of the PCMLTFR.

     OR

     2)  A client instructs that $5000 be sent to beneficiary subsequent $5000 be sent to beneficiary B and a third $5000 be sent to beneficiary C. In this instance, the 24- hour rule must be considered.

The 24-hour rule applies if the reporting entity knows, or an employee or senior officer knows, that the transactions were made within 24 consecutive hours of each other, by or on behalf of the same individual or entity. It applies only to transactions that are under $10,000. If a transaction is for $10,000 or more, it is reportable as one transaction.  As such, if the reporting entity knows that the first two EFTs of $5000 each were made by, or on behalf of, the same person, then the reporting entity would be required to submit two reports under the 24-hour rule, as these two EFTs total $10,000.    

I trust this information will be of assistance.

Best regards

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