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FINTRAC Alert – Laundering the Proceeds of a Romance Scam

Quick Overview

On April 11th, 2019, FINTRAC published an Operational Alert issued in part with the Canadian Anti-Fraud Centre.  The information provided related to laundering the proceeds of romance scams and mass marketing fraud. The publication provided an explanation of what constitutes a romance scam, some common indicators that may be present and transaction patterns or flow of funds that may suggest fraud.

What Does it Mean?

The suspicious indicators provided by FINTRAC list circumstances or activities that might signal potential cases of individuals caught in a romance scam or the subject of a mass marketing fraud.  This does not mean that if one or more of the indicators are present that the transaction is definitely suspicious and must be reported to FINTRAC. It is meant to ensure that you are aware of the potential that suspicious activity may be taking place.  In that context, if you are involved in customer’s transactions, whether on the front lines or in back office, you must be aware of the indicators in the alert.  If you do encounter a transaction that may be considered unusual, you should attempt to collect additional information that will aid in the Compliance Officer’s decision to report it or clearly document why it was not considered suspicious. Where the Compliance Officer makes the decision to report the transaction to FINTRAC as suspicious, be sure to include “Project CHAMELEON” or “#CHAMELEON” in Part G—Description of suspicious activity in the STR. This will help to facilitate FINTRAC’s disclosure process.

What Now?

In order to ensure familiarity for anyone who interacts with customers and their transactions, the list of FINTRAC’s indicators should be included in your ongoing AML compliance training program.  Furthermore, the indicators should also be included in your procedure manuals, allowing easy access to the information.  Finally, the indicators should be incorporated into your Risk Assessment documentation.  Specifically, when determining customer risk and the controls used to effectively mitigate potential risks.

We’ve made it easier for you to integrate this content into your program by putting the indicators in a Word document for you.

Need a Hand?

Outlier has taken the list of indicators provided by FINTRAC and formatted them into an easy to use Microsoft Word document, which can be found here.  This should allow companies to easily update their documentation and ensure they are sufficiently monitoring for potential instances of romance scams or mass marketing fraud. If you aren’t sure what to do with this information and would like some assistance, please feel free to contact us.

AML Changes For The Real Estate Sector

Here We Go Again! Canada’s Proposed AML Changes for Real Estate Developers, Brokers and Sales Representatives

 

On June 9th, 2018, draft amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its enacted regulations (there are five separate regulations that we’re going to collectively call regulations here for simplicity’s sake). This article is intended to give a high-level summary of the proposed amendments as they relate to the real estate industry.

This article should not be considered advice (legal, tax or otherwise). That said, any of the content shared here may be used and shared freely – you don’t need our permission. While we’d love for content that we’ve written to be attributed to us, we believe that it’s more important to get reliable information into the hands of community members (meaning that if you punk content that we wrote, we may think you’re a jerk but we’re not sending an army of lawyers).

Finally, we want to encourage the community to discuss the proposed changes and submit meaningful feedback for policy makers. The comment period for this draft is 90 days. After this, the Department of Finance takes the feedback to the bat cave and drafts a final version of the amendments. From the time that the final version is published, the draft indicates that there will be 12 months of transition to comply with the new requirements.

What does this mean for my business?

While there are quite a number of proposed changes (the draft is about 200 pages in length), some are likely to have more of an impact on for real estate developers, brokers and sales representatives than others. We’ve summarized the changes that we expect to have the most impact below. Remember these are just proposed changes so there is no need to update your compliance material just yet.

What’s New?

Virtual Currency:

While there are not many proposed amendments that will introduce new requirements for real estate developers, brokers and sales representatives the draft regulations introduce reporting requirements for the receipt of CAD 10,000 or more of virtual currency. These basically are the same as large cash reporting obligations and will require reporting entities to maintain a large virtual currency transaction record.

The requirements for reporting and recordkeeping for virtual currency will be very similar to cash reporting requirements.

What existing requirements are changing?

24-hour rule:

The draft regulations clarify that multiple transactions performed by or on behalf of the same customer or entity within a 24-hour period are considered a single transaction for reporting purposes when they total CAD 10,000 or more. Only one report would need to be submitted to capture all transactions that aggregate to CAD 10,000 or more. For real estate developers, brokers and sales representatives this would apply to recipient of cash deposits. Specifically, this will apply to large cash transactions or CAD 10,000 or more. 

Identification:

The draft regulations replace the word “original” with “authentic” and states that a document used for verification of identity must be “authentic, valid and current. This would allow for scanned copies of documentation and/or for software that can authenticate identification documents to be used for the dual process method for real estate developers, brokers and sales representatives that identify clients in a non-face-to-face manner. Another change, related to measures for verifying identity, is that the word “verify” has been replaced with “confirm” and “ascertain” has been replaced with confirm. What this will mean exactly is still unclear (FINTRAC will need to provide more guidance once the final amendments are released). We are hopeful that it will allow for easier customer identification – especially for customers outside of Canada.

Records:

There have been some changes to the details that must be recorded in records that real estate broker or sales representative must maintain. In particular, the draft regulations add the requirement that information records must contain details of every person or entity for which they act as an agent or mandatary in respect of the purchase or sale of real property. Under the existing regulations information related to the person or entity purchasing real estate only.

Risk Assessment:

Under current regulations, reporting entities are required to assess the risks associated with its business and develop a risk assessment specific to your situation. For real estate developers, brokers and sales representatives a risk assessment must address the following four areas:

  • Products, services, and delivery channels (to better reflect the reality of the real estate sector, this workbook will now only refer to services and delivery channels);
  • Geography;
  • Clients and business relationships; and
  • Other relevant factors

A proposed amendment would require all reporting entities to assess the risk related the use of new technologies, before they are implemented.  This has been a best practice since the requirement to conduct a risk assessment came into force, but this change would make this a formal requirement.

Suspicious Transaction Reporting:

Under current regulations if a reporting entity has reasonable grounds to suspect that a transaction or attempted transaction is related to money laundering or terrorist financing, a report must be submitted to FINTRAC within 30 days of the date that a fact was discovered that caused the suspicion. The revised regulations add to this requirement by stating:

The person or entity shall send the report to the Centre within three days after the day on which measures taken by them enable them to establish that there are reasonable grounds to suspect that the transaction or attempted transaction is related to the commission of a money laundering offence or a terrorist activity financing offence.

This would require reports to be submitted to FINTRAC within three days after the reporting entity conducts an analysis that established reasonable grounds for suspicion.

Schedules:

The draft regulations introduce changes to reporting schedules, requiring more detailed information to be filed with FINTRAC then previously was required. This is in addition to including information that is marked as optional, if a reporting entity has the information. As it relates real estate developers, brokers and sales representatives these changes will impact attempted suspicious and suspicious transaction reporting, terrorist property reporting and large cash reporting. Some of the additional proposed data fields are:

  • every reference number that is connected to the transaction,
  • every other known detail that identifies the receipt (of cash for large cash transactions),
  • type of device used by person who makes request online,
  • number that identifies device,
  • internet protocol address (IP address) used by device,
  • person’s user name, and
  • date and time of person’s online session in which request is made.

Such changes may be onerous for reporting entities, especially for transactions that are conducted online.

Training:

Under current regulation, if real estate developers, brokers and sales representatives use agents, mandataries or other persons to act on their behalf, they must develop and maintain a written, ongoing compliance training program for those agents, mandataries or other persons. The draft regulations introduces an additional requirement in which there must be a documented plan for the ongoing compliance training program and delivering of that the training.

What’s Next?

If you’ve read this far, congratulations and thank you!

We hope that you will contribute your thoughts and comments. You can do this by contacting the Department of Finance directly. Their representative on this file is:

Lynn Hemmings
Acting Director General
Financial Systems Division
Financial Sector Policy Branch
Department of Finance
90 Elgin Street
Ottawa, Ontario
K1A 0G5
Email: fin.fc-cf.fin@canada.ca

If you would like assistance drafting a submission, or have questions that you would like Outlier to answer, please get in touch!

Canada’s Proposed AML Changes for MSBs

What’s Old is New Again, Well Updated

On June 9th, 2018, draft amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and its enacted regulations (there are five separate regulations that we’re going to collectively call regulations here for simplicity’s sake). This article is intended to give a high-level summary of the proposed amendments as they relate to Money Services Businesses (MSBs).

This article should not be considered advice (legal, tax or otherwise). That said, any of the content shared here may be used and shared freely – you don’t need our permission. While we’d love for content that we’ve written to be attributed to us, we believe that it’s more important to get reliable information into the hands of community members (meaning that if you punk content that we wrote, we may think you’re a jerk but we’re not sending an army of lawyers).

Finally, we want to encourage the community to discuss the proposed changes and submit meaningful feedback for policy makers. The comment period for this draft is 90 days. After this, the Department of Finance takes the feedback to the bat cave and drafts a final version of the amendments. From the time that the final version is published, the draft indicates that there will be 12 months of transition to comply with the new requirements.

♬The Times Regulations Are Changing♬

Foreign MSBs

Currently, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has issued a policy interpretation (PI-5594) in August of 2013, which states that a “real and substantial connection” to Canada must be present for an entity to be required to register as an MSB with FINTRAC.  A “real and substantial connection” was defined in the interpretation as having one or more of the following:

  • Whether the business is incorporated in Canada;
  • Whether the business has agents in Canada;
  • Whether the business has physical locations in Canada; and/ or
  • Whether the business maintains a bank account or a server in Canada.

The draft amendments introduce a new definition, which is “Foreign Money Services Business” that means anyone serving Canadian customers or entities in Canada is now subject to all Canadian requirements no matter where they are located.  Throughout the proposed changes, where there is a reference to money services businesses, there is also a reference to foreign money services businesses.  This will be significant to MSBs who operate non-face-to-face in the online marketplace and do not reside in Canada.

Non-Face-To-Face Customer Identification

Currently, there is a requirement that when customers are identified using the dual process method, the document and/or data that you collect is in its “original” format. This has been interpreted to mean that if the customer receives a utility bill in the mail, they must send you the original paper (not scanned or copied) document. The word “original” will be replaced with “authentic” (meaning that so long as you believe that the utility bill is a real utility bill for that person, it doesn’t need to be the same piece of paper that they received in the mail).

In addition, there are provisions that would allow reporting entities to rely on the identification conducted previously by other reporting entities. If this method is used to identify a customer, the reporting entity must immediately obtain the identification information from the other reporting entity and have a written agreement in place requiring the entity doing the identification to provide the identification verification within 3 days of the request.

Reporting EFTs of $10,000 or More

If you conduct international remittance transactions at the request of your customers, the requirement to report transactions of $10,000 or more will now be your responsibility, not your financial services provider.

The proposed change removes the language commonly known as the “first in, last out” rule.  This means that the first person/entity to ‘touch’ the funds for transactions incoming to Canada or the last person/entity to ‘touch’ the funds for a transaction outgoing from Canada had the reporting obligation (as long as the prescribed information was provided to them).

The update will change the reporting obligation to whoever maintains the customer relationship. So if you initiate a transaction at your customer’s request (outgoing transaction) or provide final receipt of payment to your customer (incoming transaction), it will be your obligation to report that transaction to FINTRAC.

For example, if the flow of the instructions for payment were as follows:

Currently, the reporting obligation of the outgoing EFT would fall to the bank in Canada.  With the draft updates, the reporting obligation would now fall to the MSB in Canada, because they have the relationship with the customer initiating the transaction.

 

Third Party Determination

Currently, the obligation to determine whether a third party is involved in a transaction relates to Large Cash Transactions.  The proposed changes would include the obligation to make a third party determination for all EFTs of $10,000 or more.  This would also require similar record keeping obligations as a third party determination under the current Large Cash Transaction records.

Suspicious Transaction Reporting

Currently, if a reporting entity has reasonable grounds to suspect that a transaction or attempted transaction is related to money laundering or terrorist financing, a report must be submitted to FINTRAC within 30 days of the date that a fact was discovered that caused the suspicion. This change appeared in the last round of amendments that came into force last year, and the proposed new wording would be another significant change:

The person or entity shall send the report to the Centre within three days after the day on which measures taken by them enable them to establish that there are reasonable grounds to suspect that the transaction or attempted transaction is related to the commission of a money laundering offence or a terrorist activity financing offence.

This means that a report would be due three days after the reporting entity conducts an investigation or does something that allows them to reach the conclusion that there are reasonable grounds to suspect.

Information Included In Reports to FINTRAC

Certain information is required in reports to FINTRAC. Even where information is marked as being optional, if a reporting entity has the information, it becomes mandatory to include it. Some of the additional proposed data fields are:

  • every reference number that is connected to the transaction,
  • type of device used by person who makes request online,
  • number that identifies device,
  • internet protocol address (IP address) used by device,
  • person’s user name, and
  • date and time of person’s online session in which request is made.

These fields may require significantly more data to be included in reports, especially for transactions that are conducted online.

Ongoing Compliance Training

Currently, there are five required elements of a Canadian AML compliance program, but there is soon to be a sixth.  Before you get too worried, it’s not that major.  The change is specific to your ongoing compliance training obligations, which says you must institute and document a plan for your ongoing compliance training program and the delivery of the training.  Basically, in your AML compliance program documentation, you need to provide a description of your training program for at least the next year and how the training will be delivered. Many MSBs have already implemented this best practice.

Risk Assessment Obligations

With the recent addition of the “New Technologies and Developments” category to the Risk-Based Approach requirements, the next logical progression has be added.  The updates include the obligation to assess the money laundering and terrorist financing risk of any new technology before implementation.  Meaning, if you are looking to take your business online and are going to use this fancy, new non-face-to-face ID system, you had better take careful inventory of where your risks are and be sure the appropriate controls have been put in place before going live. Much like the training plan, many MSBs have already implemented this best practice.

Virtual Currency

The draft updates also include major changes related to virtual currency. “Dealers in virtual currencies’ would be regulated as MSBs. New record keeping and reporting obligations would apply to all reporting entities that accept payment in virtual currency, or send virtual currency on behalf of their customers.

For more information on updates specific to virtual currency, please check out our full article.

What Next

If you’ve read this far, congratulations and thank you!

We hope that you will contribute your thoughts and comments. You can do this by contacting the Department of Finance directly. Their representative on this file is:

Lynn Hemmings

Acting Director General

Financial Systems Division

Financial Sector Policy Branch

Department of Finance

90 Elgin Street

Ottawa, Ontario

K1A 0G5

Email: fin.fc-cf.fin@canada.ca

If you would like assistance drafting a submission, or have questions that you would like Outlier to answer, please get in touch!

If you are interested in sharing your comments with the Canadian MSB Association (and we highly encourage you to do so) please email luisa@global-currency.com. She will have more information on the industry group’s submission and consultation process.

FINTRAC’s 2016 Real Estate Brief

Quick Overview

A little over a month ago, FINTRAC published an operational brief for the Canadian real estate industry.  The brief was intended to assist reporting entities in meeting the obligations to report suspicious transactions or attempted suspicious transactions that related to potential money laundering or terrorist financing.  The publication provided some common indicators that may be present in a transaction that suggest money laundering or terrorist financing could be involved.

What Does it Mean?

The suspicious indicators provided by FINTRAC list circumstances or activities that might signal potentially illicit activity.  This does not mean that if one or more of the indicators are present that the transaction is definitely suspicious and must be reported to FINTRAC, it is meant to ensure that you are aware of the potential that suspicious activity may be taking place.  In that context, if you are involved in real estate transactions, you must be aware of the indicators in the brief.  If you do encounter a transaction that may be considered suspicious, you will need to collect additional information that will aid in your decision to report it or document why it was not considered suspicious.

What Now?

In order to ensure familiarity for anyone who interacts with customers and their transactions, the list of FINTRAC’s indicators should be included in your ongoing AML compliance training program.  Furthermore, the indicators should also be included in your procedure manuals, allowing easy access to the information.  Finally, the indicators should be incorporated into your Risk Assessment documentation.  Specifically, when determining customer risk and the controls used to effectively mitigate potential risks.

We’ve made it easier for you to integrate this content into your program by putting the indicators in a Word document for you.

Need a Hand?

Outlier has taken the list of indicators provided by FINTRAC and formatted them into an easy to use Microsoft Word document, which can be downloaded here: FINTRAC Indicators Specific to Real Estate Transactions.  This should allow companies within the real estate sector to easily update their documentation and ensure they are sufficiently monitoring for potentially suspicious activity.  If you aren’t sure what to do with this information and would like some assistance, please feel free to contact us.

Would You Recognize Real Estate Red Flags?

Rodney_FINTRACOn November 14th, 2016 FINTRAC released a brief for all reporting entities who may be involved in real estate transactions.  The briefing is intended as guidance to provide some examples of indicators that may be present in transactions that may suggest they are linked to money laundering or terrorist financing.  The indicators described have been taken from transactions suspected of being related to money laundering or terrorist financing reported internationally.  The briefing focuses on the potential risks and vulnerabilities within the real estate industry and provides suggestions on how to ensure reporting entities are sufficiently meeting suspicious transaction reporting obligations.

The briefing is meant to provide operational guidance given the small overall number of suspicious transactions that have been reported to FINTRAC by the Real Estate industry.  The briefing states that these indicators will be used by FINTRAC to assess compliance with your reporting obligations.  If you are a reporting entity that interacts with the real estate industry in one form or another, the indicators and scenarios outlined in this brief should be considered when updating your Risk Assessment and training materials.

To put things into perspective, though the actual size of the real estate market is difficult to determine precisely, CMHC has produced some statistics.  CMHC suggests that between 2003 and 2013 over $9 trillion of mortgage credits were negotiated and roughly 5 million sales took place through Multiple Listing Services (MLS).  In contrast, FINTRAC received only 127 Suspicious Transactions Reports (STRs) from real estate brokers, agents and developers and 152 by other types of reporting entities, such as banks and trust/loan companies.  To go a step further, in FINTRAC’s 2015 Annual Report, between April 1, 2014 and March 31, 2015, a total of 92,531 STRs were filed across all reporting entities.

 

re-strs-filed-vs-sales

This evidence supports FINTRAC’s assertion that operational guidance for the real estate industry is needed.

The indicators and examples covered in the brief outline numerous scenarios that may suggest that a transaction is related to a money laundering or terrorist financing offense.  It also speaks to how the appearance of legitimacy obfuscates the clarity of suspicious transactions and requires more than a just “gut feel”.  What is required is the consideration of the facts related to the transaction and their context.  Does the transaction with all the known factors, positive or negative, make sense?

 

What This Means to Your Business? 

First off, FINTRAC will be using the indicators provided to assess your compliance with reporting obligations.  This has a couple different applications.  The first being, does your AML compliance program documentation make reference to the suspicious indicators that are provided.  Basically, are staff aware of the elements that may be present in a transaction that would suggest money laundering or terrorist financing may be occurring?

Secondly, is there an oversight process to ensure if there are transactions that contain one or more of these indicators where an STR was not submitted, is reviewed?  If so, does the process ensure supporting evidence that the Compliance Officer reviewed the transaction and determined there were not reasonable grounds to suspect its relation to money laundering or terrorist financing?  When you encounter a transaction involving any of the indicators provided, it is very important that you collect as much information as possible to assist the Compliance Officer with their determination of whether there are reasonable grounds to suspect that a transaction, or attempted transaction, may be related to money laundering or terrorist financing.  Alternatively, even if none of the indicators provided by FINTRAC are present but we still feel there is “something off” about our customer’s transaction, speak with your Compliance Officer.  They will be able to provide some insight on additional information that may assist our decision.  Once you have collected any additional information you may still not feel comfortable, but this does not mean you cannot complete the transaction, but that you must be sure your Compliance Officer is provided with all the information, which includes our reason for the escalation, so that they can decide whether there are reasonable grounds to suspect it may be related to a money laundering or terrorist financing offense.  The Compliance Officer will document their decision and, if necessary, submit an STR to FINTRAC.

Need a Hand?

If you are a reporting entity that interacts with the real estate industry and would like assistance updating your AML compliance program documentation or simply have some questions, please contact us.

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: July 18th – 22nd, 2016

OSFIOutlier3_032

On July 18th and 22nd, 2016, the Office of the Superintendent of Financial Institutions (OSFI) released the United Nations Security Council’s (UNSC’s) Al’Qaida and Taliban regulations updates to the sanctions list, deleting one individual and amending another.

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.

The review of the individual who was deleted from the list was triggered by regularly scheduled updates.  However, no additional information was available regarding the justification.

The amendment of one individual’s information included the following:

  • A physical description;
  • The confirmation of the most recent position held within the Taliban, as of April 2015; and
  • That they are currently involved in drug trafficking and operate a heroin laboratory in Afghanistan.

See the July 18th update on the United Nations (UN) website.

See the July 22nd update on the United Nations (UN) website.

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 addition of three individuals to the Counter Terrorism Designations list.  The second update was related to the addition of multiple individuals and entities to the Syria and Non-proliferation Designations lists.  The final update last week was to the Kingpin Act and Panama-related Frequently Asked Questions (FAQs) regarding 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 changes to the Counter Terrorism Designations list included three individuals of different nationalities, Saudi Arabia, Egypt and Algeria, though all have been linked to Al Qa’ida.

The update to the Syria Sanctions list included eight individuals, all of whom are Syrian.  The seven entities, which range from construction, to finance to manufacturing industries and vary in location, which include:

  • Syria;
  • Saint Kitts and Nevis;
  • Cyprus;
  • UAE; and

The update to the Kingpin Act and Panama-related FAQs are specific General License 5B and 6B

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

See the Syrian and Non-proliferation Designations lists update on OFAC’s website.

See the Kingpin Act and Panama-related General License 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: July 4th – 8th, 2016

OSFISanctions Pic

On July 5th, 2016, the Office of the Superintendent of Financial Institutions (OSFI) released the United Nations Security Council’s (UNSC’s) Al’Qaida and Taliban regulations update to the sanctions list, removing one individual.

Individuals who are included in the list 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. The individual delisted was decided following a review, initiated by a request that was submitted to the Ombudsperson.  The individual is a German national and has been imprisoned in Germany since 2007.

See the update on the United Nations (UN) website.

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.  The first update, released on July 5th, 2016 was related to the settlement of a potential civil liability for apparent violations of the Iranian and Sudanese transactions and sanctions regulations.  The second update was related to the addition of multiple North Korean individuals and entities to the North Korean Designations List.  The final update was further clarification to the new Cuba-related Frequently Asked Questions (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 settlement on July 5th for apparent violations of the Iranian and Sudanese sanctions was levied against Alcon Laboratories, Inc., Alcon Pharmaceuticals Ltd., and Alcon Management SA.  In the course of the investigations, Alcon produced documents and information where it appeared that from August 2008 to December 2011, Alcon violated Iranian sanctions on 452 occasions and Sudanese sanctions on 61 occasions.  Alcon engaged in the sale and exportation of medical end-use surgical and pharmaceutical products from the United States to distributors located in Iran and Sudan without OFAC authorization. OFAC determined that Alcon did not make a voluntary self-disclosure and that the apparent violations were not egregious. The statutory maximum civil monetary penalty amount for the Apparent Violations was $138,982,584 USD and the base penalty amount was $16,927,000 USD.  Ultimately, Alcon paid $1,317,150 USD.

The North Korean sanctions list update included numerous individuals and entities, some of whom are high-ranking officials with titles such as:

  • Director of the Fifth Bureau of the Reconnaissance;
  • Director of the Workers’ Party of Korea Propaganda and Agitation Department; and
  • Minister of People’s Security.

The update to the Cuba-related FAQs were specific to the issuance of two new questions added, #43 and #50, regarding the use of the U.S. dollar in certain transactions.

See the Enforcement Action update on OFAC’s website.

See the North Korea Designations List update on OFAC’s website.

See the Cuba-related FAQ 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 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.

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