Yesterday, OFAC added the following persons to the SDN List under its Global Magnitsky human rights sanctions program:

ESSA, Salim (a.k.a. ESSA, Salim Aziz), Johannesburg, South Africa; DOB 15 Jan 1978; nationality South Africa; Gender Male; Passport M00073786 (South Africa) issued 09 Nov 2012 expires 08 Nov 2022; National ID No. 7801155017084 (South Africa) (individual) [GLOMAG]. 

 

GUPTA, Ajay (a.k.a. GUPTA, Ajay Kumar), Dubai, United Arab Emirates; DOB 05 Feb 1966; POB Saharanpur, India; nationality India; Gender Male (individual) [GLOMAG]. 

 

GUPTA, Atul (a.k.a. GUPTA, Atul Kumar), Dubai, United Arab Emirates; DOB 14 Jun 1968; POB Saharanpur, India; nationality South Africa; Gender Male (individual) [GLOMAG]. 

 

GUPTA, Rajesh (a.k.a. GUPTA, Rajesh Kumar; a.k.a. “GUPTA, Tony”), Dubai, United Arab Emirates; DOB 05 Aug 1972; POB Saharanpur, India; nationality South Africa; Gender Male; National ID No. 7208056345087 (South Africa) (individual) [GLOMAG].

and changed the following 2 listings under the Iran (both), counter terrorism and/or non-proliferation programs (1 each):

BAHMAN GROUP, No. 37, Saba Boulevard, Africa Street, P.O. Box 14335-835, Tehran 1917773844, Iran; Website http://www.bahmangroup.com; Additional Sanctions Information – Subject to Secondary Sanctions [SDGT] [IFSR] (Linked To: ANDISHEH MEHVARAN INVESTMENT COMPANY). -to- BAHMAN GROUP, No. 37, Saba Boulevard, Africa Street, P.O. Box 14335-835, Tehran 1917773844, Iran; Website http://www.bahmangroup.com; Additional Sanctions Information – Subject to Secondary Sanctions [SDGT] [IFSR] (Linked To: ISLAMIC REVOLUTIONARY GUARD CORPS). 

 

ROSTAMIAN, Kambiz, Villa No 13, Cluster 31 Juemierah Islands, Dubai, United Arab Emirates; DOB 27 Aug 1960; Additional Sanctions Information – Subject to Secondary Sanctions; Passport RE0003026 (Saint Kitts and Nevis); alt. Passport I17217816 (Iran) (individual) [NPWMD] [IFSR]. -to- ROSTAMIAN, Kambiz, Villa No 13, Cluster 31 Juemierah Islands, Dubai, United Arab Emirates; DOB 27 Aug 1960; Additional Sanctions Information – Subject to Secondary Sanctions; Passport RE0003028 (Saint Kitts and Nevis); alt. Passport I17217816 (Iran) (individual) [NPWMD] [IFSR].  

And Treasury:

PRESS RELEASES

Treasury Sanctions Members of a Significant Corruption Network in South Africa 

Global Magnitsky designations target members of family business engaged in corruption, including bribery and misappropriation of state assets

Washington – Today, the U.S. Department of the Treasury’s Office of Foreign AssetsControl (OFAC) sanctioned members of a significant corruption network in South Africa that leveraged overpayments on government contracts, bribery, and other corrupt acts to fund political contributions and influence government actions.  Specifically, OFAC designated Ajay Gupta, Atul Gupta, Rajesh Gupta, and Salim Essa for their involvement in corruption in South Africa pursuant to Executive Order (E.O.) 13818, which builds upon and implements the Global Magnitsky Human Rights Accountability Act.

“The Gupta family leveraged its political connections to engage in widespread corruption and bribery, capture government contracts, and misappropriate state assets.  Treasury’s designation targets the Guptas’ pay-to-play political patronage, which was orchestrated at the expense of the South African people,” said Sigal Mandelker, Treasury Under Secretary for Terrorism and Financial Intelligence.  “The Guptas and Essa have used their influence with prominent politicians and parties to line their pockets with ill-gotten gains.  We will continue to exclude from the U.S. financial system those who profit from corruption.”

Today’s sanctions announcement demonstrates the U.S. government’s unwavering commitment to supporting the rule of law and accountability in South Africa.  We support the anti-corruption efforts of South Africa’s independent judiciary, law enforcement agencies, and the ongoing judicial commissions of inquiry.  Moreover, we commend the extraordinary work by South Africa’s civil society activists, investigative journalists, and whistleblowers, who have exposed the breadth and depth of the Gupta family’s corruption. 

THE GUPTA FAMILY

Ajay, Atul, and Rajesh Gupta immigrated to South Africa in the 1990s, and due in large part to their generous donations to a political party and their reportedly close relationship with former South African President Jacob Zuma, their business interests expanded.  The family has been implicated in several corrupt schemes in South Africa, allegedly stealing hundreds of millions of dollars through illegal deals with the South African government, obfuscated by a shadowy network of shell companies and associates linked to the family.  

Credible reports of these corruption schemes include the Gupta family offering members of the South African government money or elevated positions within the government, in return for their cooperation with Gupta family business efforts.  Public reporting has revealed Gupta family efforts to garner the cooperation of a potential Minister of Finance by promising millions of dollars in return for the individual’s assistance in removing key members of the South African government who were considered to be stumbling blocks to the Gupta family’s enterprises.  In another instance of an attempt to obtain the assistance of a member of government through illicit means, Rajesh reportedly promised a cut of a large scale development project to a provincial minister in return for the minister’s assistance.  While making this offer, Rajesh reportedly referred to two other politically powerful individuals present at the meeting as receiving large monthly payments, similar to the one being offered the provincial minister, directly from Rajesh in return for their assistance with a mining project.  In addition, the Gupta family was overpaid for government contracts and then used a portion of the proceeds of those overpayments to donate money to a South African political party.  Further, the family paid money to a South African government official in exchange for the appointment of other government officials friendly to the Gupta family business interests.  As a part of their corrupt business enterprise, South African government officials and business executives discussed ways to capture government contracts and then move the proceeds of those contracts through Gupta-owned businesses. 

AJAY GUPTA

Ajay Gupta (Ajay) is being designated for being the leader of an entity that has engaged in, or whose members have engaged in, corruption, including the misappropriation of state assets, the expropriation of private assets for personal gain, corruption related to government contracts or the extraction of natural resources, or bribery.

Ajay is the family patriarch who formulated the family’s corrupt business strategies and controlled its finances. 

ATUL GUPTA

Atul Gupta (Atul) has materially assisted, sponsored, or provided financial, material, technological support for, or goods or services to or in support of, an entity that has engaged in, or whose members have engaged in, corruption, including the misappropriation of state assets, the expropriation of private assets for personal gain, corruption related to government contracts or the extraction of natural resources, or bribery.

Atul is widely known to have overseen the Gupta family’s outreach to corrupt government officials.

RAJESH GUPTA

Rajesh Gupta (Rajesh) has materially assisted, sponsored, or provided financial, material, technological support for, or goods or services to or in support of, an entity that has engaged in, or whose members have engaged in, corruption, including the misappropriation of state assets, the expropriation of private assets for personal gain, corruption related to government contracts or the extraction of natural resources, or bribery.

Rajesh cultivated important relationships with the sons of powerful South African politicians and led efforts to pursue business and relationships in a South African province where corruption was rampant.  Rajesh attempted to use at least one of those relationships to seek undue influence with additional members of a South African political party.

SALIM ESSA

Salim Essa, a business associate of the Gupta family, has materially assisted, sponsored, or provided financial, material, technological support for, or goods or services to or in support of, an entity that has engaged in, or whose members have engaged in, corruption, including the misappropriation of state assets, the expropriation of private assets for personal gain, corruption related to government contracts or the extraction of natural resources, or bribery. 

As a result of today’s action, all property and interests in property of the individuals named above, and of any entities that are owned, directly or indirectly, 50 percent or more by them, individually, or with other designated persons, that are in the United States or in the possession or control of U.S. persons, are blocked and must be reported to OFAC.  Unless authorized by a general or specific license issued by OFAC or otherwise exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons.  In addition, any approval, financing, facilitation, or guarantee by a U.S. person, wherever located, of a transaction by a foreign person where the transaction by that foreign person would be prohibited by E.O. 13818 if performed by a U.S. person or within the United States would be prohibited.

GLOBAL MAGNITSKY

Building upon the Global Magnitsky Human Rights Accountability Act, on December 20, 2017, the President signed E.O. 13818, in which the President found that the prevalence of human rights abuse and corruption that have their source, in whole or in substantial part, outside the United States, had reached such scope and gravity that it threatens the stability of international political and economic systems.  Human rights abuse and corruption undermine the values that form an essential foundation of stable, secure, and functioning societies; have devastating impacts on individuals; weaken democratic institutions; degrade the rule of law; perpetuate violent conflicts; facilitate the activities of dangerous persons; and undermine economic markets.  The United States seeks to impose tangible and significant consequences on those who commit serious human rights abuse or engage in corruption, as well as to protect the financial system of the United States from abuse by these same persons. 

To date, the Department of the Treasury has designated 118 individuals and entities under E.O. 13818.  This figure is in addition to the numerous human rights- or corruption-related designations Treasury has issued under other various authorities.  In total, since January of 2017, Treasury has taken action against more than 680 individuals and entities engaged in activities related to, or directly involving, human rights abuse or corruption. 

and State:

Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned four individuals for corruption in South Africa pursuant to Executive Order 13818, which builds upon and implements the Global Magnitsky Human Rights Accountability Act.  Specifically, OFAC designated Ajay Gupta, Atul Gupta, Rajesh Gupta, and Salim Essa for their involvement in corrupt schemes with government officials and employees in state-owned enterprises for their own personal gain.  As a result of today’s actions, any property, or interest in property, of those designated within U.S. jurisdiction is blocked.  Additionally, U.S. persons are generally prohibited from engaging in transactions with blocked persons, including entities owned or controlled by designated persons.

Today’s action demonstrates continued U.S. commitment to promoting transparency, accountability, and the rule of law globally.  We commend the critical role played by South Africa’s civil society activists, whistleblowers, and investigative journalists to shine the spotlight on the Gupta network’s elicitation of criminal abuse of public office and other acts of corruption, which have deterred investment and impeded South Africa’s economic growth.  The United States strongly supports ongoing efforts by the Government of South Africa, including its independent judiciary, judicial commissions of inquiry, and law enforcement agencies, to investigate and prosecute alleged instances of corruption.  Successfully prosecuting and deterring corruption is essential to building a future of accountable government that fosters economic growth and opportunity for all of South Africa’s citizens.

both issued press releases.

As you can see, although the Magnitsky sanctions program is ostensibly about human rights abuses, the “global” (i,e. Besides Russia) version includes corruption. Why not just a corruption program? Mr. Watchlist wonders…

Links:

OFAC Notice

Treasury Press Release

State Department Press Release

Final reminder: frozen assets reporting 2019

OFSI is conducting its annual frozen assets review. If you hold or control funds or economic resources belonging to, owned, held, or controlled by a designated person you are required to submit a report to the Treasury’s OFSI by Friday 11 October 2019.

Your report should include details of all funds or economic resources frozen in the UK as well as those overseas where these funds or economic resources are subject to UK financial sanctions legislation. Your report to OFSI should include the value of all such assets as of close of business on Monday 30 September 2019.

All completed reports should be emailed to ofsi@hmtreasury.gov.uk using the template on the GOV.UK website.

Please ensure that any changes to previous frozen asset reporting submissions are clearly identified and explained.

If you have already submitted your return, or have no information to report, please ignore this email.

Link:

OFSI Notice

Statement of inspection in DFDS A / S (money laundering area)

In March 2019, the Danish FSA was on inspection in DFDS A / S. The inspection was an investigation of the money laundering area as part of the ongoing supervision of the company. The inspection included compliance with the rules of customer knowledge, monitoring, investigation, notification and listing. 

Risk assessment and summary

The company is authorized to exchange currency pursuant to section 41 of the Money Laundering Act.

The company offers currency exchange to passengers (private customers) and to ship crew (employees). 

The company offers currency exchange operations in Denmark from the two vessels “Crown Seaways” and “Pearl Seaways”, sailing on the route between Copenhagen and Oslo. The company receives both cash and card payments. The company’s private customers consist mainly of tourists who exchange for holiday purposes in connection with their stay on the ships.

The Danish Financial Supervisory Authority considers that the company’s inherent risk of being abused for money laundering or terrorist financing is normal to high assessed in relation to the average of financial companies in Denmark. In the assessment, the FSA has placed particular emphasis on the fact that currency exchange operations are generally considered to have a high inherent risk of being exploited for money laundering or terrorist financing.

Conversely, the assessment also emphasizes that the currency exchange business is exercised under special conditions, including the additional security measures as a result of the business being carried on board a ship. Among other things, this includes that all customers must buy a ticket and legitimize themselves before boarding the ships, and that DFDS must deliver passenger lists to customs and police authorities under other legislation.

Based on the inspection, there are some areas that give rise to supervisory reactions.

The company is instructed to ensure that the company retains identity and verification information and a copy of the credentials presented for currency exchange on the ship “Pearl Seaways”. 

The company is required to have procedures to determine whether customers are politically exposed persons (PEP) or close or close partners of a politically exposed person. 

The company is instructed to ensure that its customers are not listed in EU regulations containing financial penalties. 

Finally, the company is being prosecuted for failing to keep proven credentials from exchanges on the ships before March 2018. 

Link:

Finanstilsynet inspection statement

Statement of inspection in DLR Kredit A / S

In December 2018, the Danish FSA was on inspection in DLR Kredit A / S (DLR). The inspection included large loans.

At the inspection, the Danish FSA reviewed 35 of DLR’s largest loans, including the institute’s 10 largest new loans. The inspection also included a review of, among other things. credit policies, credit instructions and business procedures, policies and management reports related to the credit area.

Summary and risk assessment

The Danish Financial Supervisory Authority found that the volume of large loans with objective indication of credit deterioration had decreased since the last study of the theme. However, it remains at a high level, not least in the light of the business cycle.

In the opinion of the Danish Financial Supervisory Authority, DLR’s assessment and rating of major credit cases is predominantly true. However, the Danish FSA found two cases where the rating was too high.

DLR must ensure that for all customer groups an assessment is required of a managerial supplement to the department’s write-downs. DLR was ordered to do so.

Several of the institute’s major new loans were pre-mortgages for properties under construction for rental. In the opinion of the Danish Financial Supervisory Authority, lending to rental properties under construction is characterized by an increased risk, not least in the current market.

For Q3 2019, DLR had calculated its solvency need at 9.1%. Actual solvency amounted to 16.5 per cent, which, in addition to the solvency need, would cover buffer requirements of a total of 4.0 per cent. The Danish Financial Supervisory Authority did not comment on the solvency need.

Link:

Finanstilsynet inspection statement

Earlier this month, the US Government Accountability Office (GAO) issued a report entitled “Economic Sanctions: Agencies Assess Impacts on Targets, and Studies Suggest Several Factors Contribute to Sanctions’ Effectiveness.” (Whew!)

Here’s the lead “What GAO Found” section”:

The Departments of the Treasury (Treasury), State (State), and Commerce (Commerce) each undertake efforts to assess the impacts of specific sanctions on the targets of those sanctions. For example, Treasury and State both analyze or compile information on sanctions programs’ impacts, such as on a target country’s economy. In addition, Commerce assesses prospective impacts of some sanctions on targeted countries and others. According to Treasury and State officials, the agencies also use Intelligence Community assessments to gauge sanctions’ impacts. However, agency officials cited several difficulties in assessing sanctions’ effectiveness in meeting broader U.S. policy goals, including challenges in isolating the effect of sanctions from other factors as well as evolving foreign policy goals. According to Treasury, State, and Commerce officials, their agencies have not conducted such assessments on their own. However, they stated that agency assessments of sanctions’ impacts often contribute to broader interagency discussions that examine the effectiveness of sanctions in achieving policy goals.

The academic studies GAO reviewed suggest that several factors have contributed to more-effective sanctions. Studies examining factors that contribute to the effectiveness of sanctions in changing targeted countries’ behavior provided evidence that sanctions have been more effective when (1) they were implemented through an international organization (e.g., the United Nations) or (2) the targeted countries had some existing dependency on, or relationship with, the United States, such as a trade or military relationship. In addition, studies examining factors that increased sanctions’ economic impact provided evidence that the impact has generally been higher when the sanctions were more comprehensive in scope or severity, or—similar to the findings on effectiveness in changing behavior—were imposed through an international organization. Sanctions may also have unintended consequences for targeted countries, such as negative impacts on human rights or public health. In some studies, larger economic impacts were associated with more unintended consequences.

It’s not a bad read – confirms a lot of common wisdom, But, it does make you think – then why do we have all these programs that are unlikely to bear fruit?

Link:

GAO Report

On Tuesday, UK regulators corrected 3 listings that had been made under the counter terrorism sanctions program under Council Implementing Regulation (EU) 2019/24. As per OFSI’s notice:

2. On 9 January 2019, OFSI published a Notice which outlined that 2 individuals and 1 entity had been added to the consolidated list.

3. The update to the consolidated list on 8 October 2019 completes the additional information sections for these listings. Details of this correction can be found in the Annex to this Notice.

4. Assadollah Asadi, Saeid Hashemi Moghadam and the Directorate for Internal Security of the Iranian Ministry for Intelligence and Security are all still subject to an asset freeze.

Here are the corrected listings – individual:

1. ASADI, Assadollah

DOB: 22/12/1971. POB: Tehran, Iran Nationality: Iranian Passport Details: Iranian diplomatic passport number: D9016657 Other Information: EU listing only Listed on: 09/01/2019 Last Updated: 09/01/2019 08/10/2019 Group ID: 13740.

2. HASHEMI MOGHADAM, Saeid

DOB: 06/08/1962. POB: Tehran, Iran Nationality: Iranian Passport Details: Passport number: D9016290, valid until 4.2.2019. Other Information: EU listing only Listed on: 09/01/2019 Last Updated: 09/01/2019 08/10/2019 Group ID: 13741.

and entity:

1. DIRECTORATE FOR INTERNAL SECURITY OF THE IRANIAN MINISTRY FOR INTELLIGENCE AND SECURITY

Other Information: EU listing only Listed on: 09/01/2019 Last Updated: 09/01/2019 08/10/2019 Group ID: 13742.

The only real difference being the “Other Information” information.

Links:

OFSI Notice

Council Implementing Regulation (EU) 2019/24

So, according to this story (one of many), Adobe is going to cut off all Venezuelan customers. It looks like it’s struggling with the latest OFAC Executive Order, which blocks all assets of the “Government of Venezuela” – and that includes all associated persons (i.e. all government employees). And that seems to be the problem – because it can’t reliably tell government employees from other Venezuelans, Adobe is cutting off all business to the country.

Mr. Watchlist wonders – was this part of the Trump Administration’s machinations, or just a happy side effect?