Guidance

September 5, 2019: OFSI issues Frozen Assets Reporting notice/reminder

Background

1. Financial sanctions legislation applicable in the UK requires that all funds or economic resources belonging to, owned, held or controlled by a designated person must be frozen. Under this legislation the Treasury, through its Office of Financial Sanctions Implementation (OFSI), can request information you may possess for the purpose of, among other things, monitoring compliance with the legislation.

Frozen Asset Reporting (2019)

2. Every year the Treasury carries out a review to update our records to reflect any changes to these assets during the reporting period. As part of this review, the Treasury requires all persons that hold or control funds or economic resources belonging to, owned, held, or controlled by a designated person, to provide a report to us with the details of these assets. If you possess this information you are requested to complete such a report and submit it to OFSI by Friday 11 October 2019.

3. 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. Accounts blocked solely by other national authorities (e.g. OFAC) do not need to be reported to us. Your report to OFSI should include the value of all such assets as at close of business on Monday 30 September 2019. For a general description of what should be reported please see the Annex to this Notice.

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

https://www.gov.uk/government/publications/annual-frozen-asset-review-and-reporting- form

5. There is no need to provide a nil return to OFSI if you do not hold or control funds or economic resources belonging to, owned, held, or controlled by a designated person. However, if you submitted a report last year (other than a nil return) and no longer hold those assets, please submit a nil return.

What you should do now

6. You should identify all of the funds or economic resources belonging to, owned, held or controlled by designated persons that are held or controlled by you. You should report all identifying information concerning those funds or economic resources, along with their value as at 30 September 2019, to OFSI no later than 11 October 2019.

7. You should ensure that one person in your organisation is responsible for collating and sending in your return to avoid duplication.

8. Failure to comply with financial sanctions legislation or seeking to circumvent its provisions is a criminal offence. Such conduct could lead to either a criminal conviction or civil or administrative action by OFSI. This might include the imposition of a monetary penalty of up to either £1 million or 50% of the monetary value of the breach, whichever is greater. Guidance on OFSI’s enforcement can be found here:

https://www.gov.uk/government/publications/monetary-penalties-for-breaches-of-financial- sanctions

9. If you have a question regarding this exercise you should contact OFSI immediately by emailing: ofsi@hmtreasury.gov.uk.

Ongoing compliance

10. Separately to the above, you are required on an ongoing basis to:

I. check whether you hold or control any funds or economic resources belonging to, owned, held, or controlled by the persons listed on the Treasury’s Consolidated List of asset freeze targets;

II. if yes to (i) above, freeze such funds or economic resources;

III. refrain from dealing with the funds or economic resources or making the funds or

economic resources available to, or for the benefit of, such persons unless licensed by

OFSI;

IV. report any findings to OFSI, together with any additional information that would

facilitate compliance with the legislation; and

V. provide any information concerning the frozen funds or economic resources of

designated persons that OFSI may request. Information reported to OFSI may be passed on to other regulatory authorities or law enforcement.

11. Your reporting obligations to OFSI are set out in Chapter 5 of OFSI’s guide to financial sanctions: https://www.gov.uk/government/publications/financial-sanctions-faqs.

12. You should not wait for the reporting deadline above to report newly frozen funds or economic resources to OFSI. All newly frozen funds or economic resources must be reported immediately.

Data Protection

13. Please note that all information reported to OFSI will be handled in accordance with the General Data Protection Regulation and/or the Data Protection Act 2018.

Further Information

14. For more information please see OFSI’s guide to financial sanctions: https://www.gov.uk/government/publications/financial-sanctions-faqs.

Enquiries

15. Non-media enquiries, reports and licence applications should be addressed to:

Office of Financial Sanctions Implementation HM Treasury

1 Horse Guards Road

London

SW1A 2HQ

Phone: 020 7270 5454

E-mail: ofsi@hmtreasury.gov.uk

16. Media enquiries about how financial sanctions are implemented in the UK should be

addressed to the Treasury Press Office on 020 7270 5238.

17. Media enquiries about the sanctions measures themselves should be addressed to the Foreign and Commonwealth Office Press Office on 020 7008 3100.

Link:

OFSI Notice

OFAC adds a new Venezuela General License, and amends FAQ 680

Earlier today, OFAC issued a new Venezuela General License “Authorizing Transactions Involving Certain Government of Venezuela Persons”:

GENERAL LICENSE NO. 34

Authorizing Transactions Involving Certain Government of Venezuela Persons

(a) Except as provided in paragraph (c) of this general license, all transactions and activities prohibited by Executive Order (E.O.) 13884 involving one or more individuals who meet the definition of the “Government of Venezuela,” as defined in E.O. 13884, including all transactions that involve property in which such individuals have an interest, are authorized, provided that the individuals are one or more of the following:

(1) United States citizens;

(2) Permanent resident aliens of the United States;

(3) Individuals in the United States who have a valid U.S. immigrant or nonimmigrant visa, other than individuals in the United States as part of Venezuela’s mission to the United Nations; or

(4) Former employees and contractors of the Government of Venezuela.

(b) Except as provided in paragraph (c), all transactions necessary to unblock property or interests in property that were blocked solely pursuant to E.O. 13884, including the return or processing of funds, for individuals described in paragraph (a) of this general license are authorized.

(c) This general license does not authorize:

(1) The unblocking of any property blocked pursuant to E.O. 13884, or any part of 31 C.F.R. chapter V, except as authorized by paragraph (a) or (b); or

(2) Any transactions or dealings otherwise prohibited by E.O. 13884, or E.O. 13850 of November 1, 2018, E.O. 13835 of May 21, 2018, E.O. 13827 of March 19, 2018, E.O. 13808 of August 24, 2017, or E.O. 13692 of March 8, 2015, each as amended by E.O. 13857 of January 25, 2019, or any part of 31 C.F.R. chapter V, or any transactions or dealings with any blocked person, including persons meeting the definition of the “Government of Venezuela” in

E.O. 13884, other than the individuals described in paragraph (a) of this general license.

(d)U.S. persons unblocking property pursuant to paragraph (a) or (b) of this general license are required, within 10 business days from the date the property is unblocked, to file a report detailing the information required by 31 C.F.R. § 501.603(b)(3)(ii), with the Office of Foreign Assets Control, Office of Compliance and Enforcement, U.S. Department of the Treasury, 1500 Pennsylvania Avenue N.W., Freedman’s Bank Building, Washington, DC 20220, or via email to OFACReport@treasury.gov.

And amended FAQ 680:

680. Does the blocking of the Government of Venezuela impact the ability of U.S. persons to transact with the Government of Venezuela, or persons in which the Government of Venezuela owns, directly or indirectly, a 50 percent or greater interest?

 

Yes. Unless exempt or authorized by OFAC, all property and interests in property of persons meeting the definition of the Government of Venezuela  (see section 6(d) of E.O. 13884 of August 5, 2019) that are in, or come within, the United States or the possession or control of a United States person are blocked, pursuant to E.O. 13884.  The term “Government of Venezuela,” as defined in E.O. 13884, includes the state and Government of Venezuela, any political subdivision, agency, or instrumentality thereof, including the Central Bank of Venezuela and Petroleos de Venezuela, S.A. (PdVSA), any person owned or controlled, directly or indirectly, by the foregoing, and any person who has acted or purported to act directly or
indirectly for or on behalf of, any of the foregoing, including as a member of the Maduro regime, 

OFAC has issued several General Licenses (GLs) that provide authorization for categories of persons blocked by E.O. 13884.  GL 34 authorizes transactions with certain Government of Venezuela individuals, including United States citizens; permanent resident aliens of the United States; individuals in the United States who have a valid U.S. immigrant or nonimmigrant visa, other than individuals in the United States as part of Venezuela’s mission to the United Nations; and former employees and contractors of the Government of Venezuela.  In addition, GL 22 authorizes certain transactions related to Venezuela’s mission to the United Nations, and GL 31 provides authorization related to the Government of the Interim President of Venezuela. 

Without authorization from OFAC, U.S. persons are generally prohibited from engaging in transactions with the Government of Venezuela, or persons in which the Government of Venezuela owns, directly or indirectly, a 50 percent or greater interest. U.S. persons are not prohibited from engaging in transactions involving the country or people of Venezuela, provided blocked persons or any conduct prohibited by any other Executive order imposing sanctions measures related to the situation in Venezuela, are not involved.

Please note that persons meeting the definition of Government of Venezuela and persons that are owned, directly or indirectly, 50 percent or more by the Government of Venezuela are blocked pursuant to E.O. 13884, regardless of whether the person appears on the Specially Designated Nationals and Blocked Persons list (SDN List), unless exempt or authorized by OFAC. 

As a general matter, OFAC expects financial institutions to conduct due diligence on their own direct customers (including, for example, their ownership structure) to confirm that those customers are not persons whose property and interests in property are blocked.  With regard to other types of transactions where a financial institution is acting solely as an intermediary and fails to block transactions involving a sanctions target, OFAC will consider the totality of the circumstances surrounding the bank’s processing of the transaction to determine what, if any, regulatory response is appropriate. [09-09-2019]

Links:

OFAC Notice

General License 34

FAQ 680

September 6, 2019: OFAC updates Cuban regulations, FAQs

Publication of Updated Cuban Assets Control Regulations (CACR) and Frequently Asked Questions

9/6/2019

The Department of the Treasury’s Office of Foreign Assets Control (OFAC) is amending the Cuban Assets Control Regulations, 31 C.F.R. part 515 (CACR), to further implement portions of the President’s foreign policy toward Cuba.  In accordance with announced changes related to remittances and certain kinds of financial transactions, OFAC is amending the CACR to: i) revise certain authorizations for remittances to Cuba to impose new requirements and limitations; and ii) revise the authorization commonly known as the “U-turn” general license to eliminate the authorization for banking institutions subject to U.S. jurisdiction to process certain kinds of financial transactions.  The CACR amendment will be published in the Federal Register on Monday, September 9, 2019 and will take effect on October 9, 2019.  OFAC is also publishing a number of updated Frequently Asked Questions and a Fact Sheet pertaining to this regulatory amendment.

The updated FAQs are part of that separate Cuba FAQ document (as opposed to being on OFAC’s FAQ page).

And Treasury issued a press release, which appears to be identical to the Fact Sheet:

PRESS RELEASES

Treasury Issues Changes to Strengthen Cuba Sanctions Rules

WASHINGTON – Today, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) amended the Cuban Assets Control Regulations (CACR) to further implement President Trump’s June 2017 National Security Presidential Memorandum (NSPM) Strengthening the Policy of the United States Towards Cuba.  The changes amend certain authorizations related to the provision of remittances to Cuba and eliminate the authorization for specific financial transactions known as “U-turn” transactions.

“We are taking additional steps to financially isolate the Cuban regime.  The United States holds the Cuban regime accountable for its oppression of the Cuban people and support of other dictatorships throughout the region, such as the illegitimate Maduro regime,” said Treasury Secretary Steven Mnuchin.  “Through these regulatory amendments, Treasury is denying Cuba access to hard currency, and we are curbing the Cuban government’s bad behavior while continuing to support the long-suffering people of Cuba.”

These actions mark an ongoing commitment to implement the President’s Cuba policy.  Previously, on June 5, 2019, OFAC further restricted non-family travel to Cuba by removing an authorization for group people-to-people educational travel, pursuant to an April 17, 2019 foreign policy announcement.  The Treasury changes announced today will take effect on October 9, 2019, which is 30 days from the date the regulations will be published in the Federal Register.

For the latest changes to the Treasury regulations, which can be found at 31 Code of Federal Regulations (CFR) part 515.  Major elements of the changes in the revised regulations include:

REMITTANCES

                                                                              

  • Family remittances:  OFAC is placing a cap of $1,000 U.S. dollars per quarter that one remitter can send per quarter to one Cuban national, and is prohibiting remittances to close family members of prohibited Cuban officials and members of the Cuban Communist Party.

 

  • Donative remittances:  OFAC is eliminating the authorization for donative remittances.  

 

  • Remittances to certain individuals and independent non-governmental organizations in Cuba:  OFAC is adding a provision authorizing such remittances to support the operation of economic activity in the non-state sector by self-employed individuals, in light of the NSPM’s policy to encourage the growth of the Cuban private sector independent of government control.
     

 “U-TURN” TRANSACTIONS

 

  • OFAC is removing the authorization for banking institutions subject to U.S. jurisdiction to process certain funds transfers originating and terminating outside the United States, commonly known as “U-turn” transactions.  Banking institutions subject to U.S. jurisdiction will be authorized to reject such transactions, but may no longer process the transactions.

And the State Department didn’t want to be left out of the fun:

United States Restricts Remittances and “U-Turn” Transactions to Cuba

MEDIA NOTE

OFFICE OF THE SPOKESPERSON

SEPTEMBER 6, 2019

Share

Today, the Department of the Treasury took action to prevent U.S. remittances to Cuba from enriching Cuban regime insiders and their families and to restrict Cuba’s access to the U.S. financial system.

Going forward, U.S. persons are no longer allowed to send family remittances to close relatives of prohibited officials of the Government of Cuba or close relatives of prohibited members of the Cuban Communist Party.  U.S. persons will also no longer be allowed to send donative remittances, or remittances regardless of familial relationships, to Cuba.

In line with the President’s foreign policy on Cuba, these actions are designed to target the Cuban regime while continuing to provide vital relief to the long-suffering people of Cuba.  As National Security Advisor Bolton said in April, “we know that families in the United States want to help their loved ones in Cuba, and we want Cubans to get the support they need and deserve…we know that these remittances are critical to families.”  For this reason, remittances to support family members are permitted up to $1,000 per quarter per person, and remittances to private businesses, human rights groups, religious organizations, and other self-employed individuals operating in the non-state sector are authorized with no cap at this time.

The Department of the Treasury also restricted the Cuban regime’s access to the U.S. financial system by eliminating authorization for what are commonly known as “U-turn” transactions, funds transfers that originate and terminate outside the U.S. where neither the originator nor beneficiary is a person subject to U.S. jurisdiction.

The United States continues to hold Cuba accountable for its repression of the Cuban people, its interference in Venezuela, and its unconscionable support of the illegitimate former Maduro regime.  Despite widespread international condemnation, Maduro continues to undermine his country’s institutions and subvert the Venezuelan people’s right to self-determination.  Empowered by Cuba, he has created a humanitarian disaster that destabilizes the region.

For more information on the regulations, please refer to the following Department of the Treasury page:

https://www.treasury.gov/resource-center/sanctions/Programs/Pages/cuba.aspx

For further information, please contact WHA Press at WHA_Press@state.gov and EB Press at EB-A-PD-DL@state.gov.

Links:

OFAC Notice

Cuban Assets Control Regulations

Frequently Asked Questions

Fact Sheet

Treasury Press Release

State Department Press Release

DFAT publishes overview of all sanctions programs

UNCLASSIFIED

Dear subscribers

I write to advise you of new guidance material developed by the Department of Foreign Affairs and Trade (DFAT) in relation to Australia’s sanctions regimes.

As you may be aware, Australia implements 21 sanctions regimes, which include both United Nations Security Council sanctions and Australian autonomous sanctions. These regimes comprise a diverse range of measures, including: 

  • Restrictions on trade in goods and services

  • Restrictions on engaging in commercial activities

  • Targeted financial sanctions (including asset freezes) on designated persons and entities, and

  • Travel bans on certain declared persons.

The attached sanctions ‘snapshots’ provide an overview of the measures in each of Australia’s sanctions regimes and include links to key information. Please feel free to circulate the snapshots as you see appropriate. The snapshots are now available on the DFAT website at https://dfat.gov.au/international-relations/security/sanctions/sanctions-regimes/Pages/sanctions-regimes.aspx.

Inquiries and applications for sanctions permits in relation to particular proposed activities should continue to be made through the Online Sanctions Administration System (OSAS). Please feel free to email sanctions@dfat.gov.au with any other sanctions related matters.

Kind regards 

Sanctions Section

_______________________________
Transnational and Sea Law Branch
Legal Division

Department of Foreign Affairs and Trade 

Link:

Sanctions Snapshots

September 5, 2019: OFAC updates Iran FAQ 296, adds more

Here’s the updated FAQ 296:

296. Will the provision of bunkering services to a non-Iranian vessel carrying non-sanctionable goods to or from Iran be subject to sanctions?

If a non-Iranian vessel is transporting non-sanctionable goods to or from Iran, the bunkering of that non-Iranian vessel in a country other than Iran — and related payments for these bunkering services — will not be subject to sanctions, only if (1) the transaction either does not involve U.S. persons (including U.S. financial institutions) or U.S.-owned or -controlled foreign entities, or the transaction is exempt from OFAC regulation or authorized by OFAC if it does involve U.S. persons (including U.S. financial institutions) or U.S.-owned or -controlled foreign entities, and (2) the transaction does not involve persons on OFAC’s List of Specially Designated Nationals and Blocked Persons (SDN List) that have been designated in connection with Iran’s support for international terrorism or proliferation of weapons of mass destruction, including designated Iranian financial institutions or the Islamic Revolutionary Guard Corps (IRGC), or activity that is subject to other sanctions authorities. [09-05-2019]

and the new FAQs, all of which are about bunkering services:

691. Will the provision of bunkering services to a non-Iranian vessel carrying sanctionable goods to or from Iran be subject to sanctions?

If a non-Iranian vessel is transporting sanctionable goods to or from Iran (including, but not limited to, petroleum, petroleum products, or petrochemical products from Iran; goods used in connection with the automotive sector of Iran; or iron, iron products, aluminum, aluminum products, steel, steel products, copper, or copper products from Iran), bunkering of that non-Iranian vessel in a country other than Iran — and related payments for these bunkering services — risk being subject to sanctions unless an applicable waiver or exception applies. For example, persons providing bunkering services to a non-Iranian vessel transporting petroleum or petroleum products from Iran could be designated under subsection 1(a)(ii) of E.O. 13846 if such activities involve the provision of material support for, or goods or services to or in support of, NIOC or NICO. Persons that knowingly provide bunkering services to a non-Iranian vessel carrying only petroleum or petroleum products from Iran could likewise be sanctioned under section 3(a)(ii) of E.O. 13846 if that transaction is determined to be a significant transaction for the purchase, acquisition, sale, transport, or marketing of those items. [09-05-2019]

692. Will the provision of bunkering services for an Iranian vessel be subject to sanctions?

Section 1244(d)(1) of IFCA makes sanctionable knowingly selling, supplying, or transferring to or from Iran significant goods or services used in connection with Iran’s energy, shipping, or shipbuilding sectors. (See FAQ 289 above for an interpretation of “significant.”) The provision of bunkering services to a vessel flying the flag of the Islamic Republic of Iran, or owned, controlled, chartered, or operated directly or indirectly by, for, or on behalf of the Government of Iran (GOI) or an Iranian person, could be sanctionable under this authority, regardless of whether the transaction involves persons that have been determined to be part of Iran’s energy, shipping, or shipbuilding sectors pursuant to Section 1244(c) of IFCA. Likewise, pursuant to section 1244(d)(2) of IFCA, a foreign financial institution could be exposed to sanctions if it knowingly conducts or facilitates a significant financial transaction for the sale, supply, or transfer to or from Iran of goods or services used in connection with Iran’s energy, shipping, or shipbuilding sectors. Payments for the provision of bunkering services to a vessel flying the flag of the Islamic Republic of Iran or owned, controlled, chartered, or operated directly or indirectly by, for, or on behalf of the GOI or an Iranian person could be sanctionable under this authority, regardless of whether the transaction involves persons that have been determined to be part of Iran’s energy, shipping, or shipbuilding sectors pursuant to Section 1244(c) of IFCA. (See FAQ 295). 

In addition, non-U.S. persons that provide bunkering services for an Iranian vessel that has been identified as blocked property of an Iranian person on OFAC’s List of Specially Designated Nationals and Blocked Persons — or that make related payments for these bunkering services — risk being designated themselves

However, the provision of bunkering services for an Iranian vessel transporting goods subject to an exception, such as agricultural commodities, food, medicine, or medical devices, to Iran, or subject to an applicable waiver — and the making of related payments for these bunkering services — will not be exposed to sanctions, unless the transactions involve persons on the SDN List that have been designated under E.O. 13224 or E.O. 13382 in connection with Iran’s support for international terrorism or proliferation of weapons of mass destruction, including certain designated Iranian financial institutions or the Islamic Revolutionary Guard Corps (IRGC), as described in section 104(c)(2)(E) of CISADA, or activity that is subject to other sanctions authorities. [09-05-2019]

297. Are there any exceptions to the sanctions provisions of section 1244 of IFCA? 

The following transactions are excepted from the provisions of section 1244 of IFCA.

a. Transactions for the sale of agricultural commodities, food, medicine, or medical devices to Iran or for the provision of humanitarian assistance to the people of Iran. 

b. The export of petroleum or petroleum products from Iran to a country with a significant reduction exception under section 1245(d)(4)(D)(i) of the National Defense Authorization Act for Fiscal Year 2012 (NDAA 2012). 

c. A significant financial transaction conducted or facilitated by a foreign financial institution (FFI), provided that a significant reduction exception under 1245(d)(4)(D)(i) of NDAA 2012 applies to the country with primary jurisdiction over the FFI and the financial transaction is for trade in goods or services (i) between Iran and the country with primary jurisdiction over the FFI and (ii) not otherwise subject to sanctions under the law of the United States, and any funds owed to Iran as a result of the trade are credited to an account located in the country with primary jurisdiction over the FFI. We anticipate the implementation of these trade requirements to be similar to the trade requirements set forth in the Iranian Financial Sanctions Regulations (IFSR), in particular 31 CFR §561.203(j) and 31 CFR §561.203(k). 

d. The sale, supply, or transfer of natural gas to or from Iran. IFCA section 1244, however, does set out sanctions that may apply to FFIs that conduct or facilitate a transaction for the sale, supply, or transfer of natural gas to or from Iran unless the financial transaction is for trade in goods or services (i) between Iran and the country with primary jurisdiction over the FFI and (ii) not otherwise subject to sanctions under the law of the United States, and any funds owed to Iran as a result of the trade are credited to an account located in the country with primary jurisdiction over the FFI. We anticipate the implementation of these trade requirements to be similar to the trade requirements set forth in the IFSR, in particular 31 CFR §561.203(j) and 31 CFR §561.203(k).

e. Certain activities relating to the pipeline project to supply natural gas from the Shah Deniz gas field in Azerbaijan to Europe and Turkey. [08-06-18]

315. Will routine payments or fees be subject to sanctions if they are made to a person determined to be a port operator in Iran and if the vessel is carrying non-sanctioned goods?

Any company involved in loading or unloading cargo in Iran should exercise great caution to avoid engaging in transactions with entities designated by the United States, including the Tidewater Middle East Co. which was designated for its involvement in Iran’s proliferation of weapons of mass destruction. However, to the extent that a shipping company transacts with port operators in Iran that have been identified as such under IFCA but not otherwise designated, and as long as such payments are limited strictly to routine fees including port dues, docking fees, or cargo handling fees, paid for the loading and unloading of non-sanctioned goods at Iranian ports, we anticipate that such transactions would not be considered significant transactions for the purposes of IFCA. Non-routine and/or large payments or fees that materially exceed standard industry rates could expose a person to sanctions. Furthermore, providing any port operator in Iran with any significant financial, material, technological, or other support could expose a person to sanctions. [08-06-18]

Links:

OFAC Notice

FAQ 296

New Iran FAQs

FINMA Guidance on blockchain & AML

News

26 August 2019 

Press release

 

FinTech

FINMA guidance: stringent approach to combating money laundering on the blockchain

The Swiss Financial Market Supervisory Authority FINMA has published guidance on how it applies Swiss anti-money laundering rules to financial services providers supervised by FINMA in the area of blockchain technology. FINMA has also issued banking licences to two new blockchain service providers.

FINMA recognises the innovative potential of new technologies for the financial industry. It applies the relevant provisions of financial market law in a technology-neutral way. However, blockchain-based business models cannot be allowed to circumvent the existing regulatory framework. This applies particularly to the rules for combating money laundering and terrorist financing, where the inherent anonymity of blockchain technology presents increased risks. 

Combating money laundering requires identification

On 21 June 2019 the international body tasked with developing policies to combat money laundering, the Financial Action Task Force (FATF), issued guidance on financial services in the context of blockchain technology. As for traditional bank transfers, information about the client and the beneficiary must be transmitted with transfers of tokens (with the exception of transfers from and to unregulated wallet providers). Only then, for example, can the provider receiving this information check the name of the sender against sanction lists or check that the information provided about the beneficiary is correct. 

Anti-money laundering regulations apply to the blockchain

FINMA has consistently applied the Anti-Money Laundering Act to blockchain service providers since their emergence. In its guidance published today, FINMA provides information about this technology-neutral application of the regulation to payment transactions on the blockchain. Institutions supervised by FINMA are only permitted to send cryptocurrencies or other tokens to external wallets belonging to their own customers whose identity has already been verified and are only allowed to receive cryptocurrencies or tokens from such customers. FINMA-supervised institutions are thus not permitted to receive tokens from customers of other institutions or to send tokens to such customers. This practice applies as long as information about the sender and recipient cannot be transmitted reliably in the respective payment system. Unlike the FATF standard, this established practice applies in Switzerland without the exception for unregulated wallets and is therefore one of the most stringent in the world.

New blockchain service providers in Switzerland

For the first time, FINMA has issued banking and securities dealers’ licences to two pure-play blockchain service providers. The companies involved are SEBA Crypto AG registered in Zug and Sygnum AG registered in Zurich, which will offer services for institutional and professional customers. As usual, various conditions are attached, ensuring that the businesses are set up in an orderly manner. The practice set out in the guidance published today applies in full to the supervision of the two new institutions.

Contact

Vinzenz Mathys, Media Spokesperson 
Tel. 031 327 19 77 
vinzenz.mathys@finma.ch 

Link:

FINMA Guidance

In conjunction with the recent OFAC designation…

Of a Chinese network supplying opioids to the US, FinCEN issued an advisory yesterday entitled “Advisory to Financial Institutions on Illicit Financial Schemes and Methods Related to the Trafficking of Fentanyl and Other Synthetic Opioids.” Here’s the first section (it’s a lengthy one – 18 pages):

Transnational criminal organizations (TCOs), foreign fentanyl suppliers, and Internet purchasers located in the United States engage in the trafficking of fentanyl, fentanyl analogues, and other synthetic opioids and the subsequent laundering of the proceeds from such illegal sales.

Introduction

The Financial Crimes Enforcement Network (FinCEN) is issuing this advisory1 to alert financial institutions to illicit financial schemes and mechanisms related to the trafficking of fentanyl, fentanyl analogues, and other synthetic opioids,2 and to assist them in detecting and reporting related activity.

The United States is in the midst of an unparalleled epidemic of addiction and death, fueled by the illicit trafficking, sale, distribution, and misuse of fentanyl and other synthetic opioids. The statistics are sobering; between 2013 and 2017, deaths in the United States from synthetic opioids, other than methadone, increased over 800 percent.3 Every day in the United States, more than

130 people die from an opioid-related overdose.4 These numbers alone cannot fully capture the devastation wrought by this epidemic, the consequences of which are far reaching and everlasting, from grieving parents and orphaned children, to the enormous economic and public policy costs,5 and the destruction of current and future generations.

The epidemic is tearing away at the social and economic fabric of our communities, while TCOs, international drug traffickers, money launderers, and other criminal actors profit off the misery

of victims. Criminal networks and others generate billions of dollars in illicit drug proceeds, and

use the U.S. financial system and economy to advance their criminal enterprises and continue this epidemic to generate more criminal profits, resulting in more deaths and addictions. FinCEN

and other U.S. government agencies are collaboratively working with foreign partners, including Mexico, to end the fentanyl epidemic. This advisory will assist financial institutions in detecting

and reporting suspicious activity, making it harder and more costly for criminals to (i) commit these crimes; (ii) hide and use their illicit money; and (iii) continue fueling this epidemic. By using the information in this advisory and safeguarding our financial system, financial institutions will help save lives, protect innocent families, and ensure the safety and future of our communities. Indeed, this is the real value and utility behind information generated, maintained, and reported under the Bank Secrecy Act by financial institutions. This advisory highlights the primary typologies and red flags derived from sensitive financial reporting which are associated with (i) the sale of these drugs by Chinese, Mexican, or other foreign suppliers; (ii) methods used by Mexican and other TCOs to launder the proceeds of fentanyl trafficking; and (iii) financial methodologies associated with the sale and procurement of fentanyl over the Internet by purchasers located in the United States.6 Fentanyl is sold in the United States in many forms, all of which can be deadly. Fentanyl can be purchased alone; mixed with heroin, cocaine, or methamphetamine; or pressed into pill form and falsely sold as prescription opioids, many times being ingested by unsuspecting victims.

Link:

FinCEN Advisory