Frequently Asked Questions (FAQ)

On Thursday, OFAC issued amended versions of Venezuela General Licenses 7, 8 and 13. General Licenses 8 and 13 were extended through July 27th, while section a of General License 7 “automatically renews on the first day of each month, and is valued for a period of 18 months from the effective date of General License No. 7B or the date of any subsequent renewal of General License No. 7B, whichever is later.”

Mr. Watchlist does not understand this – if it is valid for 18 months, why does it need to renew each month?

Also, the authorization in section b said it is valid through April 28th, which has already passed. Was this a mistake, or did they mean 2020 (or some other date)?

OFAC also issued a single new, unrelated FAQ:

672. Can I export or reexport diluents to Venezuela? 

No.  Diluents (including, for example, crude oil and naphtha) play a key role in the transportation and exportation of Venezuelan petroleum, a primary source of revenue for the illegitimate and corrupt Maduro regime, which the United States seeks to restrict further.  OFAC is amending General Licenses (GLs) 7A, 8, and 13  effective as of June 6, 2019, to restrict U.S. persons engaging in transactions and activities authorized by those GLs from exporting or reexporting diluents, directly or indirectly, to Venezuela, or from engaging in transactions or activities related thereto. 

 

Absent authorization from OFAC, all U.S. persons continue to be prohibited from engaging in any dealings with Petróleos de Venezuela, S.A. (PdVSA), or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest.  In addition, non-U.S. persons could be subject to designation pursuant to Executive Order 13850, as amended, for operating within the oil sector of the Venezuelan economy, or for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of PdVSA, including the exportation or reexportation of diluents to PdVSA.  

 

Given PdVSA’s role as Venezuela’s state-owned oil company, exports or reexports of diluents to Venezuela likely include a direct or indirect interest of PdVSA.  As a result, persons directly or indirectly exporting or reexporting diluents to Venezuela should exercise enhanced due diligence to verify the ultimate end user and ensure that the transaction does not involve a direct or indirect interest of a sanctioned person, including PdVSA, even if the sanctioned person is not identified as a participant in the transaction. [06-06-2019] 

Links:

OFAC Notice

General License 7B

General License 8A

General License 13A

FAQ 672

On Tuesday, OFAC issued amended Cuban Asset Control Regulations (CACR), which ends group people-to-people travel. And BIS (part of the Commerce Department) amended the Export Administration Regulations (EAR) to end exports of a number of types of ships and aircraft which previously were eligible to be licensed. OFAC also issued an updated Cuba FAQ document and a Fact Sheet.

And there was a veritable slew of press statements – here’s Treasury’s:

PRESS RELEASES

Treasury and Commerce Implement Changes to Cuba Sanctions Rules

WASHINGTON – Today, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) unveiled amendments to the Cuban Assets Control Regulations (CACR) to further implement the President’s foreign policy on Cuba.  These amendments complement changes to the Department of Commerce’s Bureau of Industry and Security (BIS) Export Administration Regulations (EAR), which Commerce is also unveiling today.  These regulatory changes were announced on April 17, 2019 and include restrictions on non-family travel to Cuba.  

“Cuba continues to play a destabilizing role in the Western Hemisphere, providing a communist foothold in the region and propping up U.S. adversaries in places like Venezuela and Nicaragua by fomenting instability, undermining the rule of law, and suppressing democratic processes,” said Treasury Secretary Steven Mnuchin.  “This Administration has made a strategic decision to reverse the loosening of sanctions and other restrictions on the Cuban regime.  These actions will help to keep U.S. dollars out of the hands of Cuban military, intelligence, and security services.”

These actions mark a continued commitment towards implementing the National Security Presidential Memorandum signed by the President on June 16, 2017 titled “Strengthening the Policy of the United States Toward Cuba.”  These policies continue to work to channel economic activities away from the Cuban military, intelligence, and security services.  The Treasury changes will take effect on June 5, 2019 when the regulations are published in the Federal Register. 

For the Treasury regulations, which can be found at 31 Code of Federal Regulations (CFR) part 515, see here.  For the Commerce regulations, which can be found at 15 CFR parts 730-774, see here.  Major elements of the changes in the revised regulations include:  

ENDING GROUP PEOPLE-TO-PEOPLE TRAVEL                                                                              

  • In accordance with the newly announced changes to non-family travel to Cuba, OFAC is amending the regulations to remove the authorization for group people-to-people educational travel.  OFAC’s regulatory changes include a “grandfathering” provision, which provides that certain group people-to-people educational travel that previously was authorized will continue to be authorized where the traveler had already completed at least one travel-related transaction (such as purchasing a flight or reserving accommodation) prior to June 5, 2019. Please note that travel-related transactions continue to be permitted by general licenses for certain categories of travel and certain authorized export transactions.  For more on authorized travel to Cuba, please click here

ENDING EXPORTS OF PASSENGER VESSELS, RECREATIONAL VESSELS, AND PRIVATE AIRCRAFT 

  • BIS, in coordination with OFAC, is amending the EAR to make passenger and recreational vessels and private and corporate aircraft ineligible for a license exception and to establish a general policy of denial for license applications involving those vessels and aircraft. 

Links:

OFAC Notice

Cuban Asset Control Regulations

FAQ

Fact Sheet

Treasury Press Release

BIS Press Release

State Department Press Guidance

On Wednesday, President Trump issued a new Iran sanctions Executive Order, which says, in part, the following:

Section 1. (a) All property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in: any person determined by the Secretary of the Treasury, in consultation with the Secretary of State:

(i) to be operating in the iron, steel, aluminum, or copper sector of Iran, or to be a person that owns, controls, or operates an entity that is part of the iron, steel, aluminum, or copper sector of Iran;

(ii) to have knowingly engaged, on or after the date

of this order, in a significant transaction for the sale,

supply, or transfer to Iran of significant goods or services used in connection with the iron, steel, aluminum, or copper sectors of Iran;

(iii) to have knowingly engaged, on or after the date of this order, in a significant transaction for the purchase, acquisition, sale, transport, or marketing of iron, iron products, aluminum, aluminum products, steel, steel products, copper, or copper products from Iran;

(iv) to have materially assisted, sponsored, or

provided financial, material, or technological support for, or goods or services in support of any person whose property and interests in property are blocked pursuant to this section; or

(v) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to this section.

Sec. 2. (a) The Secretary of the Treasury, in consultation with the Secretary of State, is hereby authorized to impose on a foreign financial institution the sanctions described in subsection (b) of this section upon determining that the foreign financial institution has, on or after the date of this order,

knowingly conducted or facilitated any significant financial transaction:

(i) for the sale, supply, or transfer to Iran of

significant goods or services used in connection with the iron, steel, aluminum, or copper sectors of Iran;

(ii) for the purchase, acquisition, sale, transport, or marketing of iron, iron products, aluminum, aluminum products, steel, steel products, copper, or copper products from Iran; or

(iii) for or on behalf of any person whose property and interests in property are blocked pursuant to this order.

(b) With respect to any foreign financial institution

determined by the Secretary of the Treasury in accordance with this section to meet any of the criteria set forth in subsection (a)(i) through (a)(iii) of this section, the Secretary of the Treasury may prohibit the opening, and prohibit or impose strict

conditions on maintaining, in the United States of a

correspondent account or payable-through account by such foreign financial institution.

And there are new FAQs:

Frequently Asked Questions Regarding Executive Order (E.O.) “Imposing Sanctions with Respect to the Iron, Steel, Aluminum, and Copper Sectors of Iran” of May 8, 2019


666. What does the Executive Order Imposing Sanctions with Respect to the Iron, Steel, Aluminum, and Copper Sectors of Iran of May 8, 2019 do?

The Executive Order of May 8, 2019 authorizes sanctions with respect to the iron, steel, aluminum, and copper sectors of Iran.

Section 1 of the E.O. of May 8, 2019 authorizes blocking sanctions on any person determined by the Secretary of the Treasury, in consultation with the Secretary of State:

(i) to be operating in the iron, steel, aluminum, or copper sector of Iran, or to be a person that owns, controls, or operates an entity that is part of the iron, steel, aluminum, or copper sector of Iran;

(ii) to have knowingly engaged, on or after the effective date of the order, in a significant transaction for the sale, supply, or transfer to Iran of significant goods or services used in connection with the iron, steel, aluminum, or copper sectors of Iran;

(iii) to have knowingly engaged, on or after the effective date of the order, in a significant transaction for the purchase, acquisition, sale, transport, or marketing of iron, iron products, aluminum, aluminum products, steel, steel products, copper, or copper products from Iran;

(iv) to have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of any person whose property and interests in property are blocked pursuant to section 1; or

(v) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to section 1.

Section 2 of the E.O. of May 8, 2019 authorizes correspondent and payable-through account sanctions on foreign financial institutions (FFIs) determined to have knowingly conducted or facilitated any significant financial transaction:

(i) for the sale, supply, or transfer to Iran of significant goods or services used in connection with the iron, steel, aluminum, or copper sectors of Iran;

(ii) for the purchase, acquisition, sale, transport, or marketing of iron, iron products, aluminum, aluminum products, steel, steel products, copper, or copper products from Iran; or

(iii) for or on behalf of any person whose property and interests in property are blocked pursuant to the order.

Sections 3-13 of the E.O. of May 8, 2019 contain exceptions, definitions, and other implementing provisions related to the sanctions. [05-08-2019]


667. When does Executive Order Imposing Sanctions with Respect to the Iron, Steel, Aluminum, and Copper Sectors of Iran become effective?

The E.O. of May 8, 2019 became effective upon signing. [05-08-2019] 


668. Is there a wind-down period?

Yes. Persons engaged in transactions that could be sanctioned under the Executive Order Imposing Sanctions with Respect to the Iron, Steel, Aluminum, and Copper Sectors of Iran of May 8, 2019 will have a 90-day period to wind down those transactions without exposure to sanctions under the E.O. of May 8, 2019. Those persons should take the necessary steps to wind down transactions by the end of the 90-day wind-down period to avoid exposure to sanctions. Entering into new business that would be sanctionable under the E.O. of May 8, 2019 (the effective date of the E.O.) will not be considered wind-down activity and could be sanctioned even during the wind-down period. [05-08-2019] 


669. Does the Executive Order Imposing Sanctions with Respect to the Iron, Steel, Aluminum, and Copper Sectors of Iran expand upon existing sanctions relating to trade with Iran in certain raw and semi-finished metals, such as aluminum and steel?

 

Yes. The E.O. of May 8, 2019 expands upon existing sanctions under section 1245 of IFCA on the sale, supply, or transfer, directly or indirectly, to or from Iran of certain materials, including raw and semi-finished metals such as aluminum and steel, as described in subsections 1245(a)(l)(B) or (C) of IFCA.

 

In addition, the E.O. of May 8, 2019 explicitly targets the iron and copper sectors of Iran. [05-08-2019]  


670. Are there exceptions to the sanctions imposed under E.O. of May 8, 2019?

 

Yes. The sanctions authorized under the E.O. of May 8, 2019 do not apply to transactions for the conduct of the official business of the United States Government or the United Nations (including its specialized agencies, programmes, funds, and related organizations) by employees, grantees, or contractors thereof. [05-08-2019] 


671. What is the definition of significant?

 

The Department of the Treasury anticipates adopting the interpretation of “significant” set out in 31 C.F.R § 561.404. See existing OFAC Iran FAQ 289. [05-08-2019]

Mr. Watchlist is kind of speechless… if someone sees a way that this ends well – especially long-term – please enlighten me.

Links:

OFAC Notice

Executive Order

New FAQs

Last Wednesday, OFAC designated the following person:

RUZZA TERAN, Iliana Josefa (Latin: RUZZA TERÁN, Iliana Josefa), Caracas, Venezuela; DOB 27 Feb 1980; Gender Female; Cedula No. 14310920 (Venezuela) (individual) [VENEZUELA].

and entity:

BANCO CENTRAL DE VENEZUELA (a.k.a. CENTRAL BANK OF VENEZUELA), Av. Urdaneta, Esquina Las Carmelitas, Edif. Banco Central, Caracas, Venezuela; Av. Urdaneta, Esquina de Carmelitas, Distrito Capital, Caracas 1010, Venezuela; SWIFT/BIC BCVEVECA; Tax ID No. G200001100 (Venezuela) [VENEZUELA-EO13850].

under its Venezuela sanctions program, and the following person:

ORTEGA MURILLO, Laureano Facundo (a.k.a. ORTEGA, Laureano); DOB 20 Nov 1982; POB Managua, Nicaragua; nationality Nicaragua; Gender Male; Passport A00000684 (Nicaragua) expires 26 Sep 2023; National ID No. 0012011820046M (individual) [NICARAGUA].

and entity:

BANCO CORPORATIVO SA (a.k.a. “BANCO NACIONAL”; a.k.a. “BANCO NATIONAL”; a.k.a. “BANCORP”; a.k.a. “NATIONAL BANK”), 2 Cuadras Aloeste y 3 Cuadras Alnorte, Managua, Nicaragua; SWIFT/BIC BOFPNIMA [NICARAGUA].

under its Nicaragua program.

OFAC also updated 5 existing General Licenses (old names: 3D, 4A, 9C, 15 & 16) and issued two new ones (19 & 20).

They also issued one new Frequently Asked Question (FAQ):

665. Will the designation of Banco Central de Venezuela, or the Central Bank of Venezuela, restrict the ability of U.S. persons to engage in or facilitate the provision of humanitarian assistance or non-commercial, personal remittances to Venezuela?

No.  OFAC is committed to ensuring that humanitarian assistance and non-commercial, personal remittances can flow to the people of Venezuela.  To that end, concurrent with the designation of Banco Central de Venezuela, OFAC has issued amendments to current Venezuela-related general licenses and issued a new general license to ensure that U.S. persons may continue to engage in and facilitate non-commercial, personal remittances and the provision of humanitarian assistance to the people of Venezuela.  

Regarding humanitarian transactions, OFAC has updated General License 4A “Authorizing New Debt Transactions and Transactions involving Certain Banks Related to the Exportation or Reexportation of Agricultural Commodities, Medicine, Medical Devices or Replacement Parts and Components” to include Banco Central de Venezuela in the authorization for transactions ordinarily incident and necessary to the exportation or reexportation of agricultural commodities, medicine, medical devices, components, or replacement parts for medical devices, to Venezuela, or to persons in third countries purchasing specifically for resale to Venezuela, provided that the exportation or reexportation is licensed or otherwise authorized by the Department of Commerce, or for items not subject to the Export Administration Regulations, is not listed under any multilateral export control regime.  Furthermore, OFAC maintains a specific licensing regime that can evaluate on a case-by-case basis the authorization of humanitarian activities not covered under general licenses. 

OFAC has also revised General License 16 “Authorizing Maintenance of U.S. Person Accounts and Noncommercial, Personal Remittances involving Certain Banks” to include Banco Central de Venezuela to authorize all transactions and activities ordinarily incident and necessary to processing noncommercial, personal remittances involving certain banks (including Banco Central de Venezuela) through 12:01 a.m. eastern daylight time, March 22, 2020, as long as the transactions are not otherwise prohibited by OFAC’s Venezuela sanctions program. 

In addition, OFAC is issuing General License 20 “Authorizing Official Activities of Certain International Organizations Involving Banco Central de Venezuela” to authorize international organizations such as the United Nations and its specialized agencies and the International Committee of the Red Cross, among others, to engage in transactions with Banco Central de Venezuela to the extent the transactions are subject to U.S. jurisdiction.  Sanctions do not prohibit U.S. persons from engaging in transactions involving Venezuela (such as exporting or re-exporting items to Venezuela), provided that the transactions do not involve sanctioned individuals or entities or certain prohibited activity.

If individuals, companies, or financial institutions have questions about engaging in or processing transactions related to non-commercial, personal remittances or the provision of humanitarian assistance to Venezuela, they can contact OFAC’s Sanctions Compliance and Evaluation Division at (800) 540-6322 or (202) 622-2490. [04-17-2019]

Treasury issued a press release about Venezuela:

Treasury Sanctions Central Bank of Venezuela and Director of the Central Bank of Venezuela

Washington – Today, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated Banco Central de Venezuela, or the Central Bank of Venezuela, pursuant to E.O. 13850, as amended, for operating in the financial sector of the Venezuelan economy.  Additionally, OFAC designated Iliana Josefa Ruzza Terán (Ruzza), pursuant to E.O. 13692, as amended, who is determined to be a current or former official of the Government of Venezuela.

“Treasury is designating the Central Bank of Venezuela to prevent it from being used as a tool of the illegitimate Maduro regime, which continues to plunder Venezuelan assets and exploit government institutions to enrich corrupt insiders,” said Treasury Secretary Steven T. Mnuchin.  “The United States is committed to helping the Venezuelan people.  While this designation will inhibit most Central Bank activities undertaken by the illegitimate Maduro regime, the United States has taken steps to ensure that regular debit and credit card transactions can proceed and personal remittances and humanitarian assistance continue unabated and are able to reach those suffering under the Maduro regime’s repression.”

This action targets a key entity and individual in Venezuela’s financial sector, which the Maduro regime continues to exploit in order to stay in power, and illustrates the Trump Administration’s resolve to prevent the Maduro regime from gaining access to the U.S. financial system, including through Venezuela’s central bank.

Today, OFAC designated the following persons:

• Banco Central de Venezuela is the central bank of Venezuela, and is based in Caracas.  Multiple OFAC-designated individuals currently hold leadership positions with the Banco Central de Venezuela, including Simon Alejandro Zerpa Delgado and William Antonio Contreras, both of whom are Directors of the bank and were designated by OFAC pursuant to E.O. 13692 in 2017 and 2018, respectively.

• Iliana Josefa Ruzza Terán is a Director of Banco Central de Venezuela.  Additionally, Ruzza was appointed in July 2018 as a Director on the Board of Directors for the Venezuelan Department of Foreign Commerce, also known as CORPOVEX, and was appointed in May 2018 to be the Vice President of Finance of Petroleos de Venezuela, S.A., which was designated on January 28, 2019, pursuant to E.O. 13850.

Concurrent with this designation, OFAC has issued amendments to current Venezuela-related general licenses and issued new general licenses, which include authorizations to ensure that U.S. persons may continue to engage in and facilitate non-commercial, personal remittances and the provision of humanitarian assistance to the people of Venezuela. 

For information about the methods that Venezuelan senior political figures, their associates, and front persons use to move and hide corrupt proceeds, including how they try to exploit the U.S. financial system and real estate market, please refer to Treasury’s Financial Crimes Enforcement Network (FinCEN) advisories FIN-2017-A006, “Advisory on Widespread Public Corruption in Venezuela,” FIN-2017-A003, “Advisory to Financial Institutions and Real Estate Firms and Professionals” and FIN-2018-A003, “Advisory on Human Rights Abuses Enabled by Corrupt Senior Foreign Political Figures and their Financial Facilitators.”

As a result of today’s action, all property and interests in property of this entity and individual, and any entity that is owned, directly or indirectly, 50 percent or more by the designated entity or individual, that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC.  OFAC’s regulations generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked or designated persons.

U.S. sanctions need not be permanent; sanctions are intended to bring about a positive change of behavior.  The United States has made clear that the removal of sanctions is available for persons designated under E.O. 13692 or E.O. 13850, both as amended, who take concrete and meaningful actions to restore democratic order, refuse to take part in human rights abuses, speak out against abuses committed by the illegitimate Maduro regime, and combat corruption in Venezuela.

and Nicaragua:

Treasury Targets Finances of Nicaraguan President Daniel Ortega’s Regime

WASHINGTON – Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated Laureano Ortega Murillo, the son of Nicaraguan President Daniel Ortega and Vice President Rosario Murillo, as well as Nicaraguan bank Banco Corporativo SA (BanCorp).  Today’s action, taken pursuant to Executive Order (E.O.) 13851, targets corrupt financial operations and Ortega regime support networks.  The individual and entity designated today support a regime that, since April 2018, has cracked down on political opposition, leading to the death of 325 persons, the injury of more than 2,000, the imprisonment of hundreds of political and civil society actors, and over 42,000 Nicaraguans seeking refuge in Costa Rica.

“President Ortega, Vice President Murillo, and members of their inner circle continue to engage in blatant corruption, violence, and violations of basic human rights.  The corrupt Ortega regime has ignored the Nicaraguan people’s calls for reform, including the freeing of all political prisoners, and early transparent elections,” said Sigal Mandelker, Under Secretary of the Treasury for Terrorism and Financial Intelligence.  “Treasury is sanctioning Laureano Ortega Murillo and BanCorp for their roles in corruption and money laundering for the personal gain of the Ortega regime.  These actions send a message to all who continue to prop up the Ortega regime that there is a steep price to pay for abusing the Nicaraguan economy and its people.” 

As a result of today’s actions, all property and interests in property of these persons, and of any entities that are owned, directly or indirectly, 50 percent or more by these 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. OFAC’s regulations generally prohibit all dealings by U.S. persons or within (or transiting) the United States that involve any property or interests in property of blocked or designated persons.  Further details on these designations are included below.

Banco Corporativo SA

BanCorp is being designated for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, Vice President Rosario Murillo, a person whose property and interests in property are blocked pursuant to E.O. 13851, and for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, any transaction or series of transactions involving corruption by, on behalf of, or otherwise related to the Government of Nicaragua or a current official of the Government of Nicaragua.  Created as a subsidiary to the Venezuelan government-funded Alba de Nicaragua, S.A. (ALBANISA) in 2014, BanCorp is a bank used by the Ortega regime to launder and hide ALBANISA money.  BanCorp is also reportedly used by President Ortega’s ruling Sandinista National Liberation Front (FSLN) party to launder money.  Finally, as of 2018, BanCorp has been a haven for OFAC sanctioned persons, allowing designated individuals to continue enjoying banking privileges and their ill-gotten wealth. 

BanCorp, as a subsidiary of ALBANISA, is ultimately owned by PETROLEOS DE VENEZUELA, S.A. (PdVSA) and, as such, was blocked by operation of law following the January 28, 2019, designation of PdVSA pursuant to E.O. 13850. 

Laureano Ortega Murillo

Laureano Ortega Murillo (Laureano) is being designated for being a current official of the Government of Nicaragua.  In his role as the Investment Promotion Advisor of the Nicaraguan government agency, ProNicaragua, Laureano acts as an extension of President Ortega and Vice President Murillo, overseeing investment proposals and projects.  However, as of 2018, Laureano engaged in corrupt business deals in which foreign investors paid for preferential access to the Nicaraguan economy.  Additionally, Laureano coordinated executive tasks for the Nicaragua Grand Canal project, and was at the center of its creation.  Despite the project’s loss of momentum, Ortega regime figures, including Laureano, continue to use the Nicaragua Grand Canal Company as a means to launder money and to acquire property along the planned canal route. 

And State, not to be outdone, issued two also – one for Venezuela:

The United States Sanctions the Central Bank of Venezuela

Media Note

Office of the Spokesperson

Washington, DC

April 17, 2019


Today, the United States has taken further action to halt the former Maduro regime’s theft of Venezuela’s assets and destruction of the economy.

The United States has sanctioned the Central Bank of Venezuela (BCV) for operating in the financial sector of the Venezuelan economy, pursuant to Executive Order 13850. Additionally, Iliana Josefa Ruzza Teran, a director of BCV, has been designated pursuant to Executive Order 13692.

As the central bank of Venezuela, the BCV formulates and implements Venezuela’s monetary policy, issues currency, and manages the country’s international reserves. The regime’s failed policies have turned a once prosperous nation into an economic disaster, while Nicolas Maduro used the BCV as a tool to remain in power and enrich himself and his corrupt circle at the expense of the Venezuelan people.

These new sanctions do not target the innocent people of Venezuela. They will not prohibit humanitarian assistance or personal remittances, which are desperately needed after years of corruption and mismanagement by the regime. In connection with these actions, the Department of the Treasury is taking several licensing-related actions that are in the interest of a democratic and prosperous Venezuela. These actions include measures to help ensure the regular processing of debit and credit card transactions, and the provision of humanitarian assistance. Licensing-related actions will also include a wind-down period for commercial operations or existing contracts involving the BCV.

The United States is committed to helping the Venezuelan people’s struggle to restore democracy and prosperity to Venezuela. By defeating Maduro’s tyranny, all Venezuelans will be free to rebuild their nation and regain the international standing and stability it deserves.

and one for Nicaragua:

Additional Financial Sanctions Against Nicaragua

Media Note

Office of the Spokesperson

Washington, DC

April 17, 2019


Today, the United States has affirmed its commitment to use all economic and diplomatic tools to promote accountability for the Ortega regime and to support the Nicaraguan people in their quest for freedom.

The United States has sanctioned Laureano Ortega and Banco Corporativo SA (Bancorp), pursuant to Executive Order 13851, which President Trump signed November 27, 2018. Because of this action, their U.S. assets are frozen and U.S. persons are generally prohibited from transactions with Laureano Ortega and Bancorp.

Laureano Ortega, son of President Daniel Ortega and Vice President Rosario Murillo, is a key enabler of the Ortega regime’s corruption. On the regime’s behalf, he has sought international financial support and foreign investment. In doing so, he has placed the interests of his family and his personal fortune ahead of the interests of the Nicaraguan people by engaging in corrupt business deals. Bancorp has served as the personal slush fund for the Ortega family and the instrument for corrupt deals with Nicolas Maduro and his former regime in Venezuela.

We urge the Ortega regime to restore democratic order in Nicaragua and heed the calls of Nicaraguans clamoring for early free, fair, and transparent elections. The regime must also abide by the commitments it has already made, including under the Inter-American Democratic Charter. We call on Nicaragua to unconditionally and fully release arbitrarily detained persons and protect the fundamental human rights of its citizens. We will continue to promote accountability for those who have demonstrated a blatant disregard for human rights and fomented violence in support of the Ortega regime.

This post is long enough already – the new General Licenses will be published separately.“

Links:

OFAC Notice

General License 3E

General License 4B

General License 9D

General License 15A

General License 16A

General License 19

General License 20

New FAQ

Treasury Press Release – Venezuela

Treasury Press Release – Nicaragua

State Department Venezuela Press Release

State Department Nicaragua Press Release

Circular to Licensed Corporations and Associated Entities

Anti-Money Laundering / Counter-Financing of Terrorism

Frequently Asked Questions

The Securities and Futures Commission (“SFC”) today published a new set of Frequently Asked Questions (“FAQs”) in relation to anti-money laundering and counter-financing of terrorism (“AML/CFT”). The FAQs superseded the FAQs published in March 2012. A copy of the FAQs is attached in the Appendix to this circular1.

The FAQs, which should be read in conjunction with the latest AML/CFT guidelines2, address often asked questions by the industry about the implementation of some guideline provisions. They provide elaboration or illustration to provisions in the AML/CFT guidelines in order to promote greater understanding. The SFC will keep the FAQs for the AML/CFT guidelines under review and update them where necessary.

Licensed corporations (“LCs”) and associated entities (“AEs”)3 should have regard to the FAQs in meeting applicable AML/CFT statutory and regulatory requirements.

Should you have any queries regarding the contents of this circular, please contact Ms Remy Cheung at 2231 1186.

Intermediaries Supervision Department
Intermediaries Division
Securities and Futures Commission

Enclosure

End

SFO/IS/005/2019

1 The FAQs is also available on the SFC’s website at http://www.sfc.hk, under the section “Regulatory functions – Intermediaries – Supervision – FAQs”.
2
 This refers to the revised Guideline on Anti-Money Laundering and Counter-Financing of Terrorism (For Licensed Corporations) (“AML/CFT Guideline”) and the Prevention of Money Laundering and Terrorist Financing Guideline issued by the Securities and Futures Commission for Associated Entities (“Guideline for AEs”), which have come into effect on 1 November 2018.
3 Under paragraph 6 of the Guideline for AEs, AEs that are not authorized financial institutions are expected to have regard to the provisions of the AML/CFT Guideline as if they were themselves LCs.

It’s a 6+ page PDF document consisting of 17 questions on the following topics:

  • Overseas subsidiaries
  • Non-Hong Kong residents
  • Acceptable travel documents
  • Retention of a copy of travel documents
  • Principal place of business
  • Address of registered office
  • Presence of directors or beneficial owners for the purpose of account opening
  • Electronic documents
  • Document in foreign language
  • Expired documents
  • Source of wealth
  • Jurisdictions subject to a call by the Financial Action Task Force (“FATF”)
  • Using intermediaries for ongoing monitoring
  • Independent validation of transaction monitoring systems
  • Certification
  • Sanctions screening of parties involved in payments
  • Record-keeping of unsuccessful applicants

Links:

HK SFC Notice

HK SFC Circular

Frequently Asked Questions (Appendix)

On Friday, OFAC issued two Venezuela-related notices, which amended a number of Frequently Asked Questions, added a bunch of new ones, and amended 2 of the existing General Licenses…

Amended FAQs:

595. What does Venezuela-related General License 5 authorize?

The President issued Executive Order (E.O.) 13835 on May 21, 2018.  Subsection 1(a)(iii) of E.O. 13835 prohibits U.S. persons from being involved in the transfer by the Government of Venezuela (GOV) of any equity interest in any entity owned 50 percent or more by the GOV, as well as related transactions in the United States.  Subsequent to the issuance of E.O. 13835, OFAC received inquiries about how and whether subsection 1(a)(iii) of E.O. 13835 could affect the ability to enforce bondholder rights to the CITGO shares serving as collateral for the Petróleos de Venezuela, S.A. (PdVSA)  2020 8.5 percent bond.  Subsection 1(a)(iii) of E.O. 13835 hinders the Maduro regime’s ability to dispose of interests in entities owned 50 percent or more by the GOV at terms unfavorable to the Venezuelan people.  Authorizing bondholders to enforce rights related to the PdVSA 2020 8.5 percent bond prevents the Maduro regime from using the E.O. to default on its bond obligations without consequence.  In order to provide that authorization, OFAC issued General License 5, which removed E.O. 13835 as an obstacle to holders of the PdVSA 2020 8.5 percent bond gaining access to their collateral, and keeps sanctions pressure where it belongs – on the Maduro regime.  General License 5 continues in effect and remains operative despite OFAC’s designation of PdVSA on January 28, 2019.  Separately, General License 9, issued on January 28, 2019, authorizes transactions involving certain PdVSA debt, including the PdVSA 2020 8.5 percent bond.  Because transactions related to the PdVSA 2020 8.5 percent bond are authorized pursuant to General License 5 and General License 9, holders of this bond would not be limited from gaining access to their collateral.  This would include U.S. person bondholders who may be recipients of such collateral.  [01-31-2019]

648. What types of activities are considered “maintenance” as the term is used in Venezuela-related General Licenses 6 and 11?

 

As a general matter, the authorization for “maintenance” in General Licenses 6 and 11 includes all transactions ordinarily incident to the continuity of operations, provided that, in the case of General License 11, U.S. financial institutions may not process transactions to or for the benefit of Petróleos de Venezuela, S.A. (PdVSA) or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest. (See FAQ 654 for further information on this requirement). Additionally, for the purposes of General Licenses 6 and 11, the authorization for “maintenance” generally includes all transactions and activities ordinarily incident to performing under a contract or agreement in effect prior to the sanctions effective date (in the case of General License 6, January 8, 2019, and in the case of General License 11, January 28, 2019), provided that the level of performance is consistent with the terms of the general license and consistent with past practices that existed between the party and the blocked entity prior to the applicable sanctions effective date. Notwithstanding the absence of a contract or agreement in effect prior to the applicable sanctions effective date, the authorization for “maintenance” also generally includes all transactions and activities ordinarily incident to obtaining goods or services from or providing goods or services to a blocked entity listed in such authorization in a manner consistent with the terms of the relevant general license and consistent with past practices that existed between the party and the blocked entity prior to the applicable sanctions effective date. OFAC will consider the transaction history between the party, or any intermediary party, and the blocked entity prior to the applicable sanctions effective date in assessing whether activity is consistent with past practices. The authorization for “maintenance” also generally includes authorization to enter into contingent contracts for transactions and activities consistent with the above, where any performance after the expiration of the relevant general license is contingent on such performance either not being prohibited or being authorized by OFAC.

For example, transactions and activities authorized by General Licenses 6 and 11 could include entering into or renewing contracts, paying invoices, or receiving services, consistent with the terms of the relevant general license, that were initiated after the applicable sanctions effective date involving the blocked entities if such activity is ordinarily incident and necessary to contracts in effect prior to the applicable sanctions effective date (provided the terms are consistent with past practices, as demonstrated by transaction history). Similarly, transactions and activities that are not within the framework of a preexisting agreement may be considered “maintenance” if such activity is consistent with the transaction history between the person and the blocked entity prior to the applicable sanctions effective date. Conversely, General Licenses 6 and 11 would not authorize entering into contracts, paying invoices, or receiving services involving the blocked entities where there was no preexisting relationship between a person and a blocked entity or where the contemplated activity exceeds past practices that existed between the party and the blocked entity prior to the applicable sanctions effective date as demonstrated by transaction history. [01-31-2019]

New FAQs

650. What is the expected level of due diligence associated with ensuring that transfers or divestment of debt in certain blocked persons are consistent with the terms of Venezuela-related General License 9?

General License 9 (which has been superseded by General License 9A) requires that any divestment or transfer by U.S. persons of debt of Petróleos de Venezuela, S.A. (PdVSA) (or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest), that was issued prior to August 25, 2017, be to a non-U.S. person.  General License 9 also authorizes U.S. persons to facilitate the transfer or divestment of such debt, so long as the divestment or transfer of any holdings in such debt by a U.S. person is to a non-U.S. person.  Financial institutions or registered broker-dealers in securities may rely upon the information ordinarily available to them for purposes of conducting the activities authorized under General License 9. 

Consistent with OFAC FAQ 116, if a U.S. broker or financial institution involved in a transfer or divestment of such debt has information in its possession leading it to know or have reason to know that the buyer is a U.S. person, then the U.S. broker or financial institution will be held responsible if it does not take appropriate steps to ensure that the trade is not consummated.  OFAC expects U.S. persons to conduct due diligence on their own direct customers, and OFAC will consider the totality of the circumstances surrounding the processing of the transaction to determine what, if any, enforcement action to take.  [01-31-2019]


651. What happened to the Petróleos de Venezuela, S.A. (PdVSA) bonds, or bonds issued by any entity directly or indirectly owned 50 percent or more by PdVSA, that were previously included in the Annex to General License 3?  

Bonds issued by PdVSA or any entity in which it owns, directly or indirectly, a 50 percent or greater interest that was previously listed in the Annex to General License 3 (which has been superseded by General License 3B) are now listed in the Annex to General License 9.  All Venezuela-related general licenses are provided on OFAC’s website (www.treasury.gov/ofac) on the Venezuela-related Sanctions page.  [01-31-2019]


652.  Is it permissible for mutual funds and exchange traded funds (collectively, “funds”) that are U.S. persons to buy, sell, or otherwise engage in transactions related to debt, equity, or other holdings in an entity that appears on OFAC’s List of Specially Designated Nationals and Blocked Persons (SDN List), or of an entity owned 50 percent or more, individually or in the aggregate, by an individual or entity on the SDN List?  

No.  A fund that is a U.S. person may not buy, sell, or otherwise engage in transactions related to  debt, equity, or other holdings in blocked persons and must block such holdings, unless authorized by OFAC via general or specific license.  A U.S. fund that contains such blocked holdings generally is not itself considered a blocked entity, and U.S. persons may continue to invest in the fund and the fund may continue to operate.  The fund may divest itself of blocked holdings only with OFAC authorization.  [01-31-2019]


653. I am the manager of a Synthetic Exchange Traded Fund (ETF), which tracks a basket of debt, equity or other holdings in order to provide a return approximating the returns on that basket, but which does not actually hold the underlying debt, equity, or other holdings contained in the basket.  May I continue to offer such funds, and may U.S. persons trade in shares of these funds, if the underlying basket being tracked contains holdings in an entity or entities that appear on OFAC’s List of Specially Designated Nationals and Blocked Persons (SDN List), or of an entity owned 50 percent or more, individually or in the aggregate, by an individual or entity on the SDN List?  

Yes, so long as the underlying basket being tracked includes less than a predominant share by value of debt, equity, or other holdings in blocked persons.  U.S. and non-U.S. persons may continue to constitute, offer, and trade in funds that include only synthetic risk in debt, equity, or other holdings in blocked persons, provided the underlying basket being tracked includes less than a predominant share by value of debt, equity, or other holdings in blocked persons.  [01-31-2019].


654. With regard to Venezuela-related General License 11, “Authorizing Certain Activities Necessary to Maintenance or Wind Down of Operations or Existing Contracts with Petróleos de Venezuela, S.A.,” are U.S. financial institutions required to reject funds transfers involving both Petróleos de Venezuela, S.A. (PdVSA) or entities owned, directly or indirectly, 50 percent or more by PdVSA, and a non-U.S. entity located in a country other than the United States or Venezuela?

General License 11 authorizes, with certain exceptions, U.S. person employees of non-U.S. entities located in a country other than the United States or Venezuela to engage in transactions and activities prohibited by Executive Order 13850 that are ordinarily incident and necessary to the maintenance or wind down of operations, contracts, or other agreements involving PdVSA or entities owned, directly or indirectly, 50 percent or more by PdVSA that were in effect prior to January 28, 2019.  The authorization is valid through 12:01 a.m. eastern daylight time on March 29, 2019.  In accordance with paragraph (b) of General License 11, and for purposes of activities authorized under General License 11 only, U.S. financial institutions are authorized to reject, rather than block, funds transfers that involve both PdVSA or any entity owned, directly or indirectly, 50 percent or more by PdVSA and a non-U.S. entity located in a country other than the United States or Venezuela, provided that: (i) the funds transfers originate and terminate outside the United States; (ii) the originator and the beneficiary are non-U.S. persons; (iii) the funds are not destined for a blocked account on the books of a U.S. person; and (iv) the funds transfers otherwise are effected in accordance with paragraph (c) of General License 11.  U.S. financial institutions are not required to block funds transfers meeting the conditions in paragraph (b) of General License 11, but they are prohibited from processing such transactions. [01-31-2019]


655. Can U.S. persons purchase petroleum and petroleum products from Petróleos de Venezuela, S.A. (PdVSA) or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest?

Until 12:01 a.m. eastern daylight time, April 28, 2019, U.S. persons are authorized to engage in all transactions and activities that are ordinarily incident and necessary to the purchase and importation of petroleum and petroleum products from PdVSA or from entities owned 50 percent or more by PdVSA, provided that any payments to PdVSA, entities in which it owns, directly or indirectly, a 50 percent or greater interest, or other blocked persons for such purchases are made into a blocked, interest-bearing account located in the United States in accordance with 31 C.F.R. § 591.203 (unless authorized by other Venezuela-related general licenses).  After the expiration of the 90-day wind-down period, as described in General License 7 and General License 12, the purchase by U.S. persons of petroleum and petroleum products from PdVSA or any entity in which it owns, directly or indirectly, a 50 percent or greater interest will be prohibited absent authorization from OFAC (see also General License 10 and FAQ 656 authorizing the purchase of refined petroleum products by U.S. persons in Venezuela, and General License 8 authorizing purchases of petroleum and petroleum products from PdVSA or any entity in which it owns, directly or indirectly, a 50 percent or greater interest for certain listed entities that are ordinarily incident and necessary to their operations in Venezuela).  [01-31-2019] 


656. Can U.S. persons in Venezuela purchase gasoline or other refined petroleum products from Petróleos de Venezuela, S.A. (PdVSA) or any entity in which it owns, directly or indirectly, a 50 percent or greater interest? 

Yes.  Venezuela-related General License 10 authorizes U.S. persons in Venezuela to purchase refined petroleum products, including gasoline, for personal, commercial, or humanitarian uses from PdVSA, or any entity in which it owns, directly or indirectly, a 50 percent or greater interest.  General License 10 authorizes, among other things, purchases of refined petroleum products by U.S. commercial airlines providing passenger or cargo services in Venezuela for the purposes of fueling aircraft in Venezuela.  General License 10 also would authorize purchase for use to power a means of conveyance or a household good (such as a generator) in Venezuela.  General License 10, however, does not authorize U.S. persons to purchase refined petroleum products in Venezuela from PdVSA for purposes of executing a commercial transaction to resell, transfer, export, or reexport such refined petroleum products.  [01-31-2019]


657. I am a non-U.S. entity that purchases petroleum and petroleum products from Petróleos de Venezuela, S.A. (PdVSA) or an entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest.  Am I now prohibited from purchasing petroleum and petroleum products from these companies?

Transactions to purchase petroleum and petroleum products from PdVSA or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest, and that involve U.S. persons or any other U.S. nexus (e.g., transactions involving the U.S. financial system or U.S. commodity brokers) must be wound down by April 28, 2019 pursuant to Venezuela-related General License 12.  In addition, under General License 11, U.S. person employees and contractors of non-U.S. companies located in a country other the United States or Venezuela are authorized to engage in certain maintenance or wind-down transactions with PdVSA, or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest, through 12:01 a.m. eastern daylight time, March 29, 2019.  (See FAQ 654.)  [01-31-2019]


658. Can U.S. persons purchase, or engage in other transactions including swaps and non-cash transactions involving the purchase or exchange of, petroleum and petroleum products, if Petróleos de Venezuela, S.A. (PdVSA) or any entity in which it owns, directly or indirectly, a 50 percent or greater interest is not directly involved in the transaction?

After 12:01 a.m. eastern daylight time, April 28, 2019, as described in Venezuela-related General License 7 and General License 12, any transactions (including swaps and non-cash transactions) involving the purchase or exchange of petroleum or petroleum products in which PdVSA or any entity in which it owns, directly or indirectly, a 50 percent or greater interest has a direct or indirect interest will be prohibited for U.S. persons absent authorization from OFAC (see also General License 10 and FAQ 656).  Prior to April 28, 2019, any funds or tangible proceeds of a swap or non-cash agreement owed to PdVSA or any entity in which it owns, directly or indirectly, a 50 percent or greater interest as a result of such purchases or exchanges must be blocked, and, in the case of blocked funds, must be placed into a blocked interest-bearing account in the United States.  In the case of blocked non-cash proceeds, please reach out to OFAC for further guidance. [01-31-2019]


659. Does Venezuela-related General License 12 authorize U.S. persons to export goods, services, and technology from the United States to Petróleos de Venezuela, S.A. (PdVSA) or any entity in which it owns, directly or indirectly, a 50 percent or greater interest during the wind-down period?

General License 12 authorizes, until 12:01 a.m. eastern standard time, February 27, 2019, all transactions and activities that are ordinarily incident and necessary to the wind down of operations, contracts, or other agreements that were in effect prior to January 28, 2019.  This authorization includes the importation into, or the exportation from, the United States of goods, services, or technology (other than the exportation of diluents) involving PdVSA or any entity in which it owns, directly or indirectly, a 50 percent or greater interest (other than ALBA de Nicaragua (ALBANISA) or any entity in which ALBANISA owns, directly or indirectly, a 50 percent or greater interest). [01-31-2019] 


660. When will sanctions be lifted on Petróleos de Venezuela, S.A. (PdVSA) or any entity in which PdVSA owns, directly or indirectly, a 50 percent or greater interest?

The path to sanctions relief for PdVSA and its subsidiaries is through the expeditious transfer of control of the company to Interim President Juan Guaidó or a subsequent, democratically elected government that is committed to taking concrete and meaningful actions to combat corruption, restore democracy, and respect human rights.  A bona fide transfer of control will ensure that the assets of Venezuela are preserved for the country’s people, rather than misused and diverted by former President Nicolas Maduro.  Treasury will continue to use its economic tools to support Interim President Guaidó, the National Assembly, and the Venezuelan people’s efforts to restore their democracy. [01-31-2019] 


661. What does General License 9A authorize with respect to Petróleos de Venezuela, S.A. (PdVSA) securities and what are the implications for U.S. and non-U.S. persons?

General License 9A authorizes U.S. persons to engage in all transactions and activities that are ordinarily incident and necessary to dealings in any debt (including, but not limited to, the bonds listed in the Annex to General License 9A) of, or equity in, PdVSA, or any entity directly or indirectly owned 50 percent or more by PdVSA (together, PdVSA securities), that was issued prior to August 25, 2017, provided that if a U.S. person decides to sell or transfer any interests in such securities, it must sell or transfer the interests to a non-U.S. person. 

Paragraph (c) of General License 9A authorizes all transactions and activities that are ordinarily incident and necessary to facilitating, clearing, and settling trades of holdings in the PdVSA securities described in paragraph (a) of General License 9A, provided such trades were placed prior to 4:00 p.m. eastern standard time on January 28, 2019; this authorization aims to ensure that trades that were placed prior to the imposition of blocking sanctions on PdVSA are allowed to settle in the ordinary course, irrespective of whether the sale or transfer is to a non-U.S. person. 

Paragraph (d) of General License 9A authorizes all transactions and activities, including transactions in securities and security derivatives, that are ordinarily incident and necessary to the wind down of financial contracts or other agreements that were entered into prior to 4:00 p.m. eastern standard time on January 28, 2019, involving, or linked to, PdVSA securities issued prior to August 25, 2017, through 12:01 a.m. eastern standard time on March 3, 2019.  This authorization allows certain financial contracts and agreements that were entered into prior to the imposition of blocking sanctions on PdVSA that involve or are linked to PdVSA securities to be wound down, including resolving the purchase and sale of securities, securities lending, repurchase agreements, and swaps and derivative contracts in securities.

Paragraph (e) of General License 9A authorizes all transactions and activities prohibited by Section 1(a)(iii) of Executive Order 13808 or Executive Order 13850 that are ordinarily incident and necessary to dealings in any bonds issued by PDV Holdings, Inc., CITGO Holdings, Inc., Nynas AB, or any of their subsidiaries, prior to August 25, 2017.

U.S. persons may continue to hold their interests in PdVSA debt and equity issued prior to August 25, 2017, but are subject to certain requirements on the sale of those interests in the secondary market.  General License 9A does not generally authorize U.S. persons to purchase or acquire new interests in PdVSA bonds or other debt or equity, and as a result, such purchases are prohibited absent authorization from OFAC.  However, to the extent that divesting or transferring PdVSA-related debt or equity from U.S. persons to non-U.S. persons requires engaging in certain securities-related transactions with PdVSA and its 50 percent or more owned subsidiaries, such as purchasing or settling purchases of PdVSA debt or equity, paragraph (f)(2) of General License 9A authorizes U.S. persons to engage in such transactions.

While non-U.S. persons may continue to deal in PdVSA debt and equity, to the extent transactions involve U.S. persons or the U.S. financial system, such transactions must comply with the terms of General License 9A and may not involve sales of interests in such securities to U.S. persons (other than as described above) as U.S. persons are largely prohibited from purchasing such interests.    [02-01-2019] 


662. What does General License 3B authorize with respect to Government of Venezuela debt, and what are the implications for U.S. and non-U.S. persons?

General License 3B authorizes U.S. persons to engage in all transactions related to, the provision of financing for, and other dealings in the bonds specified in the Annex to General License 3B, provided that any divestment or transfer of, or facilitation of divestment or transfer of, any holdings in such bonds be to a non-U.S. person. 

Paragraph (b) of General License 3B authorizes all transactions and activities that are ordinarily incident and necessary to facilitating, clearing, and settling trades of holdings in the bonds specified in the Annex to General License 3B, provided such trades were placed prior to 4:00 p.m. eastern standard time on February 1, 2019; this authorization aims to ensure that trades that were placed prior to the issuance of General License 3B are allowed to settle in the ordinary course, irrespective of whether the sale or transfer is to a non-U.S. person.  

Paragraph (c) of General License 3B authorizes all transactions and activities, including transactions in securities and security derivatives, that are ordinarily incident and necessary to the wind down of financial contracts or other agreements that were entered into prior to 4:00 p.m. eastern standard time on February 1, 2019, involving, or linked to, the bonds specified in the Annex to General License 3B, through 12:01 a.m. eastern standard time on March 3, 2019.  This authorization allows certain financial contracts and agreements that were entered into prior to the issuance of General License 3B that involve or are linked to the bonds specified in the Annex to General License 3B to be wound down, including resolving the purchase and sale of securities, securities lending, repurchase agreements, and swaps and derivative contracts in securities.

Paragraph (d) of General License 3B authorizes all transactions related to, the provision of financing for, and other dealings in bonds that were issued both (i) prior to August 25, 2017 (the effective date of E.O. 13808), and (ii) by U.S. person entities owned or controlled, directly or indirectly, by the Government of Venezuela, other than Nynas AB, PDV Holding, Inc., CITGO Holding, Inc., and any of their subsidiaries.

While non-U.S. persons may continue to deal in the bonds specified in the Annex to General License 3B, to the extent transactions involve U.S. persons or the U.S. financial system, such transactions must comply with the terms of General License 3B and may not involve sales of any interests in such bonds to U.S. persons (other than as described above) as U.S. persons are largely prohibited from purchasing such interests.   [02-01-2019] 

The amended General Licenses will be posted in separate posts.

Links:

OFAC Notice #1, #2

Amended FAQs: 595, 648

New FAQs – PdVSA-related (11), OFAC Notice #2 FAQs (2)

General License 3B, 9A

Yesterday, OFAC added the following 2 persons:

GHORBANIYAN, Mohammad (a.k.a. GHORBANIAN, Mohammad; a.k.a. “EnExchanger”; a.k.a. “Ensaniyat”; a.k.a. “Ensaniyat_Exchanger”), Iran; DOB 09 Mar 1987; POB Tehran, Iran; nationality Iran; Website http://www.enexchanger.com; Email Address EnExchanger@gmail.com; alt. Email Address Ensaniyat1365@gmail.com; Additional Sanctions Information – Subject to Secondary Sanctions; Gender Male; Digital Currency Address – XBT 1AjZPMsnmpdK2Rv9KQNfMurTXinscVro9V; Identification Number 008-046347-9 (Iran); Birth Certificate Number 32270 (Iran) (individual) [CYBER2].

KHORASHADIZADEH, Ali (a.k.a. “Iranvisacart”; a.k.a. “Mastercartaria”), Iran; DOB 21 Sep 1979; POB Tehran, Iran; nationality Iran; Email Address iranvisacart@yahoo.com; alt. Email Address mastercartaria@yahoo.com; alt. Email Address alikhorashadi@yahoo.com; alt. Email Address toppglasses@gmail.com; alt. Email Address iranian_boy5@yahoo.com; Additional Sanctions Information – Subject to Secondary Sanctions; Gender Male; Digital Currency Address – XBT 149w62rY42aZBox8fGcmqNsXUzSStKeq8C; Passport T14553558 (Iran) issued 28 Oct 2008 expires 29 Oct 2013 (individual) [CYBER2].

to the cyber-related sanctions program.

Additionally, OFAC has released the following 2 new Frequently Asked Questions related to digital currencies:

646. How do I block digital currency?  

Once it has been determined that your institution is holding digital currency that is required to be blocked pursuant to OFAC’s regulations, you must ensure that access to that digital currency is denied to the blocked person and that your institution complies with OFAC regulations related to blocked assets.  Institutions may choose, for example, to block each digital currency wallet associated with the digital currency addresses that OFAC has identified as being associated with blocked persons, or opt to use its own wallet to consolidate wallets that contain the blocked digital currency (similar to an omnibus account) titled, for example, “Blocked SDN Digital Currency.”  Each of these methods is satisfactory, so long as there is an audit trail that will allow the digital currency to be unblocked only when the legal prohibition requiring the blocking of the digital currency ceases to apply.  The institution is not obligated to convert the blocked digital currency into traditional fiat currency (e.g., U.S. dollars).  Blocked digital currency must be reported to OFAC within 10 business days.  Questions about whether a transaction should be blocked should be directed to OFAC at 202-622-2490 or ofac_feedback@treasury.gov. [11-28-2018]


647. Should an institution tell its customer that it blocked access to their digital currency and, if so, how does the institution explain it to the customer?

An institution may notify its customer that it has blocked digital currency pursuant to OFAC regulations.  The customer has the right to apply for the unblocking and release of the digital currency.

To apply online to have the virtual currency released, please go to OFAC’s online application page. [11-28-2018]

And Treasury has issued a press release about the new designations:

Treasury Designates Iran-Based Financial Facilitators of Malicious Cyber Activity and for the First Time Identifies Associated Digital Currency Addresses

November 28, 2018

WASHINGTON – The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) took action today against two Iran-based individuals, Ali Khorashadizadeh and Mohammad Ghorbaniyan, who helped exchange digital currency (bitcoin) ransom payments into Iranian rial on behalf of Iranian malicious cyber actors involved with the SamSam ransomware scheme that targeted over 200 known victims.  Also today, OFAC identified two digital currency addresses associated with these two financial facilitators.  Over 7,000 transactions in bitcoin, worth millions of U.S. dollars, have processed through these two addresses – some of which involved SamSam ransomware derived bitcoin. In a related action, the U.S. Department of Justice today indicted two Iranian criminal actors for infecting numerous data networks with SamSam ransomware in the United States, United Kingdom, and Canada since 2015.

“Treasury is targeting digital currency exchangers who have enabled Iranian cyber actors to profit from extorting digital ransom payments from their victims.  As Iran becomes increasingly isolated and desperate for access to U.S. dollars, it is vital that virtual currency exchanges, peer-to-peer exchangers, and other providers of digital currency services harden their networks against these illicit schemes,” said Treasury Under Secretary for Terrorism and Financial Intelligence Sigal Mandelker.  “We are publishing digital currency addresses to identify illicit actors operating in the digital currency space. Treasury will aggressively pursue Iran and other rogue regimes attempting to exploit digital currencies and weaknesses in cyber and AML/CFT safeguards to further their nefarious objectives.”

Today’s action focuses on a ransomware scheme known as “SamSam” that has victimized numerous corporations, hospitals, universities, and government agencies and held over 200 known victims’ data hostage for financial gain.  To execute the SamSam ransomware attack, cyber actors exploit computer network vulnerabilities to gain access and copy the SamSam ransomware into the network.  Once in the network, these cyber actors use the SamSam ransomware to gain administrator rights that allow them to take control of a victim’s servers and files, without the victim’s authorization.  The cyber actors then demand a ransom be paid in bitcoin in order for a victim to regain access and control of its own network.

Central to the SamSam ransomware scheme’s success were Khorashadizadeh and Ghorbaniyan, who helped the cyber actors exchange digital currency derived from ransom payments into Iranian rial and also deposited the rial into Iranian banks.  To help convert the digital currency ransom payments into rial, Khorashadizadeh and Ghorbaniyan used the following two digital currency addresses: 149w62rY42aZBox8fGcmqNsXUzSStKeq8C and 1AjZPMsnmpdK2Rv9KQNfMurTXinscVro9V.  Since 2013, Khorashadizadeh and Ghorbaniyan have used these two digital currency addresses to process over 7,000 transactions, to interact with over 40 exchangers—including some US-based exchangers—and to send approximately 6,000 bitcoin worth millions of USD, some of which involved bitcoin derived from SamSam ransomware.

While OFAC routinely provides identifiers for designated persons, today’s action marks the first time OFAC is publicly attributing digital currency addresses to designated individuals.  Like traditional identifiers, these digital currency addresses should assist those in the compliance and digital currency communities in identifying transactions and funds that must be blocked and investigating any connections to these addresses.  As a result of today’s action, persons that engage in transactions with Khorashadizadeh and Ghorbaniyan could be subject to secondary sanctions.  Regardless of whether a transaction is denominated in a digital currency or traditional fiat currency, OFAC compliance obligations are the same.  See OFAC’s updated FAQ’s for additional information on compliance requirements for digital currencies.

OFAC designated Iran-based Khorashadizadeh and Ghorbaniyan pursuant to Executive Order 13694, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, the SamSam ransomware attacks.  The SamSam ransomware attacks are cyber-enabled activities originating from, or directed by, persons located, in whole or in substantial part, outside the United States that are reasonably likely to result in, or have materially contributed to, a significant threat to the national security, foreign policy, or economic health or financial stability of the United States that have the purpose or effect of harming, or otherwise significantly compromising the provision of services by, a computer or network of computers that support one or more entities in a critical infrastructure sector, causing a significant disruption to the availability of a computer or network of computers, and causing a significant misappropriation of funds or economic resources, trade secrets, personal identifiers, or financial information for commercial or competitive advantage or private financial gain.

As a result of today’s action, all property and interests in property of the designated persons that are in the possession or control of U.S. persons or within or transiting the United States are blocked, and U.S. persons generally are prohibited from dealing with them.

Today’s action marks the fourth round of U.S. sanctions targeting the Iranian regime this month.  Under this Administration, in less than two years, OFAC has sanctioned more than 900 individuals, entities, aircraft, and vessels, including for a range of activities related to Iran’s support for terrorism, ballistic missile program, weapons proliferation, cyberattacks, transnational criminal activity, censorship, and human rights abuses.  This marks the highest-ever level of U.S. economic pressure targeting the Iranian regime. This sanctions pressure campaign is designed to blunt the broad spectrum of the Iranian regime’s malign activities and compel the regime to change its behavior.

OFAC closely coordinated its action with the Department of Justice and the Federal Bureau of Investigation, which released details regarding its law enforcement action against the two Iranian criminal cyber actors.

Links:

OFAC Notice

New FAQs

Treasury Press Release