Recent joint activity by the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC), including joint actions against Venezuela and North Korea, suggest that the two Treasury agencies are increasing coordination to tackle financial and other crimes.
On September 20, 2017, FinCEN issued an advisory which detailed widespread corruption in Venezuela, noting that OFAC has designated a number of Venezuelan public officials for public corruption and narcotics trafficking, including President Nicolas Maduro, Vice President Tareck El Aissami, national assembly leaders, and leaders of national energy company Petroleos de Venezuela (PdVSA). This tracks a pattern of regular communications and actions by OFAC and FinCEN, including:
- On September 6, 2017, OFAC “blacklisted” several South Sudanese senior political figures and companies for destabilizing activities; on the same date, FinCEN issued an advisory to alert US financial institutions of the possibility that these sanctioned persons may try to use the US financial system for money laundering.
- Steptoe previously analyzed OFAC’s June 29, 2017 designation of three Chinese entities in response to North Korea’s ongoing WMD development. On the same day, FinCEN proposed to prohibit US financial institutions from maintaining correspondent accounts for, or on behalf of, Bank of Dandong, a Chinese bank alleged to have served as a gateway for North Korea to access the US and international financial systems.
- On August 30, 2016, Treasury issued guidance (and some cold comfort, as Steptoe noted at the time) to the financial services sector on how to abide by BSA/AML and OFAC sanctions.
- On April 13, 2016, in response to the notorious Panama Papers leak, FinCEN targeted sanctions evasion and money laundering by finalizing a Customer Due Diligence (CDD) rule and issuing geographic targeting orders to obtain information in certain high-risk transactions, while OFAC imposed sanctions against the Waked Money Laundering Organization shortly thereafter.
OFAC administers and enforces sanctions programs against countries and individuals, often by designating entities as Specially Designated Nationals (SDNs) and blocking their assets. This prohibits US persons, including US financial institutions, from engaging in transactions involving those entities unless a general or specific license is granted. FinCEN deters money laundering and terrorism financing by, among other things, requiring financial institutions to maintain robust compliance programs and file reports about suspicious activities and other matters.
Financial institutions should take note of this increasing coordination between OFAC and FinCEN and ensure that their compliance programs are responsive to their multi-pronged enforcement efforts.