Government Enforcement

Subscribe to Government Enforcement

On March 7, 2022, the Financial Crimes Enforcement Network (FinCEN) of the US Department of the Treasury published guidance (Guidance) for US financial institutions warning about: (1) efforts of foreign actors to evade expanding US economic sanctions and trade restrictions related to the Russian Federation and Belarus and (2) increased risk of malicious cyber-attacks and related ransomware campaigns, following the invasion of and continued military action in Ukraine.  The Guidance provides instructive red flags and related advice for all US financial institutions to evaluate, and provides information of particular relevance for Money Services Businesses (MSBs) and other FinCEN-regulated institutions undertaking transactions in what the agency calls “convertible virtual currency” (CVC).

Most notably, FinCEN strongly encourages US financial institutions that have information about CVC flows, including exchangers or administrators of CVC to: (1) be mindful of efforts to evade expanded US sanctions and export controls related to Russia and Belarus, summarized by Steptoe here; (2) submit Suspicious Activity Reports (SARs) as soon as possible regarding such conduct; (3) undertake appropriate risk-based due diligence of customers, and where required, enhanced due diligence; (4) voluntarily share information with other financial institutions consistent with Section 314(b) of the USA PATRIOT Act; and (5) consider using tools to identify assets that must be blocked or frozen under applicable sanctions.…

Continue Reading What US Financial Institutions Need to Know about FinCEN’s Russian Sanctions Evasion and Ransomware Guidance

This past year saw a significant dip in the number of Foreign Corrupt Practices Act (FCPA) enforcement actions, but at the same time a series of new and important policy initiatives emanating from the White House and from the Department of Justice (DOJ) that signal a substantial commitment to investigating and prosecuting corruption-related crimes and…

On December 23, 2021, and following strong bipartisan support in Congress, President Biden signed the Uyghur Forced Labor Prevention Act (“UFLPA” or “Act”) into law.  P.L. 117-78 (2021).  The UFLPA builds on previous congressional and executive branch actions aimed at responding to allegations of forced labor and other human rights concerns in China’s Xinjiang Uyghur Autonomous Region (“XUAR”).  In particular, the UFLPA introduces a rebuttal presumption that “any goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in” the XUAR were made with forced labor and are therefore ineligible for entry into the United States.  In addition, the UFLPA details Congressional expectations for a whole of government enforcement strategy with respect to allegations of XUAR-related forced labor and expands economic sanctions introduced under the Uyghur Human Rights Policy Act of 2020 to cover “{s}erious human rights abuses in connection with forced labor” in the XUAR.

In recognition of the compliance challenges related to the above-described rebuttable presumption, the Forced Labor Enforcement Task Force (“FLETF”) is soliciting comments on how best to ensure that “goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part with forced labor in the People’s Republic of China are not imported into the United States.”  These comments are due no later than March 10, 2022.  As discussed further below, importers should consider submitting comments to the FLETF concerning this set of issues, which will ultimately inform the enforcement strategy employed by U.S. Customs and Border Protection (“CBP”) at the border.  Additionally, importers should begin top-to-bottom reviews of their supply chains to ensure compliance with the newly-introduced rebuttable presumption prior to its implementation in June of this year.…

Continue Reading Understanding the Uyghur Forced Labor Prevention Act and What Comes Next

On December 15, 2021, the White House issued Executive Order (EO) 14059, “Imposing Sanctions on Foreign Persons Involved in the Global Illicit Drug Trade.”  The new EO, which implements aspects of the Fentanyl Sanctions Act of 2019 (21 U.S.C. § 2301 et seq.), could bring a significant expansion in the US government’s use of sanctions to combat narcotics trafficking.  It also builds on more than 25 years of efforts including Clinton-era sanctions against Colombian drug trafficking networks and the identification of drug trafficking organizations under the Foreign Narcotics Kingpin Designation Act.  The new EO includes innovative designation criteria geared toward the Biden administration’s goal “to modernize and update our response to drug trafficking,” as stated in the EO’s preamble.
…
Continue Reading US Government Expands Counter-Narcotics Sanctions with New Executive Order on Global Illicit Drug Trade

On September 24, 2021, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued General License 14 (GL-14) and General License 15 (GL-15), authorizing certain types of humanitarian transactions involving Afghanistan that could relate to the Taliban or the Haqqani Network that would otherwise be prohibited by the Global Terrorism Sanctions Regulations (GTSR), the Foreign Terrorist Organizations Sanctions Regulations (FTOSR), or Executive Order (EO) 13224.

Both the Taliban and the Haqqani Network are designated by OFAC as Specially Designated Global Terrorists (SDGTs) pursuant to EO 13224. The Haqqani Network is also designated by the US Department of State as a Foreign Terrorist Organization (FTO) under section 219 of the Immigration and Nationality Act.  Furthermore, several of the individual members of the Taliban and the Haqqani Network are designated by OFAC as SDGTs.

These groups have recently taken control of, and appointed officials (including at least one individual designated as an SDGT) to administer, the Government of Afghanistan and its associated agencies and organizations.  As a result, there are concerns that interactions with the Government of Afghanistan could be prohibited to the extent they involve a person subject to US sanctions or expose parties to broader risks under US counter-terrorism financing laws.…

Continue Reading OFAC’s New Afghanistan-Related Humanitarian Licenses: Opportunities and Challenges

The German Federal Parliament has adopted a new Act on Corporate Due Diligence Responsibilities in Supply Chains (‘the Supply Chain Act’) on Friday, June 11, 2021, due to enter into effect on January 21, 2023.  By virtue of the Supply Chain Act, companies with a significant presence in Germany, as further explained below, must ensure compliance with human rights and environmental concerns in their business operations and impose equivalent due diligence responsibilities on their suppliers, irrespective of where they are located.

The Supply Chain Act could be of particular interest to the extractive industry, including oil and gas companies, and suppliers of the German automotive industry, but other industries will be affected as well given that the Act applies in principle across all sectors and covers both manufacturing and services, including, in principle, financial services.…

Continue Reading Germany Introduces New Human Rights and Environmental Responsibilities for Parties in B2B-Relationships

The World Bank Group (the Bank) published a joint Sanctions System Annual Report for fiscal year 2019 on October 10. This report, which reflects on the Sanctions System’s growth since its implementation twenty years ago, provides an overview of activities undertaken by the Bank’s Integrity Vice Presidency (INT), Office of Suspension and Debarment (OSD), and…

In remarks made at the American Conference Institute’s 20th Anniversary New York Conference on the Foreign Corrupt Practices Act (FCPA) and to the New York City Bar White Collar Crime Institute on May 9, 2018, Deputy Attorney General (DAG) Rod Rosenstein announced two new policy initiatives at the US Department of Justice (DOJ). First,…

The US Department of Justice (DOJ) and federal financial regulators announced major public enforcement actions against two large banks with significant international business dealings in February. These enforcement actions resulted in a guilty plea, a deferred prosecution agreement (DPA), and near-record fines and penalties. Both financial institutions failed to comply with Bank Secrecy Act/Anti-Money Laundering …

A series of recent federal enforcement actions targeting weaknesses in Bank Secrecy Act/anti-money laundering (BSA/AML) compliance programs continued on March 16, when US Gold refinery Elemetal LLC, based in Dallas, Texas, pled guilty in US District Court for the Southern District of Florida to a single-count information charging failure to maintain an adequate BSA/AML program.

Elemental admitted that from August 2012 through November 2016, it purchased and refined billions of dollars of gold from countries around the world, but willfully failed to develop, implement, and maintain an adequate BSA/AML compliance program, despite the high risk of gold-based money laundering.  The international gold trade is recognized as a common method for laundering illegally mined gold, narcotics and other criminal proceeds.

Federal prosecutors alleged and Elemetal admitted that they had:…
Continue Reading Texas-Based U.S. Gold Refinery Pleads Guilty for Failing to Maintain an Adequate Anti-Money Laundering Program and Agrees to Forfeit $15M, Continuing Trend of Criminal Enforcement Actions and Prosecutions for Compliance Failures