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OFAC has released and will publish on May 10 an interim final rule to amend the Reporting, Procedures and Penalties Regulations (the “Regulations”), to require electronic filing of certain submissions to OFAC and to describe and modify certain reporting requirements related to blocked property and rejected transactions. In particular, the rule would require use of the electronic OFAC Reporting System for submission of reports related to blocked property and rejected transactions, remove the mail option for certain other types of OFAC submissions, describe reports OFAC may require from financial institutions for transactions that meet specified criteria, and add a reporting requirement for any blocked property that is unblocked or transferred.

Additionally, OFAC is clarifying the scope of the reporting requirement for rejected transactions, in part to respond to comments received on the interim final rule OFAC published on June 21, 2019 to amend the Regulations. The interim final rule also modifies the procedures for requests relating to property that is blocked in error and updating the Regulations with respect to the availability of information under the Freedom of Information Act (FOIA) for certain categories of records.

The rule also clarifies that persons may submit a petition for administrative reconsideration to seek removal of a person or property from the List of Specially Designated Nationals and Blocked Persons or any other list of sanctioned persons maintained by OFAC. OFAC is also adding a description of reports OFAC may require financial institutions to provide about transactions that meet specified criteria to aid in the identification of blocked property. Finally, OFAC is making several technical and
conforming edits.

The rule will become effective 90 days after publication (August 8, 2024). Comments on the interim final rule will be accepted for 31 days after publication (through June 10, 2024).

Yesterday, FinCEN issued an Advisory to assist financial institutions in detecting potentially illicit transactions related to Islamic Republic of Iran-backed terrorist organizations. The Advisory highlights the means by which certain terrorist organizations receive support from Iran and describes several typologies these terrorist organizations use to illicitly access or circumvent the international financial system to raise, move, and spend funds. It also provides red flags that may assist financial institutions in identifying related suspicious activity.

Recent events have underscored Iran’s involvement in and financing of terrorist activity in the region. Iran seeks, among other goals, to project power by exporting terrorism throughout the Middle East and beyond by financing a range of regional armed groups, some of which are U.S.-designated Foreign Terrorist Organizations or Specially Designated Global Terrorist organizations. These terrorist organizations include Lebanese Hizballah, Hamas, the Palestinian Islamic Jihad, the Houthis, and several Iran-aligned militia groups in Iraq and Syria.

FinCEN requests that financial institutions reference this advisory in SAR field 2 and the narrative by including "IRANTF-2024-A001" and selecting SAR field 33(a) when filing SARs related to matters discussed in the Advisory.

• Advisory FIN-2024-A001

On Tuesday, the United States designated Dmitry Yuryevich Khoroshev, a Russian national and a leader of the Russia-based LockBit group, for his role in developing and distributing LockBit ransomware. This designation is the result of a collaborative effort with the U.S. Department of Justice, Federal Bureau of Investigation, the United Kingdom’s National Crime Agency, the Australian Federal Police, and other international partners.

Concurrently, the Department of Justice is unsealing an indictment and the Department of State is announcing a reward offer for information leading to the arrest and/or conviction of Khoroshev. The United Kingdom and Australia are also announcing the designation of Khoroshev.

For identification information on Khoroshev, see BankersOnline’s May 7, 2024, OFAC Update.

Federal Reserve Financial Services yesterday released the results of studies indicating that U.S. businesses and consumers are rapidly adopting digital, faster and instant payment services, according to studies released today by Federal Reserve Financial Services. Digital wallet use saw especially strong growth in 2023 — efficiency-focused businesses increased their use by 31% over the prior year, and convenience-minded consumers experienced a 32% increase.

These changes, particularly consumers’ use of digital wallets and online banking, are leading to increases in instant and faster payment use cases such as bill payment, mobile wallet funding and defunding, account-to-account transfers, and immediate payroll for employees.

Overall, 86% of businesses and 74% of consumers said they used faster or instant payments in 2023, and most (74% of businesses and 79% of consumers) reported looking to their financial institution to provide these services. Other key findings:

• Younger consumers are leading the move to digital, faster and instant payments. More than half of Generation Z (ages 18-25) and millennials (26-41) now use digital wallets, and 80% of these younger consumers say it is important to be able to make payments by mobile device.
• One in four (25%) consumers are challenged by the slow speed of payments and prefer to have better options for instant money movement to help manage personal finances.
• Businesses are using faster/instant payments because it helps them reduce cost (48%) and provides flexibility to pay and be paid as customers prefer (39%). Additionally, 35% appreciate the 24/7 nature of instant payment services.
• Businesses say key use cases that benefit from instant payments include business-to-business (92%), business-to-person (71%) and account-to-account (40%). Many businesses also believe instant payments will be useful for digital wallet funding/defunding (50%) and earned wage access (25%).

Full reports:

• Business Research Brief
• Consumer Research Brief
  

OFAC has announced the formal launch of its new OFAC Sanctions List Service (SLS) application. SLS is now the primary application OFAC will use to deliver sanctions list files and data to the public.

SLS includes support for all OFAC legacy and modern sanctions list data files. While certain sanctions list data are now hosted within the SLS cloud, existing links to OFAC list files remain functional through URL redirects.

The Sanctions List Service application incorporates the traditional OFAC Sanctions List Search tool which will continue to be available at https://sanctionssearch.ofac.treas.gov/.

The May 3, 2024, issue of FDIC Consumer News has been posted, with an article on "Your Business, Your Deposits." The article includes sections on:

• Things to know about small business accounts
• Payments from customers
• Deciding on whether the separate consumer and business deposit accounts
• Varying protections for consumer versus commercial accounts
• Watching out for scams targeting businesses

The FDIC, OCC and Federal Reserve Board have jointly announced their issuance of a guide to support community banks in managing risks presented by third-party relationships.

Third-party relationships present varied risks that community banks are expected to appropriately identify, assess, monitor, and control to ensure that their activities are performed in a safe and sound manner and in compliance with applicable laws and regulations. These laws and regulations include, but are not limited to, those designed to protect consumers and those addressing financial crimes.

The guide offers potential considerations, resources, and examples through each stage of the third-party relationship and may be a helpful resource for community banks. While the guide illustrates the principles discussed in the third-party risk management guidance issued by the agencies in June 2023, it is not a substitute for that guidance.

• Third-Party Risk Managment: A Guide for Community Banks
• OCC Bulletin 2024-11
• FIL-20-2024

Yesterday, the Department of the Treasury reported that OFAC has designated five individuals for helping U.S.-designated Hizballah money exchanger Hassan Moukalled (Moukalled) and his company, CTEX Exchange, evade sanctions and facilitate illicit activities in support of Hizballah. These individuals, including two co-founders of CTEX Exchange and two of Moukalled’s sons, operate two companies in Lebanon and the United Arab Emirates (UAE) that were concurrently designated. Individuals and entities targeted yesterday were designated pursuant to Executive Order (E.O.) 13224, as amended, which targets terrorist groups, their supporters, and those who aid acts of terrorism.

For the names and identification information of the designated parties, see the May 2, 2024, BankersOnline OFAC Update.

Yesterday, the Treasury Department announced actions to further degrade Russia’s ability to sustain its war machine, continuing a multilateral campaign to limit the Kremlin’s revenue and access to the materiel it needs to prosecute its illegal war against Ukraine. Yesterday’s actions target Russia’s military-industrial base and chemical and biological weapons programs as well as companies and individuals in third countries that help Russia acquire key inputs for weapons or defense-related production. Nearly 300 targets were sanctioned by Treasury and the Department of State, including sanctions on dozens of actors that have enabled Russia to acquire technology and equipment from abroad.

In addition to the nearly 200 targets sanctioned by the Department of the Treasury, the Department of State has imposed sanctions on over 80 entities and individuals that are engaged in sanctions evasion and circumvention or are related to Russia’s chemical and biological weapons programs and defense industrial base. The Department of State also targeted Russia’s revenue generation through its future energy, metals, and mining production and sanctioning additional individuals in connection with the death of opposition leader and anticorruption activist Aleksey Navalny. For more information on State actions, see the Department of State Fact Sheet.

Today’s action includes nearly 60 targets located in Azerbaijan, Belgium, the PRC, Russia, Slovakia, Türkiye, and the United Arab Emirates (UAE), that enable Russia to acquire desperately-needed technology and equipment from abroad.

For the names and identification information of the designated individuals, entities, and vessels, see the May 1, 2024, BankersOnline OFAC Update.

The Federal Bureau of Investigation yesterday reported the elder fraud complaints to the FBI's Internet Crime Complaint Center (IC3) increased by 14 percent in 2023, and associated losses increased by about 11 percent, according the IC3’s 2023 Elder Fraud Report, released yesterday. Five takeaways from the report:

• Elder fraud is an expensive crime. Scams targeting individuals aged 60 and older caused over $3.4 billion in losses in 2023—an increase of approximately 11% from the year prior. The average victim of elder fraud lost $33,915 due to these crimes in 2023.
• Older Americans seem to be disproportionately impacted by scams and fraud. Over 101,000 victims aged 60 and over reported this kind of crime to IC3 in 2023. On the flip side, victims under the age of 20 years old seemed to be the least-impacted demographic, with about 18,000 victims in this demographic reporting suspected scams or frauds to IC3 last year.
• Tech support scams were the most widely reported kind of elder fraud in 2023. Nearly 18,000 victims aged 60 and over reported such scams to IC3. Personal data breaches, confidence and romance scams, non-payment or non-delivery scams, and investment scams rounded out the top five most common types of elder fraud reported to IC3 last year.
• Investment scams were the costliest kind of elder fraud in 2023. These schemes cost victims more than $1.2 billion in losses last year. And tech support scams, business email compromise scams, confidence and romance scams, government impersonation scams, and personal data breaches all respectively cost victims hundreds of millions of dollars in 2023.
• Scammers are coming for people’s cryptocurrency. More than 12,000 victims aged 60 and over indicated that cryptocurrency was “a medium or tool used to facilitate” the scam or fraud that targeted them when reporting it to IC3.