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Illicit Russia-Iran oil network targeted by OFAC

The Treasury Department has announced that OFAC has designated nine targets in an international network through which the Iranian regime, working with Russian companies, provides millions of barrels of oil to the Syrian government. The Assad regime, in turn, facilitates the movement of hundreds of millions of U.S. dollars (USD) to the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) for onward transfer to HAMAS and Hizballah. U.S. sanctions prohibit material support to the Government of Syria, including shipments of oil to Syrian government-controlled ports, as well as material support to designated terrorist groups. For the names and identification information of the six individuals and nine entities designated in this action, see our OFAC Update.

OFAC has also, with the U.S. Department of State and the U.S. Coast Guard, issued an OFAC Advisory to the Maritime Petroleum Shipping Community to alert persons globally to the significant U.S. sanctions risks for parties involved in petroleum shipments to Syria. These shipments create significant sanctions risk for entities and individuals in the shipping industry, including insurers, shipping companies, financial institutions, and vessel owners, managers, and operators.


Bureau updates Compliance and Guidance webpage

The Bureau has updated its Compliance and Guidance webpage based on user feedback. There are some additional links on the pages, and some sections of the material have been rearranged.


Movement on Reg CC amendments (with some DD for good measure)

The Federal Reserve Board and Bureau of Consumer Financial Protection have jointly announced proposed amendments to Regulation CC (12 CFR part 229) that would implement a statutory requirement to adjust for inflation the amount of funds depository institutions must make available to their customers. The amendments would apply in circumstances ranging from next business day withdrawal of certain check deposits to setting the threshold amount for determining whether an account has been repeatedly withdrawn. The Dodd-Frank Act amendments to the Expedited Funds Availability Act (EFA Act) require that the EFA Act's dollar amounts be inflation adjusted every five years by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The first set of proposed adjustments are detailed the agencies' Federal Register Notice. To help ensure that institutions have sufficient time to implement the adjustments, the agencies propose a compliance date that would be at least 12 months after publication of a final rule in the Federal Register.

The agencies also propose to implement in Regulation CC the EFA Act amendments made by the Economic Growth, Regulatory Relief, and Consumer Protection Act, which include extending coverage of the EFA Act to American Samoa, the Commonwealth of the Northern Mariana Islands, and Guam.

Finally, the agencies are providing an additional opportunity for public comment on certain funds-availability amendments in subpart B of Regulation CC that the Board published in 2011 regarding funds availability schedule provisions and associated definitions. In taking this step, the agencies have not made a decision on whether to make any aspects of the 2011 proposal final. Reopening the comment period will provide the agencies with up-to-date public views to consider.

The Bureau is proposing to make some technical updates to Regulation DD (12 CFR part 1030) that relate to Regulation CC, as well as correct the typographical errors in the Appendix A formulas for calculating the APY (which BankersOnline called to the Bureau's attention many months ago), where terms in the formulas should have been shown as exponents.

Comments will be accepted for 60 days after publication.


NY landlords settle HUD discrimination claim

HUD has announced that Nolo Contendere, LLC, and Nolo Contendere LLC Trust, the owners and agent of an apartment complex in Syracuse, New York, will pay $15,000 under a HUD Consent Order resolving allegations that the owners and their agents refused to allow a woman with mental disabilities keep an assistance animal. The case came to HUD's attention when a woman with mental disabilities filed a complaint alleging that Nolo Contendere, LLC, and its owners refused to allow her to keep an assistance animal. HUD's charge of discrimination alleged that after the tenant brought the animal home, an agent for Nolo Contendere confronted her about the animal. The landlords refused to make an exception to their “no-pets” policy, even after the woman provided documentation attesting to her disabilities. HUD’s charge further alleged that the landlords initiated a retaliatory eviction action against the tenant after she made the accommodation request, in violation of th e Fair Housing Act.


Fed publishes Reg I update

The Board of Governors of the Federal Reserve System has published a final rule in today's Federal Register to apply an inflation adjustment to the threshold for total consolidated assets in Regulation I. Federal Reserve Bank (Reserve Bank) stockholders that have total consolidated assets above the threshold receive a different dividend rate on their Reserve Bank stock than stockholders with total consolidated assets at or below the threshold. Based on the change in the Gross Domestic Product Price Index as of September 27, 2018, the total consolidated asset threshold will be $10,518,000,000 for calendar year 2019.


Société Général S.A. paying $2.3B in OFAC and BSA penalties

The U.S. Attorney's Office for the Southern District of New York announced Monday that criminal charges had been brought against Société Général S.A. (SG) for conspiring to violate the Trading with the Enemy Act (“TWEA”) and the Cuban Asset Control Regulations promulgated thereunder (the “Cuban Regulations”) for SG’s role in processing billions of dollars of U.S. dollar transactions using the U.S. financial system, in connection with credit facilities involving Cuba (the “Cuban Credit Facilities”). Also announced was SG's agreement to accept responsibility for its conduct by stipulating to the accuracy of an extensive Statement of Facts, pay penalties totaling $1,340,165,000 to federal and state prosecutors and regulators, refrain from all future criminal conduct, and implement remedial measures as required by its regulators. Assuming SG’s continued compliance with the Agreement, the Government has agreed to defer prosecution for a period of three years, after which time the Government will seek to dismiss the charges. The $1.34 billion in penalties represents the second largest penalty ever imposed on a financial institution for violations of U.S. economic sanctions.

SG agreed to forfeit $717.2 million in a civil forfeiture action as part of the collective penalties. A separate payment of $54 million will be made to the Office of Foreign Assets Control. Additional payments of $162.8 million to the New York County District Attorney's Office, $81.3 million to the Federal Reserve Board, and $325 million to the New York State Department of Financial Services (NYDFS).

SG and its New York branch also agreed to pay NYDFS $95 million (over and above the OFAC violations settlement) for BSA/AML violations.


OFAC targets two individuals

On Monday, Treasury issued press releases announcing OFAC's targeting of two individuals:

  • Concurrent with action by the UN Security Council's Libya Sanctions Committee, OFAC took action targeting Salah Badi (Badi), the leader of the Sumud Brigade militia that has sparked violent clashes in the south of Libya’s capital, Tripoli.
  • OFAC also sanctioned the Russia-born, South African national Vladlen Amtchentsev pursuant to E.O. 13722 for having acted or purported to act for or on behalf of, directly or indirectly, Velmur Management Pte. Ltd. (“Velmur”). Amtchentsev has advised on how to evade U.S. sanctions. In August 2017, OFAC designated Transatlantic Partners Pte. Ltd. (“Transatlantic”) for operating in the energy industry in the North Korean economy, and OFAC simultaneously designated Velmur for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Transatlantic.

For identification information on these two targeted individuals, see our OFAC Update.


FTC issues 2018 financial report

The Federal Trade Commission has issued its Fiscal Year 2018 Agency Financial Report, which describes the Commission’s strong fiscal management and key program performance of the agency during the past year. The report highlights FTC accomplishments in furtherance of its missions to protect consumers and promote competition, and reaffirms the agency’s commitment to responsible stewardship of resources and sound financial operations.


Regulators' statement on supervisory practices following wildfires

A joint press release by the OCC, Fed, FDIC, NCUA, Conference of State Bank Supervisors and the California Department of Business Oversight published a statement on supervisory practices regarding financial institutions and their customers affected by California wildfires. The agencies will provide appropriate regulatory assistance and flexibility to affected institutions subject to their supervision. The agencies encourage institutions operating in the affected areas to meet the financial services needs of their communities.


FinCEN reissues and expands GTOs

FinCEN announced Thursday the issuance of revised Geographic Targeting Orders (GTOs) that require U.S. title insurance companies to identify the natural persons behind shell companies used in all-cash purchases of residential real estate. The purchase amount threshold, which previously varied by city, is now set at $300,000 for each covered metropolitan area. FinCEN is also requiring that covered purchases using virtual currencies be reported. FinCEN posted a copy of the GTO and an FAQ about the orders. The order covers the period from November 17, 2018, through May 15, 2019.

The GTOs' coverage has been expanded to include 12 metropolitan areas, defined as follows:

  • Texas counties of Bexar, Tarrant and Dallas
  • Florida counties of Miami-Dade, Broward and Palm Beach, in Florida
  • Boroughs of Brooklyn, Queens, Bronx, Staten Island and Manhattan, in New York City
  • California counties of San Diego, Los Angeles, San Francisco, San Mateo and Santa Clara
  • City and County of Honolulu in Hawaii
  • Washington county of King
  • Massachusetts counties of Suffolk and Middlesex
  • Illinois county of Cook.

Note that the orders do not affect banks or credit unions directly, although they should be aware of them in case they detect activity that may signal attempts to avoid the GTO. The orders are addressed to title insurance companies and their subsidiaries or agents.


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