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Top Story Compliance Related

11/12/2021

OFAC targets corrupt Cambodian military officials

On Wednesday, the Treasury Department announced that OFAC has sanctioned two Cambodian government officials, Chau Phirun (Chau) and Tea Vinh (Tea), for their roles in corruption in Cambodia. These individuals were designated pursuant to Executive Order 13818, which builds upon and implements the Global Magnitsky Human Rights Accountability Act and targets perpetrators of serious human rights abuse and corruption around the world. The designations were complemented by the U.S. Department of State’s announcement of visa restrictions under Section 7031(c) of the FY 2021 Department of State, Foreign Operations, and Related Programs Appropriations Act on Chau and Tea, and their eligible immediate family members, due to their involvement in significant corruption.

See the BankersOnline OFAC Update for November 10, 2021, for identification information on Chau and Tea.

OFAC has also published a Cambodia Business Advisory on High-Risk Investments and Interactions.

11/10/2021

UAE bank cited for violations of Sudanese sanctions

The Office of Foreign Assets Control and the Federal Reserve Board have cited Mashreqbank psc for violations of the now-repealed Sudanese Sanctions Regulations (SSR), as part of a global settlement between Mashreqbank, the New York State Department of Financial Services (DFS) and the Federal Reserve Board of Governors. The violations related to Mashreqbank’s processing of payments through U.S. financial institutions that related to U.S. dollar transfers from accounts of Sudanese banks held outside the United States. Mashreqbank psc is a commercial bank headquartered in Dubai, United Arab Emirates, that maintains a branch in New York, New York.

OFAC issued a Finding of Violation to Mashreqbank. rather than a civil money penalty order, in part because Mashreqbank voluntarily entered into a retroactive statute of limitations waiver agreement, without which OFAC would have been time-barred from charging the violations.

The Federal Reserve Board on Tuesday announced it has issued a consent cease and desist order to Mashreqbank.

11/09/2021

Payment processor banned by FTC

The Federal Trade Commission has issued an order permanently banning a payment processor that facilitated a fraudulent student loan debt relief scheme from processing debt relief payments. The order also requires the company and its owner to surrender $500,000 to the FTC for consumer redress.

A complaint filed by FTC alleged Automatic Funds Transfer Services, Inc. (AFTS) and its owner, Eric Johnson, processed at least $31 million in consumer payments for a fraudulent student loan debt relief scheme sued by the FTC in 2019. The debt relief scheme used numerous names, including The Student Loan Group (SLG).

AFTS and Johnson processed payments from tens of thousands of consumers deceived by SLG into paying illegal upfront fees with false promises to lower the consumers’ monthly student loan payments. The complaint cites correspondence showing that AFTS and Johnson were aware of numerous issues with the scheme. The FTC alleges that the company and Johnson received complaints from, among others, consumers and banks; were aware that SLG had high return rates and was collecting illegal upfront fees from consumers; and knew that SLG kept changing company and brand names to, among other reasons, mitigate negative publicity. Despite numerous warning signs, AFTS and Johnson continued processing consumer payments for SLG right until the scheme was ultimately shut down following an enforcement action by the FTC.

The settlement permanently prohibits AFTS and Johnson from processing payments for debt relief or student loan companies. They will also be prohibited from processing payments indirectly for any merchant that does not have a signed contract with AFTS, and will be required to apply enhanced screening and monitoring of certain high risk clients to ensure such clients are not operating illegally. The monetary judgment of $27,584,969 is largely suspended due to an inability to pay. AFTS and Johnson will be required to surrender $500,000 to the FTC, and if they are found to have misrepresented their financial status, the full amount of the judgment would be immediately due.

Press release

11/09/2021

Treasury continues to counter ransomware

The Department of the Treasury on Monday announced a set of actions focused on disrupting criminal ransomware actors and virtual currency exchanges that launder the proceeds of ransomware. Treasury’s actions advance the administration’s counter-ransomware efforts to disrupt ransomware infrastructure and actors and address abuse of the virtual currency ecosystem to launder ransom payments.

Monday's actions include the OFAC designation of Chatex, a virtual currency exchange, and its associated support network, for facilitating financial transactions for ransomware actors. OFAC also designated IZIBITS OU, Chatextech SIA, and Hightrade Finance Ltd for providing material support and assistance to Chatex.

Complementing this action, the Department of State announced a Transnational Organized Crime Reward offer of up to $10,000,000 for information leading to the identification or location of any individual(s) who hold a key leadership position in the Sodinokibi/REvil ransomware variant transnational organized crime group. The Department of State also announced a reward offer of up to $5,000,000 for information leading to the arrest and/or conviction in any country of any individual conspiring to participate in or attempting to participate in a Sodinokibi variant ransomware incident.

OFAC also designated Ukrainian Yaroslav Vasinskyi and Russian Yevgeniy Polyanin for their part in perpetuating Sodinokibi/REvil ransomware incidents against the United States. These two individuals are part of a cybercriminal group that has engaged in ransomware activities and received more than $200 million in ransom payments paid in Bitcoin and Monero. OFAC also designated a company owned by Polyanin.

Treasury also reported FinCEN's release of an updated advisory on Ransomware and the Use of the Financial System to Facilitate Ransom Payments (see our related report).

For identification information on the individuals and entities targeted by OFAC, see the November 8, 2021, BankersOnline OFAC Update.

11/09/2021

FinCEN updates Advisory on Ransomware

FinCEN has announced its release of an updated advisory, FIN-2021-A004, "Advisory on Ransomware and the Use of the Financial System to Facilitate Ransom Payments." The release was made in connection with a set of actions announced Monday by the Treasury Department and focused on disrupting criminal ransomware actors. Yesterday's Advisory replaces advisory FIN-2020-A006, issued October 1, 2020.

The updated advisory is in response to the increase of ransomware attacks in recent months against critical U.S. infrastructure, such as the May 2021 ransomware attack that disrupted the operations of Colonial Pipeline, the largest pipeline system for refined oil products in the United States. This attack led to widespread gasoline shortages that affected tens of millions of Americans. Other recent targets include entities in the manufacturing, legal services, insurance, financial services, health care, energy, and food production sectors.

This amended advisory reflects information released by FinCEN in its Financial Trend Analysis Report issued on October 15, 2021, and is part of the Department of the Treasury’s broader efforts to combat ransomware. In particular, this updated advisory identifies new trends and typologies of ransomware and associated payments, including the growing proliferation of anonymity-enhanced cryptocurrencies (AECs) and decentralized mixers.

The updated advisory comes with FinCEN's request that financial institutions reference "CYBER FIN-2021-A004" in SAR field 2 and the narrative, and select SAR field 42 when filing suspicious activity reports on suspicious activity that may be related to ransomware attacks.

11/09/2021

Quarles to resign from Fed Board at end of December

The Federal Reserve Board has announced that Randal K. Quarles has submitted his resignation from the Board, effective at the end of December. He has been a member of the Board since October 13, 2017.

As Vice Chair for Supervision, Quarles oversaw the supervision and regulation of financial firms in the Board's jurisdiction. He served simultaneously as Chair of the Financial Stability Board, or FSB, an international body established by the G20 to ensure the resilience of the global financial system. His three-year term as FSB Chair ends on December 2.

11/09/2021

Reserve Banks release 18 CRA ratings

Our review of the Federal Reserve Board's archives of Community Reinvestment Act evaluation ratings reveals that the Reserve Banks made 18 evaluations public in October.

We congratulate these three banks, whose evaluations received ratings of Outstanding:

The other 15 banks' evaluations were rated Satisfactory.

11/08/2021

SEC names chief of whistleblower office

The Securities and Exchange Commission on Friday announced the appointment of Nicole Creola ("Cree") Kelly as chief of the SEC’s Office of the Whistleblower. Ms. Kelly is currently Senior Special Counsel in the Office of the General Counsel and has more than 20 years of experience with the agency. Among her other roles were counsel to former SEC Chair Mary Jo White, counsel to former SEC Commissioner Kara M. Stein, and stints in the Enforcement Division’s Complex Financial Instruments Unit as well as the Whistleblower Office.

11/05/2021

Administration COVID vax policies announced

The White House has issued a Fact Sheet with the details of two policies to fight COVID-19, both involving vaccination mandates.

The Department of Labor’s Occupational Safety and Health Administration (OSHA) is announcing the details of a requirement for employers with 100 or more employees to ensure each of their workers is fully vaccinated by January 4, 2022, or tests for COVID-19 on at least a weekly basis. The OSHA rule will also require that these employers provide paid-time for employees to get vaccinated, and ensure all unvaccinated workers wear a face mask in the workplace.

The Centers for Medicare & Medicaid Services (CMS) at the Department of Health and Human Services is announcing the details of its requirement that health care workers at facilities participating in Medicare and Medicaid are fully vaccinated, also by January 4. The rule applies to more than 17 million workers at approximately 76,000 health care facilities, including hospitals and long-term care facilities.

11/05/2021

CFPB action to stop false ID name-matching

The CFPB on Thursday announced it has issued an advisory opinion affirming that consumer reporting companies, including tenant and employment screening companies, are violating the law if they engage in shoddy name-matching procedures. Regulators are concerned about the significant harms caused by false identity matching, where an applicant is disqualified from rental housing or a job based on having the same name as another individual with negative information in their credit history.

Specifically, the CFPB affirmed that the practice of matching consumer records solely through the matching of names is illegal under the Fair Credit Reporting Act. The advisory opinion affirms the obligations and requirements of consumer reporting companies, including background screeners, to use reasonable procedures to assure maximum possible accuracy. The agency said it will be working closely with the Federal Trade Commission to root out illegal conduct in the background screening industry. Background screening companies that violate the Fair Credit Reporting Act can be liable for significant civil penalties, restitution for victims, damages, and other relief.

PUBLICATION AND EFFECTIVE DATE UPDATE: Published at 86 FR 62468 on 11/10/2021, and effective upon publication.

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