On Friday, OFAC added:

to their sanctions on Venezuela.

And the Treasury Department issued the following press release:

as did the State Department:

Links:

OFAC Notice

Treasury Press Release

State Department Press Release

On Friday, UK regulators renewed the Final Designation under the Terrorism Asset-Freezing etc Act 2010 (TAFA):

KHALED, Mohammed Fawaz

Date of Renewal of Final Designation 23/04/2019

a.k.a: (1) ABBAS, Adam, Del, Toro (2) ALHARETH, Abo (3) FAWAZ, Khaled (4) HAMAWI, Abu (5) HAMWI, Abu (6) HARES, Abu (7) HARETH, Abu (8) KHALED, Abu (9) NAEEM, Mohammed, Fawaz.

DOB: (1) 06/06/1969. (2) 06/06/1967. POB: Hama, Syria. Nationality: Syrian. Passport Details: 2255278 (Syria). Address: Turkey.

Other Information: Address: Formerly London, United Kingdom, W12. UK listing only. KHALED is assessed to have left the UK and travelled to Syria to engage in Islamist extremist activities on behalf of ISIL. It is assessed that he is now in Turkey.

Listed on: 09/05/2013

Last Updated: 23/04/2019 Group ID: 12872.

for another year.

Link:

OFSI Notice

Myanmar/Burma: Council prolongs sanctions
	On 29 April, the Council prolonged the restrictive measures in place on Myanmar/Burma for one year, until 30 April 2020. The sanctions regime includes an embargo on arms and equipment that can be used for internal repression, an export ban of dual-use goods for use by the military and border guard police, and export restrictions of equipment for monitoring communications that might be used for internal repression. It also prohibits the provision of military training to and military cooperation with the Myanmar Armed Forces (Tatmadaw). The prolongation also covers targeted restrictive measures on 14 individuals for serious human rights violations, or association with such violations, committed against the Rohingya population, ethnic minority villagers or civilians in Rakhine, Kachin and Shan States. These individuals are high-ranking officials from the Myanmar Armed Forces (Tatmadaw) and the border guard police. The Council last adopted conclusions on Myanmar on 10 December 2018, expressing deep concern over the findings of the independent international fact-finding mission (FFM) of the UN Human Rights Council which concluded that gross human rights violations were committed in Kachin, Rakhine and Shan States, in particular by the Myanmar Armed Forces (Tatmadaw). The Council called upon the Government of Myanmar/Burma to take, without further delay, meaningful action and to make progress in all areas of concern set out in its previous conclusions of 26 February 2018. The legal acts were adopted by the Council by written procedure. They will be published in the Official Journal of 30 April 2019.

Link:

EU Notice

Publication of Foreign Interference in U.S. Elections Sanctions Regulations

Links:

OFAC Notice

Foreign Interference in U.S. Elections Sanctions Regulations

Important Technical Notice for Users of the OFAC Website and Sanctions List Data Files

Link:

OFAC Technical Notice

On Wednesday, UK regulators implemented Council Implemented Regulation (EU) 2019/672 by amending the following individual designations under the Burma sanctions program:

1. SOE Khin Maung

Title: Brigadier General DOB: –/–/1972. Position: Commander of the 15th Light Infantry Division of the Myanmar Armed Forces (Tatmadaw) Commander of the Military Operation Command 15, also sometimes known as the 15th Light Infantry Division, of the Myanmar Armed Forces (Tatmadaw), under which Infantry Battalion No 564 falls. Listed on: 26/06/2018 Last Updated: 13/08/2018 01/05/2019 Group ID: 13689.

2. LWIN Thura San

Title: Brigadier General DOB: –/–/1957 17/03/1959. Other Information: Brigadier General Thura San Lwin was the Commander of the Border Guard Police from October 2016 until early October 2017. Listed on: 26/06/2018 Last Updated: 26/06/2018 01/05/2019 Group ID: 13692.

Links:

OFSI Notice

Council Implementing Regulation (EU) 2019/672

From Treasury:

The first section of the document is broken down into 5 sections: Management Commitment, Risk Assessment, Internal Controls, Testing and Auditing, and Training. the second section discusses why programs are either inherently deficient or break down.

Mr. Watchlist will post each section of the document as separate blog posts over the next few days/weeks.

Link:

OFAC Notice

A Framework for OFAC Compliance Commitments

Treasury Press Release

Yesterday, both Swiss and UK regulators added one individual to their counter terrorism sanctions lists.

The OFSI listing, made under the auspices of the United Nations and European Union Financial Sanctions (Linking) Regulations:

ALVI Mohammed Masood Azhar

DOB: (1) 10/07/1968. (2) 10/06/1968. POB: Bahawalpur, Punjab Province, Pakistan a.k.a: (1) AZHAR, Masud (2) ESAH, Wali, Adam (3) ISAH, Wali, Adam Nationality: Pakistan Other Information: UN Ref: QDi.422. Founder of Jaish-i-Mohammed (QDe.019). Former leader of Harakat ul-Mujahidin / HUM (QDe.008). (Listing to be treated as temporary for 30 days from the date of listing by the UN or until the EU adds the new listing to an existing sanctions regulation (whichever is sooner) in accordance with Policing and Crime Act 2017). Listed on: 02/05/2019 Last Updated: 02/05/2019 Group ID: 13787.

The SECO listing:

SSID: 10-40477 Foreign identifier: QDi.422 Name: Mohammed Masood Azhar Alvi

DOB: a) 10 Jul 1968 b) 10 Jun 1968 POB: Bahawalpur, Punjab Province, Pakistan Low quality a.k.a.: a) Masud Azhar b) Wali Adam Isah c) Wali Adam Esah Nationality: Pakistan Relation: a) Founder of Jaish-i-Mohammed (QE.J.19.01., SSID 10-17591) b) Former leader of Harakat ul-Mujahidin / HUM (QE.H.8.01., SSID 10-17478) Other information: Founder of Jaish-i-Mohammed (QDe.019). Former leader of Harakat ul-Mujahidin / HUM (QDe.008). INTERPOL-UN Security Council Special Notice web link available. Modifications: Listed on 1 May 2019

and here is the UN’s version:

QDi.422 Name: 1: MOHAMMED 2: MASOOD 3: AZHAR 4: ALVI
Name (original script): محمد مسعود اظہر علوی
Title: na Designation: na DOB: a) 10 Jul. 1968 b) 10 Jun. 1968POB: Bahawalpur, Punjab Province, Pakistan Good quality a.k.a.: na Low quality a.k.a.: a) Masud Azhar b) Wali Adam Isah c) Wali Adam EsahNationality: Pakistan Passport no: na National identification no: naAddress: na Listed on: 1 May 2019 Other information: Founder of Jaish-i-Mohammed (QDe.019). Former leader of Harakat ul-Mujahidin / HUM (QDe.008). INTERPOL-UN Security Council Special Notice web link: https://www.interpol.int/en/notice/search/un/xxxx.

Links:

SECO data files of updates – PDF, XML

OFSI Notice

UN Press Release

Circular to Licensed Corporations and Associated Entities

Anti-Money Laundering / Counter-Financing of Terrorism

Early Alert on United Nations Sanctions

The sanctions committee of the United Nations Security Council (“UNSC”) which administers the sanctions regime for ISIL (Da’esh) and Al-Qaida added one individual to and amended the details of 73 individuals and seven entities on its sanctions list ^{Note 1, 2} on 1 May 2019 (New York time).  Please refer to the relevant press releases issued by the UNSC in Attachment 1.

Licensed corporations (“LCs”) and associated entities (“AEs”) should update their screening databases with the above changes made by the UNSC sanctions committee for sanctions screening of customers and payments.  LCs and AEs are reminded to refer to our circular on United Nations Sanctions issued on 7 February 2018 ^{Note 3} which sets out our expectations on actions that LCs and AEs should take regarding sanctions imposed by the UNSC.

Should you have any queries regarding the contents of this circular, please contact Ms Kiki Wong at 2231 1569 who will assist to refer your queries to the relevant officer.

Intermediaries Supervision Department
Intermediaries Division
Securities and Futures Commission

Enclosure

End

SFO/IS/022/2019

Links:

HK SFC Notice

HK SFC Circular

UN Web Notices (Attachment 1)

Commerce and Economic Development Bureau List (Attachment 2)

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) administers and enforces U.S. economic and trade sanctions programs against targeted foreign governments, individuals, groups, and entities in accordance with national security and foreign policy goals and objectives.

OFAC strongly encourages organizations subject to U.S. jurisdiction, as well as foreign entities that conduct business in or with the United States, U.S. persons, or using U.S.-origin goods or services, to employ a risk-based approach to sanctions compliance by developing, implementing, and routinely updating a sanctions compliance program (SCP). While each risk-based SCP will vary depending on a variety of factors—including the company’s size and sophistication, products and services, customers and counterparties, and geographic locations—each program should be predicated on and incorporate at least five essential components of compliance: (1) management commitment; (2) risk assessment; (3) internal controls; (4) testing and auditing; and (5) training.

If after conducting an investigation and determining that a civil monetary penalty (“CMP”) is the appropriate administrative action in response to an apparent violation, the Office of Compliance and Enforcement (OCE) will determine which of the following or other elements should be incorporated into the subject person’s SCP as part of any accompanying settlement agreement, as appropriate. As in all enforcement cases, OFAC will evaluate a subject person’s SCP in a manner consistent with the Economic Sanctions Enforcement Guidelines (the “Guidelines”).

When applying the Guidelines to a given factual situation, OFAC will consider favorably subject persons that had effective SCPs at the time of an apparent violation. For example, under General Factor E (compliance program), OFAC may consider the existence, nature, and adequacy of an SCP, and when appropriate, may mitigate a CMP on that basis. Subject persons that have implemented effective SCPs that are predicated on the five essential components of compliance may also benefit from further mitigation of a CMP pursuant to General Factor F (remedial response) when the SCP results in remedial steps being taken.

Finally, OFAC may, in appropriate cases, consider the existence of an effective SCP at the time of an apparent violation as a factor in its analysis as to whether a case is deemed “egregious.”

This document is intended to provide organizations with a framework for the five essential components of a risk-based SCP, and contains an appendix outlining several of the root causes that have led to apparent violations of the sanctions programs that OFAC administers. OFAC recommends all organizations subject to U.S. jurisdiction review the settlements published by OFAC to reassess and enhance their respective SCPs, when and as appropriate.

Links:

HK SFC Notice

HK SFC Circular

United Nations Press Releases (Attachment 1)

Commerce and Economic Development Bureau List (Attachment 2)

MID-SHIP, a firm out of Port Washington, NY is settling 5 apparent non-self disclosed, egregious violations of the Weapons of Mass Destruction Proliferators Sanctions Regulations for $871,837. That represents almost double the value ($472,861) of the 5 funds transfers the company processed that involved blocked vessels on the SDN List.

This final figure is a significant reduction from the base penalty of $1,490,320, which was also the statutory maximum.

Here’s what happened, subsequent to OFAC’s designation in September 2008 of over 100 IRISL vessels – OFAC notes that the designations included the vessels’ IMO (Internatonal Maritime Organization) numbers:

In February and April 2010, MID-SHIP’s subsidiaries located in China and Turkey negotiated three charter party agreements between multiple third parties regarding the transportation of goods from foreign ports to other foreign ports. These parties ultimately nominated two separate IRISL vessels — the M/V Haadi and the M/V Adrian — as the performing vessels for the respective charter party agreements. MID-SHIP was in possession of multiple documents identifying the vessels by their respective IMO numbers and connecting the vessels to Iran, and both vessels were publicly identified by name and IMO number on the SDN List by the time MID-SHIP processed the electronic funds transfers constituting the apparent violations.

MID-SHIP’s culture of compliance appears to have been deficient at the time of the apparent violations. For example, in one instance, a MID-SHIP senior manager discussed receiving an electronic funds transfer in a non-U.S. Dollar currency from a third party after learning a financial institution was holding the payment due to the inclusion of a vessel name included in the remittance field. MID-SHIP managerial personnel were also aware that financial institutions had rejected at least two payments for “administrative reasons,” “security reasons,” or “compliance issues.”

Here is OFAC’s retelling of the General Factors contributing to the final settlement amount:

OFAC considered the following to be aggravating factors:

(1) MID-SHIP demonstrated reckless disregard for its obligations to comply with U.S. economic and trade sanctions;

(2) MID-SHIP managers knew of, and participated in, the conduct giving rise to the apparent violations;

(3) MID-SHIP’s conduct harmed the integrity of the WMDPSR and its related policy objectives by conferring economic benefit to, and dealing in the services of, IRISL; and

(4) MID-SHIP is a global, commercially sophisticated shipping and logistics company that operates in a high-risk industry.

OFAC considered the following to be mitigating factors:

(1) MID-SHIP has not received a Penalty Notice or Finding of Violation from OFAC in the five years preceding the earliest date of the transactions giving rise to the apparent violations, and the transactions constituting the apparent violations account for exactly 0.05 percent of MID-SHIP’s total transactional history during the relevant time period;

(2) MID-SHIP represents that it undertook remedial measures to improve its compliance with U.S. economic and trade sanctions programs, including by taking the following measures:

(a) appointing an OFAC Compliance Officer,

(b) providing training regarding U.S. sanctions to employees,

(c) regularly publishing OFAC compliance statements to all MID-SHIP offices, directing personnel to be vigilant in ascertaining the complete ownership chain and interests of vessels being negotiated by MID-SHIP brokers and to ensure vessels and entities involved in transactions are not listed on the SDN List,

(d) instructing all MID-SHIP shipbrokers to take appropriate measures to include an OFAC compliance clause or clauses in each charter party negotiated by a MID-SHIP shipbroker,

(e) screening every vessel and party to a wire transfer against OFAC’s SDN List, and

(f) ceasing the processing of a transaction relating to a vessel or party identified on the SDN List and providing a report to MID-SHIP’s OFAC Compliance Officer for further action; and

(3) MID-SHIP cooperated with OFAC during its investigation, including by entering into multiple tolling agreements with OFAC, tolling the statute of limitations for 1,231 days.

And OFAC’s lesson to be learned?

This case illustrates the benefits companies operating in high-risk industries (e.g., international shipping and logistics) can realize by implementing risk-based compliance measures, especially when engaging in transactions involving high-risk exposure to jurisdictions or persons

implicated by U.S. sanctions. Furthermore, this case also illustrates the benefits that companies engaging in international transactions can realize by developing and maintaining a culture of compliance where senior management sets a positive example of compliance and encourages staff to comply with the law. Companies engaging in international transactions should take note of and respond accordingly to sanctions-related warning signs, such as payments that are blocked or rejected by financial institutions for compliance or U.S. economic and trade sanctions purposes.

The OFAC Notice, and the Enforcement Information also include links to the Settlement Agreement, which will contain more detail. If I were in the shipping industry, or had a thriving Letter of Credit business, or a maritime insurance business, I would read that carefully.

Links:

OFAC Enforcement Information

Settlement Agreement

MANAGEMENT COMMITMENT

Senior Management’s commitment to, and support of, an organization’s risk-based SCP is one of the most important factors in determining its success. This support is essential in ensuring the SCP receives adequate resources and is fully integrated into the organization’s daily operations, and also helps legitimize the program, empower its personnel, and foster a culture of compliance throughout the organization.

General Aspects of an SCP: Senior Management Commitment

Senior management commitment to supporting an organization’s SCP is a critical factor in determining the success of the SCP. Effective management support includes the provision of adequate resources to the compliance unit(s) and support for compliance personnel’s authority within an organization. The term “senior management” may differ among various organizations, but typically the term should include senior leadership, executives, and/or the board of directors.

I. Senior management has reviewed and approved the organization’s SCP.

II. Senior management ensures that its compliance unit(s) is/are delegated sufficient authority and autonomy to deploy its policies and procedures in a manner that effectively controls the organization’s OFAC risk. As part of this effort, senior management ensures the existence of direct reporting lines between the SCP function and senior management, including routine and periodic meetings between these two elements of the organization.

III. Senior management has taken, and will continue to take, steps to ensure that the organization’s compliance unit(s) receive adequate resources—including in the form of human capital, expertise, information technology, and other resources, as appropriate—that are relative to the organization’s breadth of operations, target and secondary markets, and other factors affecting its overall risk profile.

These efforts could generally be measured by the following criteria:

A. The organization has appointed a dedicated OFAC sanctions compliance officer;

B. The quality and experience of the personnel dedicated to the SCP, including: (i) the technical knowledge and expertise of these personnel with respect to OFAC’s regulations, processes, and actions; (ii) the ability of these personnel to understand complex financial and commercial activities, apply their knowledge of OFAC to these items, and identify OFAC-related issues, risks, and prohibited activities; and (iii) the efforts to ensure that personnel dedicated to the SCP have sufficient experience and an appropriate position within the organization, and are an integral component to the organization’s success; and

C. Sufficient control functions exist that support the organization’s SCP—including but not limited to information technology software and systems—that adequately address the organization’s OFAC-risk assessment and levels.

IV. Senior management promotes a “culture of compliance” throughout the organization.

These efforts could generally be measured by the following criteria:

A. The ability of personnel to report sanctions related misconduct by the organization or its personnel to senior management without fear of reprisal.

B. Seniormanagementmessagesandtakesactionsthatdiscouragemisconductand prohibited activities, and highlight the potential repercussions of non-compliance with OFAC sanctions; and

C. The ability of the SCP to have oversight over the actions of the entire organization, including but not limited to senior management, for the purposes of compliance with OFAC sanctions.

V. Senior management demonstrates recognition of the seriousness of apparent violations of the laws and regulations administered by OFAC, or malfunctions, deficiencies, or failures by the organization and its personnel to comply with the SCP’s policies and procedures, and implements necessary measures to reduce the occurrence of apparent violations in the future. Such measures should address the root causes of past apparent violations and represent systemic solutions whenever possible.

Press Releases

Link:

HKMA Notice

On Friday, Canadian officials added:

QDi.422 Name: 1: MOHAMMED 2: MASOOD 3: AZHAR 4: ALVI
Name (original script): محمد مسعود اظہر علوی
Title: na Designation: na DOB: a) 10 Jul. 1968 b) 10 Jun. 1968POB: Bahawalpur, Punjab Province, Pakistan Good quality a.k.a.: na Low quality a.k.a.: a) Masud Azhar b) Wali Adam Isah c) Wali Adam EsahNationality: Pakistan Passport no: na National identification no: naAddress: na Listed on: 1 May 2019 Other information: Founder of Jaish-i-Mohammed (QDe.019). Former leader of Harakat ul-Mujahidin / HUM (QDe.008). INTERPOL-UN Security Council Special Notice web link: https://www.interpol.int/en/notice/search/un/xxxx.

to their counter terrorism sanctions, after his addition by the United Nations ISIL (Da’esh) and Al-Qaida Sanctions Committee.

And Australian regulators followed suit on Monday.

Links:

OSFI Notice

UN Notice – HTML (OSFI), PDF (DFAT)

Updated FinCEN Advisory Warns Against Continued Corrupt Venezuelan Attempts to Steal, Hide, or Launder Money 

Contact

Public Affairs, 703-905-3770

Immediate Release

May 03, 2019

WASHINGTON—The Financial Crimes Enforcement Network (FinCEN) today issued an updated advisory to alert financial institutions of continued widespread public corruption in Venezuela and the methods Venezuelan senior political figures and their associates may use to move and hide proceeds of their corruption. In addition to outlining the corrupt looting of Venezuela’s government-sponsored food distribution program, the advisory provides and updates a number of financial red flags to assist in identifying and reporting suspicious activity that may be indicative of corruption. 

“Corrupt Maduro insiders continue to seek illicit revenue streams, even as the Venezuelan people and economy sink deeper into despair. We are alerting financial institutions that the Maduro regime is using sophisticated schemes, including the diversion of humanitarian assistance, to evade sanctions and maintain its grip on power,” said Sigal Mandelker, Under Secretary of the Treasury for Terrorism and Financial Intelligence. “The international financial community must be vigilant to prevent exploitation by corrupt regime insiders and their enablers, including front companies and foreign financial institutions that continue to prop up this illegitimate regime.”

“The Venezuelan people are being preyed upon by the illegitimate Maduro regime and their allies and acolytes, who are starving the Venezuelan people, depriving them of medical care, and using them as tools to support the regime’s thirst for money and power,” said FinCEN Director Kenneth A. Blanco. “The Venezuelan people are suffering an epic tragedy the proportions of which are rarely, if ever, seen in the Western hemisphere because of the greed and corruption by the illegitimate Maduro regime. The United States will not allow our financial system to be abused for the benefit of foreign kleptocrats trying to stash their secret fortunes and buy homes, yachts, and airplanes in the United States and create ever more wealth for the Maduro regime’s inhumane purposes. This money rightfully belongs to the people of Venezuela. FinCEN and its financial institution partners will continue to work together to cut off the flow of dirty money.”

On January 23, 2019, the United States recognized the President of the Venezuelan National Assembly, Juan Guaidó, as the Interim President of Venezuela and the legitimate leader of the Venezuelan people. The illegitimate regime of former Venezuelan president Nicolas Maduro has engaged in massive corruption through state-owned enterprises and offshore third parties. In recent years, financial institutions have reported increased activity with suspected links to Venezuelan public corruption, including government contracts. 

FinCEN is warning of the misuse of Venezuela’s government-sponsored food distribution program called Los Comités Locales de Abastecimiento y Producción (“Local Supply and Production Committees”) which is commonly referred to as the “CLAP program.” CLAP was created in 2016 for the publicly stated purpose of providing subsidized food rations to Venezuelan citizens. The illegitimate former Maduro regime is using the CLAP program to provide subsidized food to its supporters, withhold food from ordinary Venezuelan citizens and those critical of the regime, and enrich corrupt regime insiders and their allies through embezzlement, price manipulation, and trade-based money laundering schemes using front and shell companies. 

The Maduro regime also has experimented with the use of digital currency to circumvent sanctions and generate revenue. It has developed a digital currency called the “petro” and reportedly continues to develop new tokens. In 2018, the Russian bank Evrofinance Mosnarbank emerged as the primary international financial institution willing to finance the petro. In March of 2019, Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Evrofinance Mosnarbank for materially assisting, sponsoring, or providing financial, material, or technological support for, or goods or services to or in support of, Petroleos de Venezuela S.A. (PdVSA). Financial institutions are reminded that Executive Order (E.O.) 13827 prohibits U.S. persons from any involvement in the petro digital currency.

Financial institutions should take risk-based steps to identify and limit any exposure they may have to funds and other assets associated with Venezuelan public corruption fueled by the Maduro regime. However, financial institutions should be aware that normal business and other transactions involving Venezuelan nationals and businesses do not necessarily represent the same risk as transactions and relationships identified as being connected to the former Venezuelan regime.

What is different in this version of the advisory?

These updates to the 2017 Venezuela Advisory primarily:

(1) renew the description of public corruption in Venezuela;

(2) add information regarding example U.S. Government actions;

(3) describe how corrupt Venezuelan senior political figures exploit a Venezuelan government- administered food program by directing overvalued, no-bid contracts to co-conspirators that use an over-invoicing trade-based money laundering (TBML) scheme that can involve (i) front4 or shell5 companies to layer and obfuscate financial transactions; (ii) non-dollar denominated accounts; and (iii) nested accounts in an attempt to evade sanctions and anti- money laundering and countering the financing of terrorism (AML/CFT) controls;

(4) highlight the attempt to use digital assets, specifically digital currency, to evade sanctions and AML/CFT controls by the corrupt illegitimate regime of Nicolas Maduro; and

(5) provide revised financial red flags to assist in identifying and reporting to FinCEN suspicious activity that may be indicative of corruption by Venezuelan senior political figures, including (i) the abuse of Venezuelan government contracts, particularly those from non-official Venezuelan government accounts located in jurisdictions outside Venezuela and (ii) transactions for the purchase of high value assets, such as aircraft and real estate6 that are not commensurate with the official salaries of the corrupt Venezuelan senior political figures making the purchase.

Links:

FinCEN Notice

FinCEN Advisory

1 Preface

1.1 The Monetary Authority of Singapore (MAS) is introducing a Notice to variable capital companies (VCCs) on anti-money laundering and countering the financing of terrorism (AML/CFT). The proposed VCC AML/CFT Notice is attached as Annex B of this consultation paper. These requirements draw reference from international best practices and the Standards set by the Financial Action Task Force (FATF), the global standard-setter for measures to combat money laundering (ML), terrorism financing (TF), and proliferation of financing.

1.2 MAS invites comments from prospective VCCs and their managers1, eligible financial institutions2, and any other interested parties on the proposed VCC AML/CFT Notice.

Please note that all submissions received will be published and attributed to the respective respondents unless they expressly request MAS not to do so. As such, if respondents would like:

(i) their whole submission or part of it (but not their identity), or

(ii) their identity along with their whole submission,

to be kept confidential, please expressly state so in the submission to MAS. MAS will only publish non-anonymous submissions. In addition, MAS reserves the right not to publish any submission received where MAS considers it not in the public interest to do so, such as where the submission appears to be libellous or offensive.

What is a Variable Capital Company?

The VCC Act was passed by Parliament on 1 October 2018, introducing a new corporate structure in Singapore that is designed for collective investment schemes (CISes). The Registrar of Companies, the Accounting and Corporate Regulatory Authority (ACRA), will be the Registrar for VCCs. ACRA will administer the VCC Act and subsidiary legislation while AML/CFT obligations of VCCs under the proposed VCC AML/CFT Notice will come under the purview of MAS.

And the notice contains the due date (May 30th), the email reply address and a suggested reply format.

Link:

MAS Consultation Paper

RISK ASSESSMENT

Risks in sanctions compliance are potential threats or vulnerabilities that, if ignored or not properly handled, can lead to violations of OFAC’s regulations and negatively affect an organization’s reputation and business. OFAC recommends that organizations take a risk-based approach when designing or updating an SCP. One of the central tenets of this approach is for organizations to conduct a routine, and if appropriate, ongoing “risk assessment” for the purposes of identifying potential OFAC issues they are likely to encounter. As described in detail below, the results of a risk assessment are integral in informing the SCP’s policies, procedures, internal controls, and training in order to mitigate such risks.

While there is no “one-size-fits all” risk assessment, the exercise should generally consist of a holistic review of the organization from top-to-bottom and assess its touchpoints to the outside world. This process allows the organization to identify potential areas in which it may, directly or indirectly, engage with OFAC-prohibited persons, parties, countries, or regions. For example, an organization’s SCP may conduct an assessment of the following: (i) customers, supply chain, intermediaries, and counter-parties; (ii) the products and services it offers, including how and where such items fit into other financial or commercial products, services, networks, or systems; and (iii) the geographic locations of the organization, as well as its customers, supply chain, intermediaries, and counter-parties. Risk assessments and sanctions-related due diligence is also important during mergers and acquisitions, particularly in scenarios involving non-U.S. companies or corporations.

General Aspects of an SCP: Conducting a Sanctions Risk Assessment

A fundamental element of a sound SCP is the assessment of specific clients, products, services, and geographic locations in order to determine potential OFAC sanctions risk. The purpose of a risk assessment is to identify inherent risks in order to inform risk-based decisions and controls. The Annex to Appendix A to 31 C.F.R. Part 501, OFAC’s Economic Sanctions Enforcement Guidelines, provides an OFAC Risk Matrix that may be used by financial institutions or other entities to evaluate their compliance programs:

I. The organization conducts, or will conduct, an OFAC risk assessment in a manner, and with a frequency, that adequately accounts for the potential risks. Such risks could be posed by its clients and customers, products, services, supply chain, intermediaries, counter-parties, transactions, and geographic locations, depending on the nature of the organization. As appropriate, the risk assessment will be updated to account for the root causes of any apparent violations or systemic deficiencies identified by the organization during the routine course of business.

A. In assessing its OFAC risk, organizations should leverage existing information to inform the process. In turn, the risk assessment will generally inform the extent of the due diligence efforts at various points in a relationship or in a transaction. This may include:

1. On-boarding: The organization develops a sanctions risk rating for customers, customer groups, or account relationships, as appropriate, by leveraging information provided by the customer (for example, through a Know Your Customer or Customer Due Diligence process) and independent research conducted by the organization at the initiation of the customer relationship. This information will guide the timing and scope of future due diligence efforts. Important elements to consider in determining the sanctions risk rating can be found in OFAC’s risk matrices. [insert hyperlink]

2. Mergers and Acquisitions (M&A): As noted above, proper risk assessments should include and encompass a variety of factors and data points for each organization. One of the multitude of areas organizations should include in their risk assessments—which, in recent years, appears to have presented numerous challenges with respect to OFAC sanctions—are mergers and acquisitions. Compliance functions should also be integrated into the merger, acquisition, and integration process. Whether in an advisory capacity or as a participant, the organization engages in appropriate due diligence to ensure that sanctions-related issues are identified, escalated to the relevant senior levels, addressed prior to the conclusion of any transaction, and incorporated into the organization’s risk assessment process. After an M&A transaction is completed, the organization’s Audit and Testing function will be critical to identifying any additional sanctions-related issues.

II. The organization has developed a methodology to identify, analyze, and address the particular risks it identifies. As appropriate, the risk assessment will be updated to account for the conduct and root causes of any apparent violations or systemic deficiencies identified by the organization during the routine course of business, for example, through a testing or audit function.

Circular to Licensed Corporations and Associated Entities

Anti-Money Laundering / Counter-Financing of Terrorism

(1)  United Nations (Anti-Terrorism Measures) Ordinance

(2)  United Nations Sanctions (ISIL and Al-Qaida) Regulation

(1)  United Nations (Anti-Terrorism Measures) Ordinance 

Further to our circular issued on 16 April 2019, an updated list specifying terrorists and terrorist associates designated by the United Nations Security Council (“UNSC”) was published under section 4 of the United Nations (Anti-Terrorism Measures) Ordinance (“the UNATMO”) (Cap. 575) in the Gazette (G.N. (E.) 22 of 2019) on 18 April 2019.  A relevant press release issued by the UNSC, reflecting the updates since the previous list was published in the Gazette (G.N. (E.) 21 of 2019), is attached in Attachment 1 ^{Note 1}.

The aforesaid list can be found on the Government’s website (https://www.gld.gov.hk/egazette/pdf/20192322e/egn2019232222.pdf).

(2)  United Nations Sanctions (ISIL and Al-Qaida) Regulation 

Further to our circular issued on 16 April 2019, an updated list specifying “individuals, groups, undertakings and entities” was published under section 25 of the United Nations Sanctions (ISIL and Al-Qaida) Regulation (Cap. 537CB) on the website of the Commerce and Economic Development Bureau on 18 April 2019. A relevant press release issued by the UNSC, reflecting the updates since the previous list was published on the website of the Commerce and Economic Development Bureau, is attached in Attachment 1 ^{Note 1}.

The aforesaid list obtained from the website of the Commerce and Economic Development Bureau is attached in Attachment 2.

Licensed corporations (“LCs”) and associated entities (“AEs”) are reminded to refer to Chapter 6 of the Guideline on Anti-Money Laundering and Counter-Financing of Terrorism (For Licensed Corporations) (“AML Guideline”) which contains guidance on the appropriate measures that LCs and AEs should take to ensure compliance with the regulations made under the UNATMO (Cap. 575) and the United Nations Sanctions Ordinance (Cap.537) ^{Note 2}.  The Securities and Futures Commission expects all new designations to be screened by LCs and AEs against their client lists as soon as practicable whenever there are updates.  LCs and AEs are also reminded to report any transactions or relationships they have or have had with any designated person or entity to the Joint Financial Intelligence Unit.

Should you have any queries regarding the contents of this circular, please contact Ms Kiki Wong at 2231 1569 who will assist to refer your queries to the relevant officer.

Intermediaries Supervision Department
Intermediaries Division
Securities and Futures Commission

Enclosure

End

SFO/IS/019/2019

Links:

HK SFC Notice

HK SFC Circular

UN Press Release (Attachment 1)

Commerce and Economic Development Bureau list (Attachment 2)

On Wednesday, President Trump issued a new Iran sanctions Executive Order, which says, in part, the following:

Section 1. (a) All property and interests in property that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of any United States person of the following persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in: any person determined by the Secretary of the Treasury, in consultation with the Secretary of State:

(i) to be operating in the iron, steel, aluminum, or copper sector of Iran, or to be a person that owns, controls, or operates an entity that is part of the iron, steel, aluminum, or copper sector of Iran;

(ii) to have knowingly engaged, on or after the date

of this order, in a significant transaction for the sale,

supply, or transfer to Iran of significant goods or services used in connection with the iron, steel, aluminum, or copper sectors of Iran;

(iii) to have knowingly engaged, on or after the date of this order, in a significant transaction for the purchase, acquisition, sale, transport, or marketing of iron, iron products, aluminum, aluminum products, steel, steel products, copper, or copper products from Iran;

(iv) to have materially assisted, sponsored, or

provided financial, material, or technological support for, or goods or services in support of any person whose property and interests in property are blocked pursuant to this section; or

(v) to be owned or controlled by, or to have acted or purported to act for or on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to this section.

…

Sec. 2. (a) The Secretary of the Treasury, in consultation with the Secretary of State, is hereby authorized to impose on a foreign financial institution the sanctions described in subsection (b) of this section upon determining that the foreign financial institution has, on or after the date of this order,

knowingly conducted or facilitated any significant financial transaction:

(i) for the sale, supply, or transfer to Iran of

significant goods or services used in connection with the iron, steel, aluminum, or copper sectors of Iran;

(ii) for the purchase, acquisition, sale, transport, or marketing of iron, iron products, aluminum, aluminum products, steel, steel products, copper, or copper products from Iran; or

(iii) for or on behalf of any person whose property and interests in property are blocked pursuant to this order.

(b) With respect to any foreign financial institution

determined by the Secretary of the Treasury in accordance with this section to meet any of the criteria set forth in subsection (a)(i) through (a)(iii) of this section, the Secretary of the Treasury may prohibit the opening, and prohibit or impose strict

conditions on maintaining, in the United States of a

correspondent account or payable-through account by such foreign financial institution.

And there are new FAQs:

Frequently Asked Questions Regarding Executive Order (E.O.) “Imposing Sanctions with Respect to the Iron, Steel, Aluminum, and Copper Sectors of Iran” of May 8, 2019

Mr. Watchlist is kind of speechless… if someone sees a way that this ends well – especially long-term – please enlighten me.

Links:

OFAC Notice

Executive Order

New FAQs