We recently assessed that the US government is turning its focus to enforcement, working to ensure that firms and financial institutions comply with US law and that facilitators of sanctions evasion and money laundering do not give illicit actors access to the US financial system. The Treasury Department this week imposed sanctions on networks that support illicit actors and sanctioned entities, moving funds for designated oligarchs and supporting illicit trade, while law enforcement agencies have been investigating and prosecuting financial crimes.
- OFAC this week sanctioned a network that supports Iranian petrochemical and petroleum trade. The entities are located in the UAE, Hong Kong, the Marshall Islands, and China, highlighting the US government’s focus on enforcing existing sanctions programs and punishing facilitators.
- Treasury also designated a network of facilitators who have been working to procure military technology for Russia. OFAC sanctioned eight aircraft, 14 individuals, and 28 entities that according to the Treasury press release are linked to two key Kremlin-connected individuals. The family of US-designated oligarch Suleiman Kerimov, as well as a Swiss individual who has been moving funds for his relatives, have also been placed on the SDN list.
- IRS-CI this year opened nearly 50 criminal investigations for possible enforcement actions in its crackdown on sanctions evasion.
The US government’s continued focus on facilitators and sanctions evasion enforcement highlights the importance of recognizing not just risky geographies, but also other factors that can impact business and reputation. Close monitoring of customers and business partners is critical to helping stop sanctions evaders and money launderers from accessing the US financial system, especially as methodologies become more complex. Screening tools, including IP detection, adverse media, and risk scores, coupled with in-depth expert analysis of customers and business partners, can help avoid regulatory and reputational pitfalls.
FiveBy has developed Risk Assessment Services to help US firms and financial institutions access expert analysis that can provide comprehensive investigations into murky entities that may be linked to malign actors or engaged in illicit financial activities. Test drive our Risk Assessment Services now by downloading our newly published, free white paper, and explore our in-depth research into a risky entity.
Compliance and Due Diligence
OFAC this week sanctioned two individuals and one entity under the illicit drugs Executive Order. The Mexican drug cartel, La Nueva Familia Michoacana, traffics rainbow fentanyl into the United States in an effort to attract young users. The original La Familia Michoacana cartel was sanctioned in 2009 under the Kingpin Act. The new and “improved” version is expanding into numerous regions of Mexico and generates revenue from drug trafficking, illicit mining, and extortion.
Treasury this week sanctioned six senior employees of an Iranian state-run media corporation accused of being a “critical tool” in Iran’s suppression and censorship of its people. The Islamic Republic of Iran Broadcasting (IRIB) has been airing hundreds of forced confessions of detainees and interviews with people who were forced to say that their relatives died in accidents, instead of being murdered by Iranian authorities.
OFAC this week sanctioned firms involved in the production and transfer of Iranian unmanned aerial systems (UAS) to Russia. Shahed Aviation Industries Research Center, Success Aviation Services FZC, and I Jet Global DMCC have all been designated for manufacturing and transferring drones to Russia for use against Ukraine. The State Department concurrently designated Russia’s Wagner group and Iran’s Islamic Revolutionary Guard Corps Aerospace Force and Qods Aviation Industries.
Treasury this week also targeted Russian corruption in the Guatemalan mining sector, sanctioning one Russian national and one Belarussian national, and three entities linked to them, for their role in exploiting the sector. The individuals and entities designated today have been exploiting Guatemalan mines since at least 2011, bribing public officials in exchange for support of Russian mining interests.
The EU and the UK this week imposed sanctions on Iran for the violent crackdowns on protesters in the wake of the death of Mahsa Amini. More than 40 individuals and entities, including Iran’s interior minister, have been sanctioned altogether. Those sanctioned by the UK include Iran’s Communications Minister Issa Zarepour and Vahid Mohammad Naser Majid, chief of Iran’s Cyber Police.
The EU this week also imposed chemical weapons-related sanctions on eight Russians accused of being complicit in the poisoning of Alexey Navalny with Novichok two years ago. The EU did not specify how the eight Russians were responsible but said they were involved in the preparation, planning, or execution of the plot. The bloc also sanctioned MHD Nazier Houranieh & Sons and its co-owners for supplying chemical weapons systems to Syria.
Canada imposed sanctions on Iran this week, targeting individuals involved in human rights abuses and companies it accused of supplying Russia with drones for use in Ukraine. Sanctions include two entities: Shahed Aviation Industries and Qods Aviation Industries. Canada also sanctioned Haitian gang leader Jimmy Chérizier (aka Barbecue), citing serious human rights abuses that are causing a humanitarian crisis on the island.
Global independent tank storage company Vopak will require customers to provide a certificate of origin for oil stored at its terminals ahead of the EU sanctions on Russian crude and oil product imports that will take effect next month and in February respectively. The clause will be added to new contracts and when customers renew their agreements and will apply to crude oil and refined products placed in Vopak storage tanks.
The New Jersey woman accused of helping Russian billionaire Oleg Deripaska evade sanctions this week pleaded not guilty to violating sanctions and destroying evidence. Olga Shriki allegedly continued arranging financial transactions for the aluminum magnate after he was sanctioned in 2018 in response to Russia’s meddling in the 2016 US elections. Although Russia denied the allegations, US-designated Wagner head and owner of the Internet Research Agency Evgeniy Prigozhin recently admitted to interfering in US elections and promised to continue to do so.
Outgoing Chinese defense minister Wei Fenghe is expected to restart military dialogue with the United States after military talks halted following House Speaker Nancy Pelosi’s trip to Taiwan earlier this year. One likely challenge to be discussed will involve Wei’s probable successor, Li Shangfu, who was sanctioned in 2018 because of China’s purchase of Russian Su-35 combat jets and S-400 air defense missile systems when he was director of China’s Equipment Development Department.
Chinese memory chip maker YMTC and numerous other Chinese entities may be added to the Bureau of Industry and Security’s (BIS) Entity List as soon as 06 December. The companies were added to the Unverified List on 06 October and had 60 days to allow US officials to conduct site checks before being added to the Entity List.
A congressional advisory panel says the White House should create an interagency committee to develop options and plans for sanctioning China in the event of an increase in Beijing’s hostilities against Taiwan. The conclusion was one of 10 key recommendations made by the United States-China Economic and Security Review Commission (USCC) in an annual report to Congress released this week.
The National Small Business Association is suing the Treasury Department to block the upcoming transparency requirement that will obligate small businesses to register with the government and provide beneficial owner information to counter the criminal abuse of anonymous shell companies. The association argues that the new reporting rule unduly burdens small firms, violates privacy and free speech protections, and infringes on states’ powers to govern businesses.
The international ship registries of Djibouti and the Cook Islands have suspended the flags on five oil tankers, following their designations by the United States this month for having facilitated oil trade for Hizballah and IRGC-QF. Oil tankers Bueno, B Luminosa, Bluefins, and Boceanica were suspended from the Djibouti International Ship Registry, and the Rain Drop was removed from the Cook Islands’ Maritime registry.
Fraud and Abuse
The United States has indicted two Russian nationals accused of operating the ebook piracy site Z-Library. Anton Napolsky and Valeriia Ermakova were arrested in Argentina earlier this month and will be prosecuted for criminal copyright infringement, wire fraud, and money laundering. The Justice Department two weeks ago seized Z-Library’s domain names as part of a criminal investigation, but the site remains operational on the dark web.
Peter Weinzierl—the former chief executive of Meinl Bank, later renamed Anglo Austrian AAB Bank, who is accused of helping launder hundreds of millions of dollars in a scheme involving the use of slush funds to pay bribes to public officials around the world—is asking a UK court to refuse to extradite him to the United States. Weinzierl is accused of being involved in a bribery and money laundering conspiracy involving Brazilian construction company Odebrecht.
Two New York pharmacy owners face 20 years in prison after pleading guilty to a multimillion-dollar Medicare fraud scheme. Arkadiy Khaimov, and Peter Khaim were accused of submitting millions of dollars’ worth of fraudulent Medicare claims and laundering more than $18 million through phony businesses. After collecting on the fake claims, the two laundered the money through shell companies, which would then pay entities in China to disburse the money to the pharmacy owners and others.
A cyber criminal group calling itself the Disneyland Team has been using visually confusing phishing domains that spoof popular bank brands via Punycode—an Internet standard that allows web browsers to render domain names with non-Latin alphabets like Cyrillic. Last year, FiveBy published a white paper on homoglyph domain spoofs, helping clients detect possible fraudulent sites.
Mexico’s anti-money laundering agency has found evidence of corruption by the country’s former attorney general. Jesus Murillo Karam has been jailed since August related to an investigation into the disappearance of 43 students in 2014. Now Mexico’s FIU says Murillo Karam failed to declare roughly $1.36 million in income and that his relatives had an interest in a company that may have benefited from government contracts during his term in office between 2012 and 2015.
The Bangladesh central bank has uncovered multiple instances of trade-based money laundering in the country’s financial sector during a special audit. Some entities laundered money by inflating prices by 20-200 percent above the actual cost of products shipped and opened letters of credit by overstating the price of the goods. The central bank had not monitored under- and over-invoicing in the financial sector recently because of the Covid pandemic and the Ukraine-Russia war.
DEA’s most corrupt agent, Jose Irizarry, is accusing some long-trusted DEA colleagues of skimming millions of dollars from drug money-laundering stings to fund their luxury lifestyles. A prosecutor from Cleveland, Marisa Darden, attended at least one DEA party in Colombia and abruptly backed out of becoming the first Black woman to serve as US Attorney in northern Ohio earlier this year. Another federal prosecutor named by Irizarry was Monique Botero, who was recently promoted to head the narcotics division at the US attorney’s office in Miami.
In the wake of the collapse of FTX last week, UK high street lenders are limiting cryptocurrency transactions, citing increasing scams involving virtual assets. Both Santander UK and Virgin Money have taken action to limit or stop customers from purchasing cryptocurrencies in the coming months.
Sanctioned international organized crime boss, Christopher Kinahan Sr., was working to purchase a fleet of Egyptian military transport planes to facilitate his organization’s drug trade. In 2020, a Dubai company linked to Kinahan, Sea Dream Middle East General Trading LLC, tried to buy as many as nine used de Havilland Canada DHC-5 Buffalos from the Egyptian air force, with Kinahan micromanaging the deal and attempting to strike similar agreements in Africa and Latin America.
US intelligence officials have compiled a classified report detailing extensive efforts to manipulate the US political system by the UAE—a close and trusted partner of the United States. The Emirates worked to exploit vulnerabilities in US governance, including dependence on campaign contributions, susceptibility to powerful lobbying firms, and lax enforcement of disclosure laws that exist to prevent foreign interference in the US political system.