Tag Archives: Rachel Fiorill

FATF “Gray Lists” Turkey, Citing Concerns with Turkey’s Banking and Real Estate Sectors and Potential Terrorism Financing

by H. Christopher Boehning, Jessica Carey, Christopher Frey, Michael Gertzman, Roberto Gonzalez, Brad Karp, Richard Elliott, Rachel Fiorill, and Jacobus Schutte

In a significant move, the Financial Action Task Force (“FATF”), the international anti-money laundering body tasked with developing policies to combat money laundering and terrorism financing, has added Turkey to its list of jurisdictions subject to increased monitoring (also known as the FATF “Gray List”).[1] With the addition of Turkey (as well as, through separate actions, Jordan and Mali), the FATF Gray List now includes 23 countries that FATF has determined to have “strategic deficiencies” in their anti-money laundering (“AML”) and counter-terrorism financing (“CFT”) laws and regulations compared to international best practices and the standards maintained by FATF. [2] Turkey is the largest economy to be included on the Gray List.

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CFTC and FinCEN Impose $100 Million Penalty on BitMEX

by H. Christopher Boehning, Walter Brown, Jessica S. Carey, Manuel S. Frey, Michael E. Gertzman, Mark F. Mendelsohn, Rachel Fiorill, Jacobus J. Schutte, and Bailey K. Williams

On August 10, 2021 the Commodity Futures Trading Commission (CFTC) and the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced $100 million in civil money penalties against BitMEX, a convertible virtual currency (CVC) derivatives exchange, for violations of the Currency Exchange Act (CEA) and the Bank Secrecy Act (BSA).[i] This was FinCEN’s first enforcement action against a futures commission merchant (FCM), and the latest in a series of regulatory enforcement actions in the cryptocurrency space. Continue reading →

OFAC Enforcement Action Against U.S. Payments Company Shows the Importance of Robust Sanctioned Person and Location Screening

by Jessica S. Carey, Christopher D. Frey, Michael E. Gertzman, Roberto J. Gonzalez, Brad S. Karp, Richard S. Elliott, Rachel Fiorill, and Joshua R. Thompson

On July 23, 2021, the U.S. Department of the Treasury’s Office of Assets Control (“OFAC”) announced a $1,400,301 settlement agreement with a New York-based online money transmitter and provider of prepaid access, Payoneer Inc. (“Payoneer”), to resolve 2,260 apparent violations of multiple OFAC sanctions programs.[1] OFAC determined that Payoneer’s sanctions compliance program—in particular its sanctioned person and location screening procedures—had several deficiencies that allowed persons located in sanctioned jurisdictions and persons on OFAC’s Specially Designation Nationals and Blocked Persons List (the “SDN List”) to engage in approximately $802,117 worth of transactions via Payoneer’s services. Continue reading →

United States Imposes Sanctions on Turkey under CAATSA Section 231 for Purchase of Russian Missile System

by H. Christopher Boehning, Jessica S. Carey, Christopher D. Frey, Michael E. Gertzman, Roberto J. Gonzalez, Brad S. Karp, Mark F. Mendelsohn, Richard S. Elliott, Rachel Fiorill, Karen R. King, and Maria E. Eliot

On December 14, 2020, the U.S. imposed sanctions on the Republic of Turkey’s Presidency of Defense Industries (“SSB”) pursuant to Section 231 of the Countering America’s Adversaries Through Sanctions Act (“CAATSA”), which mandates the imposition of sanctions against non-U.S. persons who conduct “significant” transactions with Russia’s defense or intelligence sectors.[1] The U.S. State Department determined that SSB’s acquisition of a Russian S-400 surface-to-air missile from Rosoboronexport (“ROE”) qualified as a significant transaction under Section 231. Continue reading →

OFAC Cites the Use of U.S.-Origin Software and U.S. Network Infrastructure in Reaching a Nearly $8 Million Settlement with a Swiss Commercial Aviation Services Company

by H. Christopher Boehning, Jessica S. Carey, Christopher D. Frey, Michael E. Gertzman, Roberto J. Gonzalez, Brad S. Karp, Rachel M. Fiorill, Karen R. King and Jacob A. Braly

On February 26, 2020, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) announced a $7,829,640 settlement agreement with Geneva-based Société Internationale de Télécommunications Aéronautiques SCRL (“SITA”), to settle its potential civil liability for 9,256 apparent violations of the Global Terrorism Sanctions Regulations (“GTSR”).[1] The case involved the alleged provision of commercial services and software subject to U.S. jurisdiction for the benefit of certain airline customers designated by OFAC as specially designated global terrorists (“SDGTs”) between April 2013 and February 2018.[2] Continue reading →

FinCEN Imposes Its First Penalty on a Bank Compliance Officer for $450,000 for Failing to Prevent AML Violations

On March 4, 2020, the Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) issued a consent order assessing a $450,000 civil money penalty against Michael LaFontaine, a former Chief Operational Risk Officer at U.S. Bank NA (“U.S. Bank”), for his alleged failure to prevent Bank Secrecy Act/anti-money laundering (“BSA/AML”) violations that took place during his tenure.[1] This action—which follows U.S. Bank’s 2018 BSA/AML-related resolution with FinCEN, the U.S. Department of Justice (“DOJ”), the Office of the Comptroller of the Currency (“OCC”) and the Federal Reserve for a combined $613 million in financial penalties—marks the first time FinCEN has imposed a penalty on a bank compliance officer for his role in failing to prevent BSA/AML compliance program failures.[2] Continue reading →

New York DFS Pursues $630 Million Fine Against Bank for Alleged Anti-Money Laundering and Sanctions Compliance Failures

by Brad S. Karp, H. Christopher Boehning, Jessica S. Carey, Michael E. Gertzman, Roberto J. Gonzalez, Richard S. Elliott, Rachel Fiorill and Karen R. King

On August 28, 2017, the New York State Department of Financial Services (“DFS”) announced a “Notice of Hearing and Statement of Charges” that seeks to impose a nearly $630 million civil penalty against Habib Bank Limited and its New York Branch (“the Bank”) based on allegations of persistent Bank Secrecy Act/anti-money laundering (“AML”) and sanctions compliance failures.[1] A hearing is scheduled for September 27, 2017 before Cassandra Lentchner, DFS’s Deputy Superintendent for Compliance. The Bank – the largest bank in Pakistan – has contested DFS’s allegations and indicated that it plans to challenge the penalty and surrender its DFS banking license, thus eliminating its only U.S. branch. DFS also issued two related orders, which (1) expanded the scope of a review of prior transactions for AML and sanctions issues, that was already underway under the terms of an earlier consent order; and (2) outlined the conditions under which the Bank could surrender its DFS banking license, including the retention of a DFS-selected consultant to ensure the orderly wind down of its New York Branch.

The severity of the language and proposed penalty in DFS’s statement of charges reflects the large number and extent of alleged compliance failures at the Bank, which DFS claims persisted for more than a decade, despite agreements with DFS and the Federal Reserve Board of Governors (“Federal Reserve”). According to DFS, these failures are “serious, persistent and apparently affect the entire [Bank] enterprise” and indicate a “dangerous absence of attention by [the Bank’s] senior management for the state of compliance at the New York Branch.”

This enforcement action illustrates that a DFS-regulated institution’s failure to show steady progress in remedying identified concerns can have significant and franchise-threatening consequences. We describe the enforcement action in more detail below, including the numerous compliance failures alleged by DFS. Continue reading →

Compliance and Enforcement