International Regulation and Compliance’s Post

From Foley Hoag LLP: This blog post examines the key areas where we anticipate regulatory rollbacks, as well as the potential expansion of enforcement in other domains like sanctions and foreign investment reviews. #sec #cftc #cfius #enforcementtrends #trumpadministration

Interesting read and verdict. You cannot sanction a smart contract, OFAC, as much as you would want it. Read here - https://lnkd.in/eHsuxVtb and h/t JP Koning for pointing it out.

Yesterday, the U.S. Court of Appeals for the Fifth Circuit ruled that the U.S. TREASURY, UNITED STATES DEPT OF overstepped its authority when it sanctioned Tornado Cash's immutable smart contracts in 2022. This was the right decision. While OFAC's concerns with illicit foreign actors laundering funds are absolutely legitimate, Tornado Cash's open-source, self executing software is simply not sanctionable. Despite sanctions, the code continued to function because it was not under the control of individuals or entities and continued to self execute. So, the code was clearly not the “property” of a foreign national or entity, and restricting this privacy tool for legitimate use is overreach. Bad actors use the internet, too, but the right policy is not to turn off, restrict or sanction the internet. Rather, authorities should rigorously police illicit activities and absolutely hold individuals, institutions and rogue states accountable for their nefarious behaviors. But, leave the self-executing, decentralized and open source code alone. https://lnkd.in/ezXZHenC

The Department of the Treasury's Office of Foreign Assets Control (OFAC) issued Russia-related General License 109, "Authorizing the Wind Down of Transactions Involving Certain Entities Blocked on September 13, 2024" and Russia-related General License 25F, "Authorizing Transactions Related to Telecommunications and Certain Internet-Based Communications." OFAC also published an updated, Russia-related Frequently Asked Question (FAQ 1040). Additionally, OFAC published a rule on Updating Provisions Related to Blocking and Other Actions Related to Specific Property or Interests in Property. For more detail: https://lnkd.in/dsYU_A9v 📩Please contact us at info@apccompliance.net., if you wish to learn more about the latest Sanctions news.

#OFAC could hold banks liable for processing transactions before an #SDN target was designated. Decided this month, the #Appellate #Court in Bello v. Gacki found that OFAC may make simultaneous #Sanctions designations of primary and secondary Sanctions targets. Secondary targets are those who enabled or aided in the activity that led to the Sanctions designation. OFAC need not give any advanced notice. There is no Due Process right to it. OFAC already expects U.S. persons or entities to immediately block property upon the publication of their list. While most financial institutions update their lists within 24 hours, that brief window is where SDN targets tend to move their assets. Should a financial institution process these, it is a violation of law. OFAC is clear, property must be immediately blocked upon the publication of the list. Under Bello v. Gacki, it would be within the power of OFAC to impose secondary sanctions on a financial institution for transactions that occurred prior to the SDN designation. I am not sure how likely it would be, but it is within their legal authority to Sanction past activity with no prior notice. Sanctionable activity is prohibited, not just Sanctioned activity. With the regulator interest in verifying the end users of #exports, there is increasing #compliance #risk with #due #diligence and ongoing monitoring of business partners. After the enforcement action, Microsoft updated its policies and procedures and the word is that it now has greater oversight of its foreign affiliates. The focus is on #KYC and third-party/affiliate risk management. https://lnkd.in/eyV-eqnv

I’m #OFAC_regulations_amendments #mandatory_electronic_filings #RPPR #FI_compliance_impact The U.S. Treasury Department's Office of Foreign Assets Control (OFAC) has issued an interim final rule outlining planned amendments to its Reporting, Procedures and Penalties Regulations (RPPR). The RPPR establishes standard reporting and recordkeeping requirements, license application procedures and other measures relevant to the economic sanctions programs administered by OFAC. The interim final rule, which OFAC published in the Federal Register on Friday, will be open for public comment for 30 days. There are two key changes that affect financial institutions. One of the changes is a new Note 1 to section 501.602 of the RPPR that would allow OFAC to issue instructions to financial institutions. Such instructions would contain information or criteria to aid firms in identifying blocked property and may also require them to report transactions that meet specified criteria and notify OFAC prior to processing those transactions. The interim final rule's second noteworthy change would make it mandatory, in virtually all cases, to file block-and-reject reports and annual reports of blocked assets electronically via the OFAC Reporting System (ORS) instead of sending them via mail or email. See the attached article from Thomson Reuters Regulatory Intelligence for analysis regarding the impacts on financial institutions. Amir Fadavi

Amid FUD surrounding Tether, Paolo Ardoino gave a brief interview, with key points: 1️⃣ The U.S. could destroy Tether if it wanted to. 2️⃣ Tether does not intend to conflict with the U.S., is not under investigation, and called the WSJ publication irresponsible. 3️⃣ The company takes all possible measures to combat money laundering and illegal transactions. 4️⃣ The share of USDT in criminal operations is extremely small compared to the use of the dollar. 5️⃣ Tether actively cooperates with the FBI, U.S. Department of Justice, Secret Service, and other law enforcement agencies. 6️⃣ The company respects international sanctions, and USDT reserves are backed by U.S. Treasury bonds. US will never stop being a obstacle for everyone.

Atencion Oficiales de Cumplimiento Video de OFAC #cesaroldancomenta "This video provides an overview of what it means when funds are blocked (also referred to as “frozen") in connection with OFAC sanctions and recommended steps for what to do if your funds have been blocked. The information in this video is for training purposes only. It does not have the force of law, and does not supplement or modify the statutes, regulations, executive orders, or other authorities that govern sanctions administered by OFAC. The information in this video is subject to change and is only current as of July 10, 2024. For more information about OFAC and OFAC sanctions, please visit ofac.treasury.gov."

Hello sanctions folks out there in Linked In Land. OFAC today has provided guidance on "Productions Submission Standards" It provides specific guidance on the following: "This Guidance applies primarily to persons providing responses to administrative subpoenas, requests for information (RFIs), disclosures, 1 and especially for submissions that may entail voluminous documentation (e.g., more than 100 pages). Additionally, certain technical standards may also pertain to other forms of electronic submissions to OFAC, such as supporting documentation for mandatory reports and license application supplements. 2 If you are making a production and require additional clarification, please contact the OFAC representative handling your case directly and include any reference number that the agency has provided. Unless informed otherwise, all submissions are expected to be made electronically according to the specifications detailed below. OFAC may consider adherence to these standards when assessing a person’s cooperation with OFAC. This Guidance is organized as follows: • Section I provides guidance for organizing document productions. • Section II provides general conventions for submitting electronic documents. • Section III provides guidance on submitting productions under 150 megabytes in total size. • Section IV provides guidance on submitting productions over 150 megabytes in total size.  

Expanding on a panel conversation I had this week with William Reed, MA, AFM, AAC and Kyle Roth on Foreign Land Ownership challenges. What Stuart Jones, Jr. is talking about below highlights one of the challenges with foreign land ownership policy. There’s a maze of LLC’s and ownership shells that only entities (state or otherwise) with a resource like Sigma360 can untangle. It’s a big challenge. This is NOT just an agricultural and trade policy problem. This is a national security problem. A few provisions in the #FarmBill is not going to provide a solution. This is much deeper than that.