CASSAGNE Consultants’ Post

So much to catch you up on, I've just not had chance being a busy little bee 🐝 in my new world of legal tech. Last week the Office of Financial Sanctions Implementation (OFSI) updated its guidance on "financial sanctions enforcement and monetary penalties. The updates are mainly to Chapter 3. It introduces tow new case factors “Knowledge, intention and reasonable cause to suspect” and “Co-operation” that were previously included more generally in the guidance. 🤔 Knowledge, intention and reasonable cause to suspect 🤔 OFSI will consider whether: ➡ the breach was on purpose or accidental ➡ there's proof of neglect or not being careful enough, ➡ there was a problem with how things were organised ➡ the rules were misunderstood, ➡ the person didn't realise they had responsibilities, if it was just a simple mistake. Sometimes, even a mistake like giving money to someone on a sanctions list can cause a breach. OFSI will look at whether the person knew what they were doing and if they should have known better. 🤝 Co-operation 🤝 OFSI will consider co-operation when issuing penalties. If a firm takes the initiative to investigate within their own organisation and share with OFSI any extra material or information that might help them with their case, as will prompt in replies to OFSI. However if a firm refuses to engage with OFSI this could make things worse for them. Here is a link to the guidance 👇🏻 https://lnkd.in/eEHiR96T OFSI has also introduced an FAQs page, which I found had some really great questions and answers. It is definitely worth a read! The section on Legal Services can be found at paragraph 53. https://lnkd.in/eFec2sia

The new amendment to the Russian sanctions regime (link in comments) introduces a number of changes. These are the most significant: 1.     The prohibition on making funds or economic resources available for the benefit of a designated person has been tightened up. Under the previous law, making funds etc available was only an offence if the designated person (DP) themselves could obtain a significant financial benefit thereby. The amendment provides that there is also an offence if a person owned or controlled by the DP can obtain a significant financial benefit. This was probably the intention of parliament and is a (quite belated) fix for some poor drafting in 2018. 2.     There is a new exemption from the asset freeze regulations  where payment is made to a bunch of authorities, including HMRC, the FCA and any local authority. Such payments can now be made by or on behalf of a DP (and the DP can reimburse the third party) without the need for a licence. But beware – there is a long list of “excluded payments” which won’t get the protection. And payments (including reimbursements) need to be reported promptly. 3.     A few changes to reporting. First, reporters are required to report any breach, whether criminal or not. Second, the deadline for annual reporting of funds held for a DP has shifted from 31 October to 30 November. Third, firms that have previously reported the holding of funds must now tell OFSI (on an annual basis) if they no longer hold the funds. Fourth, reporting requirements are extended to some more firms, such as high value dealers. 4.     The range of breaches of sanctions regulations for which the Treasury (OFSI) may impose monetary penalties on the civil basis has been expanded. 5.     There is a new ground of licensing: to enable anything to be done in connection with insolvency. Previously, licensing for such work had to proceed under the extraordinary situation ground. #sanctions #ofsi #licensing #insolvency #restructuring

Luxembourg's Ministry of Finance has recently updated its sanctions guidelines, emphasizing strict adherence to EU/UN compliance standards, flexibility in data vendor selection, and the 50% ownership rule for enhanced enforcement. Key updates also include high-risk jurisdiction checks and maintaining compliance despite technical challenges. #SanctionsCompliance #LuxembourgFinance #EUCompliance #FinancialSanctions #HighRiskJurisdictions #50PercentRule #AML #Compliance #SanctionsGuidelines #RegulatoryUpdates #FinancialRegulation #RiskManagement #KYC #LuxembourgRegulations https://lnkd.in/e_CUJuS3

The Office of Financial Sanctions Implementation (OFSI) has launched additional guidance aimed at providing technical support to industry partners and the public. OFSI strongly recommends that firms review the FAQs alongside existing guidance and legislation, which take precedence. For specific cases, OFSI also advises firms to seek independent legal advice. Access the guidance and FAQs - https://pimfa.cc/DBK7S #financialsanctions #sanctions #financialservices

[AML] 🇭🇰 🤔 𝗧𝗵𝗶𝗻𝗸 𝘁𝘄𝗶𝗰𝗲 𝗯𝗲𝗳𝗼𝗿𝗲 𝗹𝗮𝗯𝗲𝗹𝗶𝗻𝗴 𝗛𝗼𝗻𝗴 𝗞𝗼𝗻𝗴 𝗮𝘀 𝗮 𝗹𝗼𝘄-𝗿𝗶𝘀𝗸 𝗷𝘂𝗿𝗶𝘀𝗱𝗶𝗰𝘁𝗶𝗼𝗻 in your (client) financial crime risk assessment. Despite its high 75/100 score on Transparency International's Corruption Perception Index, US lawmakers are increasingly concerned about Hong Kong's role as a hub for financial crime. 💡 ❗ Mainly because: • Insufficient of Transparency and Regulatory Oversight • Increased Money Laundering Activities • Potential for Sanctions Evasion ⏩ https://lnkd.in/gbu4q35v #aml #financialcrime #hongkong #moneylaundering #clientriskassessment

𝗨𝗞 𝗦𝗮𝗻𝗰𝘁𝗶𝗼𝗻𝘀 𝗨𝗽𝗱𝗮𝘁𝗲: 𝗛𝗶𝗴𝗵 𝗖𝗼𝘂𝗿𝘁 𝗖𝗹𝗮𝗿𝗶𝗳𝗶𝗲𝘀 "𝗢𝘄𝗻𝗲𝗿𝘀𝗵𝗶𝗽 𝗮𝗻𝗱 𝗖𝗼𝗻𝘁𝗿𝗼𝗹" 𝗧𝗲𝘀𝘁 The High Court has recently provided pivotal guidance for financial institutions navigating the complexities of UK sanctions regulations. In the case of 𝘏𝘦𝘭𝘭𝘢𝘳𝘥 & 𝘖𝘳𝘴 𝘷 𝘖𝘑𝘚𝘊 𝘙𝘰𝘴𝘴𝘪𝘺𝘴𝘬𝘺 𝘒𝘳𝘦𝘥𝘪𝘵 𝘉𝘢𝘯𝘬 & 𝘖𝘳𝘴 [2024] 𝘌𝘞𝘏𝘊 1783 (𝘊𝘩), the court elaborated on the "ownership and control" test, building on the conclusions from the Mints and Litasco cases. Together with Ajay Malhotra, Kate Meakin, Elizabeth Head, Nihar Lovell and Ali Grodzki, I've prepared an article that delves deeper into this important development—be sure to check it out! Personally, it's fascinating to witness the evolution of sanctions law in real-time, and this decision marks another significant step in that journey. P.S. Don't forget to check out our latest special episode of the banking litigation podcast, where we touch upon this case! The link is in my previous post. #SanctionsUpdate #UKRegulations #HighCourt #Compliance #SanctionsRegime #Disputes #Banking #FinancialServices #HSF #Sanctions

Belgravia Law has secured a first-of-its-kind interim measure in the Belgian Courts. Belgravia Law (leading Partners: Benjamin Wells FCIArb & Stepan Puchkov) is representing a major brokerage (not designated) whose own assets and assets of its customers to the value of USD 1.3 billion were blocked by Euroclear on the basis that a EU-designated entity the National Settlement Depository (NSD) was present in the chain of custody. During the advanced stages of unfreezing proceedings new US sanctions on NSD came into force. Due to the US nexus of relevant assets the new sanctions had a practical implication in that even after obtaining a positive decision from the Belgium Regulator the Client would need to apply for OFAC licences in order to have the assets released. Belgravia Law through its local partner applied to Francophone Tribunal of the First Instance of Brussels requesting an interim measure in the form of authorisation, with immediate effect, the transfer of the assets in issue to a segregated account thus removing NSD from the chain of custody and avoiding the necessity to apply for additional future licences. On 8 August 2024 (only three weeks after the summons were served) the Court rendered an Order satisfying our Client’s request. The Defendant was ordered to transfer the assets in issue into a segregated account within 30 hours on the pain of a substantial fine and to pay our Client’s legal costs. By way of obtaining the Order the Client was spared of substantial delay associated with applying for OFAC specific licences. With the assets in issue ready to be released immediately upon the final decision of the Belgian Regulator. https://lnkd.in/eetpH4zz

⚖ According to the proposed new transparency law, financial intermediaries such as banks and asset managers will have to take similar organizational measures to prevent violations of sanctions law as they do to prevent money laundering and terrorist financing. In particular, they will have to ensure that their employees are adequately trained and that controls are in place⚖. #AML #SanctionsCompliance #FinancialRegulation #FINMA #SECO #RegulatoryUpdate #LegalSupport #LINDEMANNLAW

I had a Professor at my Post-Grad in Criminal Law that used to say: "to create a truly effective policy against criminal activity of any type, you need to eat, drink and think like a criminal. Don't think too much about what rules to follow, but rather how to break them." As compliance professionals, it's not enough to simply follow the rules and policies that must be adhered to. To truly establish an effective AML/CTF program, we need to take a page out of a criminal's playbook. This is the place where the gap sits, where oversight gets lost in translation and where you can be exposed to hefty fines at a minimum. Ruth Helena Alves da Mota (CAMS) highlights this importance in her insightful piece on sanctions evasion. At LSEG Risk Intelligence, we are constantly looking for ways to improve our data points based not only on regulation but also on criminal activity. After all, it's not just about following the rules, but also staying ahead of those who try to break them. Check out Ruth's piece to learn more about the art of hiding and not getting caught. #AML #CTF #compliance #riskintelligence

Judge Signs Off on Binance’s $4.3B Plea Deal With U.S. Prosecutors - https://lnkd.in/dJyDyrDa ---- Binance pleaded guilty to violating sanctions and anti-money laundering laws last year. A federal judge has signed off on crypto exchange Binance's $4.3 billion plea deal with the U.S. Department of Justice. During a sentencing hearing Friday, Judge Richard Jones of the U.S. District Court for the Western District of Washington approved the top-line fine itself, though he did not yet sign off on any monitor for the exchange. Bloomberg first reported the news earlier Friday. The DOJ announced the settlement last November, alleging Binance had violated sanctions and anti-money-laundering laws over a years-long period. Under the terms of the settlement, the exchange would pay $4.3 billion, appoint an independent compliance monitor and have its CEO at the time, founder Changpeng Zhao, step down. Zhao pleaded guilty to separate charges and is currently scheduled to be sentenced in late April. In a statement, a Binance spokesperson said the exchange was accepting responsibility through the plea deal, adding that the exchange had improved its know-your-customer and anti-money-laundering compliance in recent years. "We are gratified by the recognition we have received from regulators regarding our cooperation and significantly enhanced compliance," the statement said. "We look forward in the coming months to continuing to build on our efforts to set the industry standard for compliance, security, and transparency." A DOJ spokesperson declined to comment. In a sentencing memo ahead of the hearing, prosecutors wrote that the agreement "reflects the nature and circumstances" of Binance's alleged conduct. "Critically, the agreed-upon sentence will promote specific and general deterrence. As part of its plea agreement, Binance has agreed to take substantial measures to ensure its ongoing compliance with U.S. law. And the significant sentence agreed to here demonstrates to other financial institutions that may seek to break the law under the guise of 'innovation' that there will be serious consequences for their criminal actions," the memo said. Edited by Jesse Hamilton. ---- DeFi Central