National Bar Association Commercial Law Section Evolution of Financial Crime: FinCEN & Leading Compliance Practices Thursday, February 15, 2018

Transcription

1 National Bar Association Commercial Law Section Evolution of Financial Crime: FinCEN & Leading Compliance Practices Thursday, February 15, 2018

2 Agenda FinCEN s customer due diligence rule NYDFS 504 Innovation, machine learning, and automation Economic sanctions Q&A Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 2

3 FinCEN s customer due diligence final rule Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 3

4 Customer due diligence (CDD) final rule Key elements In May 2016, FinCEN published the Final Rule that formalizes new and existing CDD requirements for covered financial institutions (federally regulated banks and federally insured credit unions, brokers or dealers in securities, mutual funds, futures commission merchants, and introducing brokers in commodities) There are four key elements of CDD: Customer identification and verification Beneficial ownership identification and verification Understanding the nature and purpose of customer relationships to develop a customer risk profile; and Conducting ongoing monitoring to identify and report suspicious transactions and, on a risk-basis, to maintain and update customer information Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 4

5 5th Pillar First element, Customer Identification Program (CIP), is a current requirement (name, address, tax ID, and if individual, date of birth) Second element, Beneficial Ownership identification and verification, is a new requirement Third and fourth elements are already implicitly required. The new rule amends BSA to codify expectations, adding a 5th pillar to BSA program requirements. A covered financial institution s AML program must include, at a minimum: System of internal controls Independent testing BSA officer Training; and Risk-based procedures for conducting ongoing CDD to understand the nature and purpose of customer relationship, and to conduct ongoing monitoring to identify and report suspicious transactions, and on a risk basis, to maintain and update customer information. Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 5

6 Beneficial ownership overview Identify each individual who owns 25 percent or more of the equity interests in a legal entity customer and one individual who exercises significant managerial control over the legal entity customer Legal entity customers include corporations, limited liability companies, and partnerships or other similar entity created by the filing of a public document with a Secretary of State or similar office. Excludes trusts, sole proprietorships and unincorporated associations Verification of identity, not beneficial owner status FIs may rely on beneficial ownership information supplied by the customer, provided FIs have no knowledge of facts that would reasonably call into question the reliability of the information Covered FIs may obtain information from the individual opening the account by using a certification form (provided by FinCEN as Appendix A to the Final Rule) or obtaining the same information by other means, providing the individual certifies accuracy. Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 6

7 Control prong Control person FinCEN provides a number of non exclusive examples of such individuals: CEO, CFO, COO, Managing Member, General Partner, President, Vice-President, Treasurer: FinCEN stated it intentionally proposed a broad definition to provide legal entity customers a wide range of options. It subsequently explained expectation that the control person identified must be a high-level official in the legal entity, who is responsible for how the organization is run, and who will have access to a range of information concerning the day-to-day operations of the company. (FIN-2016-G003) To the extent an individual is both a 25 percent owner and exercises significant managerial control, the same individual may be identified under both prongs. Charities and non-profits are excluded from the ownership prong but subject to the control prong. Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 7

8 Considerations FIs may consider risk-based criteria for identifying beneficial owners with less than 25 percent ownership interests: There is no legal requirement to do so. FIs choosing to do so may be subject to examiners review of their criteria and judgment. Beneficial owner information is to be treated like CIP and related information, and accordingly used to ensure compliance with other requirements including OFAC and currency transaction reporting requirements. Identification and verification of beneficial owner requirement applies to new accounts opened by legal entity customers on or after the Applicability Date: The requirement does not preclude FIs from collecting beneficial ownership information on existing customers on a risk-basis. Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 8

9 Exemptions include Regulated entities: Bank holding company, pooled investment vehicle operated or advised by a FI, state regulated insurance company, financial market utility designated by the Financial Stability Oversight Council Foreign entities: Foreign FIs where relevant foreign regulator maintains BO information; non-us government department, agency or subdivision that engages in governmental not commercial activity Customer types already exempt from CIP: US or state government entity; listed publicly traded firm on US exchange or an entity owned 51% or more by listed entity Accounts used for certain activities: Private label credit card accounts with credit limit up to $50,000 to the extent they are opened at the point of sale; accounts used solely for the purchase and financing of postage; commercial accounts used solely to finance insurance premiums. Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 9

10 Potential regulatory and enforcement implications of CDD final rule A covered FI s failure to satisfactorily incorporate the fifth pillar into its BSA program could lead to supervisory action, and ultimately enforcement action by the federal banking agencies (OCC, FDIC, and Federal Reserve) As with any new statutory requirement, the CDD rule will be the object of supervisory attention. Problems with implementation may result in a Matter Requiring Attention (MRA) or other supervisory action Failure to comply with the new rule, coupled with other program deficiencies or violations, could be the basis of an enforcement action. Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 10

11 Takeaways Final Rule is effective May 11, 2018 A significant number of FIs are already implementing beneficial ownership requirements Practical implications include adapting IT systems, training, onboarding systems and processes, policies and procedures, and educating customers Each institution must account for its own particular risks and circumstances when preparing for implementation of new CDD rule. Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 11

12 Overview of New York State DFS 504 regulatory requirements Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 12

13 DFS 504 scope and guiding principles On June 30th 2016, the New York State Department of Financial Services ( NYS DFS ) adopted a new set of anti-money laundering (AML) requirements that would apply to all bank and non-bank financial institutions that it regulates The regulation entitled Part 504 BANKING DIVISION TRANSACTION MONITORING AND FILTERING PROGRAM REQUIREMENTS AND CERTIFICATIONS requires that regulated institutions submit a resolution or finding as to the effectiveness of their Transaction Monitoring (TM) and Filtering Programs. While the regulation emphasizes a number of requirements that are already fundamental to Bank Secrecy Act (BSA)/AML and Office of Foreign Assets Control of the Treasury Department (OFAC) programs, it includes a number of additional or enhanced provisions Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 13

14 DFS 504 scope and guiding principles Section lays out the requirements for an institution s TM and Filtering Programs Applicability Part 504 will apply to entities chartered, or licensed, under NY state banking law; this includes banks as well as some non-bank financial institutions Effective date Effective starting January 1, First resolution or finding is due April 15, 2018 for the calendar year January 1-December 31, 2017 Resolution The regulation stipulates that the covered institution must submit a Board Resolution or Senior Officer(s) Compliance Finding (Part 504, Form A) certifying that documents, reports, certifications and opinions of relevant parties have been reviewed by the board of directors or senior officers to report compliance with the regulation April 15, annually Strong emphasis on data-related controls With regard to both TM and filtering, the regulation requires validation of the integrity, accuracy and quality of data determined via the validation of data extraction and loading processes. In addition, Part 504 calls for end-to-end, pre- and post-implementation testing of both the TM and filtering programs, including a specific call for model validation and review of data input/output Identification and remediation Regulated institutions must maintain for examination all records, schedules and data towards the identification and remediation efforts to demonstrate compliance for five years Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 14

15 Compliance with the requirement Resolution mandates compliance with Part 504 requirements during the full-year reporting period, where the following principles are considered for the treatment of issues identified during the assessment and certification process Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Reporting period for April 15, 2018 resolution Resolution period Financial institutions must submit their resolution or finding by April 15, 2018 with Part Transaction Monitoring and Filtering Requirements for the year of the reporting period (full year January 1, 2017 to December 31, 2017) Material improvements As per requirements 504.3(d), to the extent a Regulated Institution has identified areas, systems, or processes that require material improvement, updating or redesign, the Regulated Institution shall document the identification and the remedial efforts planned and underway to address such areas, systems or processes. Such documentation must be available for inspection by the Superintendent Material has not been defined by the DFS, nor has the DFS indicated whether it will review any material gaps that are remedied before the end of the reporting period (or even whether gaps remedied by the end of the reporting period need to be reported in the resolution). Institutions are considering a variety of positions. Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 15

16 Summary of the DFS 504 requirements The DFS 504 requirements can be summarized as follows: 1 Maintain a transaction monitoring program that should: Be based on the risk assessment Be reviewed and periodically updated at risk-based intervals Appropriately match BSA/AML risks to the institution s businesses, products, services and customers/counterparties [Maintain] BSA/AML detection scenarios with threshold values and amounts [Document] End-to-end, pre-and post-implementation testing [Maintain] documentation that articulates the institution s current detection scenarios [Document] protocols setting forth how alerts generated by the Transaction Monitoring Program will be investigated and escalated Be subject to an on-going analysis to assess the continued relevance of the detection scenarios, the underlying rules, threshold values, parameters and assumptions. Maintain a watch list filtering program that should: Be based on the risk assessment of the institution; Be based on technology, processes or tools for matching names and accounts; [Maintain] end-to-end, pre- and post-implementation testing; Be subject to on-going analysis to assess the logic and performance of the technology or tools for matching names and accounts; [Maintain] documentation that articulates the intent and design of the Filtering Program tools, processes or technology. 1 Condensed from Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 16

17 Summary of the DFS 504 requirements (cont.) The DFS 504 requirements can be summarized as follows: 2 Additional requirements: Each Transaction Monitoring and Filtering Program shall require the following, to the extent they are applicable: Identification of all data sources that contain relevant data Validation of the integrity, accuracy and quality of data Data extraction and loading processes Governance and management oversight Vendor selection process Funding to design, implement and maintain a Transaction Monitoring and Filtering Program Qualified personnel or outside consultant responsible for the design, planning, implementation, operation, testing, validation and on-going analysis of the Transaction Monitoring and Filtering Program Periodic training with respect to the Transaction Monitoring and Filtering Program 2 Condensed from Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 17

18 DFS 504 frequently asked questions The NYS DFS circulated Frequently Asked Questions Regarding 3 NYCRR 504 on October 26, 2017 one of which could lead to differing interpretations: May a Regulated Institution submit a certification under 3 NYCRR if it is not yet in compliance with the requirements of Part 504? NYSDFS Response: The Department expects full compliance with the regulation. A Regulated Institution may not submit a certification under 3 NYCRR unless the Regulated Institution is in compliance with the requirements of Part 504 as of the effective date of the certification. Conflicting interpretations: What does full compliance mean? If I determine that my institution is not in full compliance, I won t certify they told me not to! The regulation permits me (under 504.3(d)) to indicate areas that require material improvement, so no matter how many material improvements I need, I m going to certify! Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 18

19 Innovation, machine learning, and automation Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 19

20 Regulatory and compliance innovation What do we mean by innovation? Regulatory and compliance innovation refers to a spectrum of technology applications that can replicate human activity or mimic human decision making to varying degrees. Robotic process automation Rules-based systems that mimic human behavior used to automate manual, repetitive tasks Natural language processing Applications that process and transform unstructured data into structured data to allow for querying and analysis Complexity Natural language generation Machine learning Applications that process and synthesize structured data into unstructured narratives Applications that adapt over time as new data is received or new scenarios are presented Artificial intelligence Applications that mimic human decision making Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 20

21 Regulatory and compliance innovation Why are compliance functions exploring innovation? Increased regulatory pressure, coupled with staffing challenges, are driving compliance leaders to explore innovative approaches in order to: Better manage changing regulatory expectations Drive efficiency in their programs allowing staff to focus on higher value activities Improve effectiveness of their programs with a focus on quality and consistency Optimize operating budgets and manage volatility by reducing reliance on scarce, high-cost resources Identify improved approaches to current activities Compared to pre-financial crisis spending levels, operating costs spent on compliance have increased by over 60 percent for retail and corporate banks. -The Future of Regulatory Productivity powered by RegTech, Deloitte Read more here: Documents/regulatory/us-regulatory-future-ofregulatory-productivity-powered-by-regtech.pdf The scarcity of skilled compliance personnel is forcing two-thirds of all firms surveyed not only to do more with less, but also to expect senior compliance staff to cost more this year. -More Regulations and Fewer Resources Squeeze Financial Compliance Teams, Thomson Reuters Global Cost of Compliance 2016 Survey Reveals, Thomson Reuters Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 21

22 Regulatory and compliance innovation Applications in AML AML program activities KYC Transaction monitoring Investigation Collect CIP Collect CDD Perform screening Complete EDD Perform quality assurance Collect name, address, government ID Basic customer profile Source and maintain screening lists Gather EDD information Perform QA Verification Beneficial ownership/ control Conduct screening Include actual activity and details Exceptions and approvals A KYC review preparation KYC data collection and case preprocessing for periodic/trigger reviews Nature and purpose of account Expected activity profile Decision potential hits/false positives Escalate potential hits Compare expected vs. actual activity (renewals) Draft AML risk conclusion D EDD preparation EDD data collection and preprocessing Request information from customer Ongoing screening Request information from customer (as necessary) B Support screening decision making Sentiment analysis on screening hits Potential Robotics C Generate KYC narrative Generate high-risk periodic review narrative from case data and documents Potential Cognitive intelligence Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 22

23 Regulatory and compliance innovation (cont.) Applications in AML AML program activities KYC Transaction monitoring Investigation Scenario development & mgt. Collect client & transaction details Alert generation & triage Alert investigation & research SAR writing Conduct QA Identify additional scenarios Collect transaction and KYC data Generate alert Perform initial case research Draft SAR narrative Review transactional activity Scenario tuning Aggregate and stage data Alert stratification/ scoring Initial disposition Complete SAR form Review case docs E Alert risk scoring Leverage historical alert and case information to more effectively triage alerts for investigation Gather relevant transaction information Conduct additional research Package supporting information Review narrative F G Alert review preprocessing Collection and aggregation of information for investigation purposes Enhances alert triage, stratification, and smart case routing Leverage disposition data for stratification, smart routing, specialized procedures Gather relevant KYC information Case assignment Draft case narrative I J SAR form packaging Automate population of SAR form and supporting material for review Anomaly detection/ investigator guidance Leverage cognitive to support and augment investigator judgment with anomaly detection K Check image recognition Extract check data from images for filtering and review Potential Robotics Potential Cognitive intelligence H Automated narrative drafts Automate drafting of initial case investigation summary narratives Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 23

24 Regulatory and compliance innovation Common challenges and issues Identification of innovation use cases FIs and compliance functions are not uniform, therefore, innovative approaches are not one size fits all. Many institutions are struggling with identifying the right technologies as well as the most effective ways to incorporate them into their programs. Regulatory concerns Financial institutions must consider which elements of their programs are suitable for innovative approaches. There may be some activities or solutions that should not be considered for innovation from a regulatory perspective. Risk management In many cases, innovative approaches are similar to other models and are therefore subject to the same risks: poor quality inputs, poorly designed approaches and inappropriate use of outcomes. If the risks associated with these approaches are not considered, the solution may not deliver on intended benefits at best, or could introduce additional risks at worst. Additionally, internal risk functions and/or regulators may consider such innovative approaches models and therefore subject them to model validation requirements. Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 24

25 Regulatory and compliance innovation Managing risks of innovative approach Develop a strategic plan Financial institutions should approach innovation investments strategically and let the opportunities drive technology rather than let technology drive the opportunity. Engage regulators early When considering implementing innovative approaches, financial institutions should discuss with their regulators early and often to gain an understanding of any concerns their regulator may have, and to provide the regulator information on how the institution considered and is handling potential risks. Employ model risk management principles Financial institutions should treat solutions the way they would other models or tools supporting their programs by ensuring an appropriate control framework is in place. This includes assessing inputs, processing and outputs to identify and mitigate potential issues. Solutions should also be periodically assessed to make sure they are still functioning as intended and delivering the intended benefit. Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 25

26 Economic sanctions Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 26

27 Changes to Cuban sanctions 2015 to 2016 Multiple amendments were issued to the Cuban sanctions in 2015 and 2016, in order to achieve the US government s stated goal of breaking down economic barriers, empowering the Cuban people, and charting a new course in US-Cuba relations. These amendments have significantly lessened restrictions on relations and trade with Cuba, although significant restrictions remain. The amendments: Eliminated the need for a specific license for authorized categories of travel to Cuba (general license is now sufficient, application for specific license is no longer needed) Authorized travel agents and airlines to provide travel and air carrier services to Cuba without the need for a specific license from OFAC Removed limits on some authorized remittances to Cuba, including donative remittances to Cuban nationals (other than prohibited Cuban Government or Cuban Communist Party officials) and remittances that individuals may carry to Cuba Allowed US financial institutions to open correspondent accounts at Cuban financial institutions to facilitate the processing of authorized transactions Allowed Cuban nationals in the US in a non-immigrant status to earn salaries or compensation in the US, consistent with terms of their visa Expanded Cuba and Cuban national s access to US financial markets Allowed a number of other activities related to, among other areas, telecommunications, financial services, trade, shipping, insurance, and humanitarian efforts Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 27

28 Changes to Cuban sanctions 2017 In November 2017, OFAC announced amendments to the Cuban Assets Control Regulations and Export Administration Regulations in order to implement changes to Cuban sanctions announced by the President in June The amendments are for the stated purpose of channeling economic activity away from the Cuban military, intelligence, and security services. The amendments also place some restrictions on people-to-people and educational travel. The amendments: Prohibit certain financial transactions with entities on the Cuba Restricted List. The Cuba Restricted List is a list of entities and subentities that are under the control of, or act for or on behalf of, the Cuban military, intelligence, or security services or personnel. Establish a general policy of denial for license applications for export to entities and subentities on the Cuba Restricted List Amend the definition of the term prohibited officials of Cuba to include additional individuals Require that people-to-people nonacademic educational travel be conducted under the auspices of an organization that is subject to US jurisdiction and sponsors such travel to promote people-to-people contact, and that travelers be accompanied by a person subject to US jurisdiction who is a representative of the sponsoring organization Require that Americans engaging in authorized educational travel do so under the auspices of a sponsoring organization subject to US jurisdiction, and that travelers be accompanied by a person subject to US jurisdiction who is a representative of the sponsoring organization Individual people-to-people nonacademic educational travel is no longer authorized Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 28

29 Countering America s Adversaries Through Sanctions Act Russia On August 2, 2017, the President signed into law the Countering America s Adversaries Through Sanctions Act, which imposes new sanctions upon Iran, Russia, and North Korea. Key provisions of Act: Russia Codifies existing Ukraine/Russia sanctions and cyber security sanctions. As a result, the sanctions can no longer be lifted or modified pursuant to an Executive Order and instead must be modified or terminated through an Act of Congress. Requires congressional review of President s Executive Orders relating to termination or waiver of Russia/Ukraine sanctions Expands the scope of the sectoral sanctions that may be implemented to include state owned entities engaged in the railway or metals and mining sectors Modifies Sectoral Sanctions Directives 1, 2, and 4 to expand scope of the prohibitions: Directive 1: Prohibits US persons or persons within the US from dealings in new debt of longer than 14 days maturity or equity of persons subject to Directive 1 (previous restriction was 30 days maturity) Directive 2: Prohibits US persons or persons within the US from dealings in new debt of longer than 30 days maturity or equity of persons subject to Directive 2 (previous restriction was 90 days maturity) Directive 4: Prohibits US persons or persons within the US from directly or indirectly providing support for deepwater, arctic offshore, or shale projects with potential to produce oil and that involve a person subject to the directive or the property or interests of such a person Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 29

30 Countering America s Adversaries Through Sanctions Act Russia (cont.) On August 2, 2017, the President signed into law the Countering America s Adversaries Through Sanctions Act, which imposes new sanctions upon Russia, Iran, and North Korea. Key provisions of Act: Russia Requires the blocking of all transactions in property and interests of property of: Persons determined to have knowingly engaged in significant activities undermining cybersecurity against any person or government on behalf of the Russian government, or persons that are owned or controlled by, or acting or purporting to act for or on behalf of, directly or indirectly, such persons Officials of the Russian government or close associates or family members of such officials determined to be responsible for, complicit in, or responsible for ordering, controlling or otherwise directing significant acts of corruption, or any individual who materially assists or provides support for such activities Foreign persons determined to have knowingly violated, or attempted to, conspired to, or caused the violation of Russian sanctions, or have knowingly facilitated significant transactions Foreign persons determined to be involved in the commission of serious human rights abuses in any territory forcibly occupied or otherwise controlled by the Russian government; persons owned or controlled by such persons, or acting or purporting to act for or on behalf of, directly or indirectly, such persons; or persons who materially assist or support such persons Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 30

31 Countering America s Adversaries Through Sanctions Act Russia (cont.) On August 2, 2017, the President signed into law the Countering America s Adversaries Through Sanctions Act, which imposes new sanctions upon Russia, Iran, and North Korea. Key Provisions of Act: Russia Requires or authorizes the President to impose secondary sanctions on non-us persons for engaging in sanctionable activities outside of the US. No US nexus is required for the secondary sanctions to be imposed or enforced. Prohibits the opening of US correspondent or payable-through accounts for foreign financial institutions that have: Knowingly engaged in significant transactions related to significant investments by foreign persons in special Russian crude oil projects Knowingly engaged in significant transactions involving activities undertaken by Gazprom relating to withholding gas supplies from US allies, if sanctions are imposed on Gazprom under the contingent sanctions provision of the Ukraine Freedom Support Act of 2014 Facilitated significant transactions on behalf of any Russian person included on the SDN list pursuant to Russia/Ukraine sanctions or the Ukraine Freedom Support Act of 2014 Authorizes the President to impose sanctions on persons determined to have knowingly made an investment in or provided to the Russian Federation goods, services, or support of fair market value of $1 million or more (aggregating to $5 million or more in 12 month period) for construction, maintenance, expansion or repair of Russian energy export pipelines Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 31

32 Countering America s Adversaries Through Sanctions Act Iran On August 2, 2017, the President signed into law the Countering America s Adversaries Through Sanctions Act, which imposes new sanctions upon Russia, Iran, and North Korea. Key Provisions of Act: Iran Imposes additional sanctions on Iran related to Iran s ballistic missile program or other programs of weapons of mass destruction and the supply of certain weapons and related materials to Iran Authorizes the President to block all transactions in property and interests in property of persons determined to have knowingly engaged in activities or supported activities related to the ballistic missile program or other programs of weapons of mass destruction; successor entities of such persons; and persons acting for or on behalf of such persons Authorizes the President to block all transactions in property and interests in property of persons determined to have knowingly engaged in activities contributing to the sale, supply or transfer to Iran of certain weapons, or who provide to Iran training, financial resources, services or advice or other assistance relating to the weapons Authorizes the President to block all transactions in property and interests in property of persons determined to be responsible for human rights abuses, or of persons acting as an agent of or on behalf of such foreign persons Although the Iranian Revolutionary Guard Corps ( IRGC ) is already on the SDN list, the Act designates the IRGC and foreign persons who are officials, agents or affiliates of the IRGC as Specially Designated Global Terrorists ( SDGTs ) Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 32

33 Countering America s Adversaries Through Sanctions Act North Korea On August 2, 2017, the President signed into law the Countering America s Adversaries Through Sanctions Act, which imposes new sanctions upon Russia, Iran, and North Korea. Key Provisions of Act: North Korea Expands mandatory and discretionary sanctions against persons that knowingly, whether directly or indirectly, engage in prohibited transactions with North Korea Prohibit US financial institutions from establishing, maintaining, administering, or managing correspondent accounts for a foreign financial institution that are being used to provide significant financial transactions indirectly to certain designated North Korean entities Requires the President to identify foreign persons that employ North Korean laborers, and determine whether sanctions should be imposed against those persons. In the event the sanctions are imposed, the property and interests in property of those persons must be blocked. Requires the President to determine whether North Korea should be designated as a State Sponsor of Terrorism On November 20, 2017, President Trump announced that North Korea would be designated as a State Sponsor of Terrorism Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 33

34 Q & A Copyright 2017 Deloitte Development LLC. All rights reserved. National Bar Association Commercial Law Section 34

35 This presentation contains general information only and Deloitte is not, by means of this presentation, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This presentation is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this presentation. About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ( DTTL ), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as Deloitte Global ) does not provide services to clients. In the United States, Deloitte refers to one or more of the US member firms of DTTL, their related entities that operate using the Deloitte name in the United States and their respective affiliates. Certain services may not be available to attest clients under the rules and regulations of public accounting. Please see to learn more about our global network of member firms. Copyright 2017 Deloitte Development LLC. All rights reserved.