Agencies Propose Regulation on the Role of Supervisory Guidance

News Release 2020-142 | October 29, 2020

Joint Release

Board of Governors of the Federal Reserve System
Consumer Financial Protection Bureau
Federal Deposit Insurance Corporation
National Credit Union Administration
Office of the Comptroller of the Currency

Five federal financial regulatory agencies today invited comment on a proposal outlining and confirming the agencies’ use of supervisory guidance for regulated institutions. The proposal would codify the statement, as amended, that was issued in September 2018 by the agencies that clarified the differences between regulations and guidance.

Unlike a law or regulation, supervisory guidance does not have the force and effect of law and the agencies do not take enforcement actions or issue supervisory criticisms based on non-compliance with supervisory guidance. Rather, supervisory guidance outlines supervisory expectations and priorities, or articulates views regarding appropriate practices for a given subject area.

In contrast to supervisory guidance, regulations do have the force and effect of law and enforcement actions can be taken if regulated institutions are in violation. Regulations are also generally required to go through the notice and comment process.

Comments will be accepted for 60 days following publication in the Federal Register.

Related Link

Media Contacts

Federal Reserve
Eric Kollig
(202) 452-2955

CFPB
Marisol Garibay
(202) 384-8538

FDIC
Julianne Fisher Breitbeil
(202) 898-6895

NCUA
Joe Adamoli
(703) 518-6330

OCC
Bryan Hubbard
(202) 649-6870

Readout from a Treasury Spokesperson on Secretary Mnuchin’s Conference Call with the Finance Ministers of Australia, Canada, and the United Kingdom

WASHINGTON – On October 28, 2020, U.S. Treasury Secretary Steven T. Mnuchin participated in a conference call with the Finance Ministers of Australia, Canada and the United Kingdom to discuss policies to support business and employment in response to the COVID-19 pandemic.  The call, hosted by Chancellor Rishi Sunak, is the latest in a series of regular calls among the Finance Ministers of the “Five Eyes” nations.  The Ministers discussed various policy responses to support workers and businesses and collaborative efforts to promote a strong and sustained economic recovery.
 
####
 

Statement from Treasury Secretary Steven T. Mnuchin

WASHINGTONU.S. Treasury Secretary Steven T. Mnuchin issued the following statement regarding offsets applied by the Centers for Medicare and Medicaid Services (CMS) to payments due to the Fire Department of New York (FDNY):

“For over a decade, the FDNY has been forced to shoulder the burden of debts owed by the NYC government. Since this issue was brought to my attention, I have been personally engaged in ensuring that New York’s Bravest receive everything that they are due from the U.S. government.

“The firefighters who answered the call of duty in response to the terrorist attacks of September 11, 2001 deserve the nation’s total support. I am delighted that CMS has wired payments to the FDNY refunding the past offsets applied to cover unpaid NYC debts. I am also pleased that this issue has been successfully resolved, and that World Trade Center Health Program payments are now protected from future offsets.”

####

Treasury Sanctions Companies Selling, Purchasing, and Enabling Iranian Petrochemical Products

Washington – Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated eight entities for their involvement in the sale and purchase of Iranian petrochemical products brokered by Triliance Petrochemical Co. Ltd. (Triliance), an entity designated by Treasury in January 2020. These entities, based in Iran, China, and Singapore, engaged in transactions facilitated by Triliance or otherwise assisted Triliance’s efforts to process and move funds generated by the sale of those petrochemical products. Iranian petrochemical sales remain a key revenue source for the Iranian regime, which is used to finance the regime’s destabilizing agenda of support to corrupt regimes and terrorist groups throughout the Middle East and, more recently, Venezuela.

“The Iranian regime benefits from a global network of entities facilitating the Iranian petrochemical sector,” said Secretary Steven T. Mnuchin. “The United States remains committed to targeting any revenue source the Iranian regime uses to fund terrorist groups and oppress the Iranian people.”

All eight entities are being designated pursuant to Executive Order (E.O.) 13846.

BACKGROUND

In January 2020, OFAC sanctioned Triliance and three other petrochemical and petroleum companies that collectively transferred the equivalent of hundreds of millions of dollars’ worth of exports from the National Iranian Oil Company (NIOC), which provides financial support or services to Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and its terrorist proxies.

In September 2020, OFAC took further steps to degrade Triliance’s network, sanctioning six entities for their support to Triliance’s continued involvement in the sale of Iranian petrochemical products, including efforts by Triliance to hide or otherwise obscure its involvement in sales contracts.

Iran’s petroleum and petrochemical industries are major sources of revenue for the Iranian regime and fund its malign activities throughout the Middle East. Triliance has used, and continues to use, various front companies to purchase, or facilitate the purchase and movement of, petrochemical products from Iran to foreign buyers, and some of the entities targeted today help facilitate Iran’s petrochemical and petroleum exports in contravention of U.S. economic sanctions.

THE SALE AND PURCHASE OF IRANIAN PETROCHEMICAL PRODUCTS

Iranian petrochemical firms Morvarid Petrochemical (Morvarid) and Arya Sasol Polymer Company (Arya Sasol) hold a substantial presence in the Iranian petrochemicals market. Morvarid has used the services of Triliance to broker the sale of tens of thousands of metric tons of petrochemicals, valued at tens of millions of dollars, to foreign buyers. Likewise, since 2019, Triliance has brokered sales of petrochemicals valued at several million dollars from Arya Sasol. As a customer of Arya Sasol, Singapore-based Jiaxiang Energy Holding PTE. LTD (Jiaxiang Energy), has purchased the equivalent of millions of dollars in petrochemicals from Arya Sasol, sales which were brokered by Triliance.

Meanwhile, Morvarid, Arya Sasol, Triliance, and Jiaxiang Energy have used multiple Chinese companies to enable and hide the sale and purchase of Iranian petrochemical products. Since 2019, Arya Sasol has used Binrin Limited (Binrin) to collect the proceeds of its foreign petrochemical sales, while Elfo Energy Holding Limited (Elfo Energy), Glory Advanced Limited (Glory Advanced), Jane Shang Co. Limited (Jane Shang), and Sibshur Limited (Sibshur) have been used by Triliance to help settle, process, and transfer millions of dollars in proceeds from petrochemical product sales.

Morvarid, Arya Sasol, Jiaxiang Energy, Elfo Energy, Glory Advanced, Jane Shang, and Sibshur are being designated, pursuant to E.O. 13846, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Triliance. Binrin Limited is being designated, pursuant to E.O. 13846, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Arya Sasol.

Update to the Current SDN Listing of Al Bilad Islamic Bank

Today, OFAC also updated the SDN listing of the Iraq-based Al Bilad Islamic Bank with additional aliases including al Atta Islamic Bank for Investment and Finance. Al Bilad Islamic Bank was designated pursuant to E.O. 13224, a counterterrorism authority, on May 15, 2018 for being owned or controlled by Aras Habib who was involved in the exploitation of Iraq’s banking sector to move funds from Tehran to Hizballah. Al-Bilad Islamic Bank was used by Iran’s Central Bank Governor to covertly funnel millions of dollars on behalf of the IRGC-QF to support Hizballah.

SANCTIONS IMPLICATIONS

All property and interests in property of these persons designated today subject to U.S. jurisdiction are blocked, and U.S persons are generally prohibited from engaging in transactions with them. In addition, foreign financial institutions that knowingly facilitate significant transactions for, or persons that provide material or certain other support to, the persons designated today risk exposure to sanctions that could sever their access to the U.S. financial system or block their property and interests in property under U.S. jurisdiction.

View identifying information on the entities designated today.

####

Office of the Comptroller of the Currency Conditionally Approves SoFi’s Application to Establish a National Bank

News Release 2020-141 | October 28, 2020

WASHINGTON, D.C.—The Office of the Comptroller of the Currency yesterday granted conditional approval for Social Finance, Inc., to establish a full-service national bank titled SoFi Bank, National Association.

The OCC granted preliminary conditional approval based on a thorough evaluation of information available to the agency, including the representations and commitments made in the application and by the proposed bank’s representatives. The decision to grant preliminary conditional approval was made with the understanding that the proposed bank will apply for Federal Reserve membership and will obtain deposit insurance from the Federal Deposit Insurance Corporation.

The OCC has granted preliminary conditional approval only. Final approval and authorization for the proposed bank to open will not be granted until all preopening requirements are met.

Media Contact

Bryan Hubbard
(202) 649-6870

Related Link

OCC Allows National Banks and Federal Savings Associations Affected by Hurricane Zeta to Close

News Release 2020-140 | October 27, 2020

WASHINGTON — The Office of the Comptroller of the Currency (OCC) today issued a proclamation allowing national banks, federal savings associations, and federal branches and agencies of foreign banks to close offices along the Gulf Coast of the United States and in other areas impacted by Hurricane Zeta at their discretion.

In issuing the proclamation, the OCC expects that only those bank offices directly affected by potentially unsafe conditions will close. Those offices should make every effort to reopen as quickly as possible to address the banking needs of their customers.

OCC Bulletin 2012-28, “Supervisory Guidance on Natural Disasters and Other Emergency Conditions” (September 21, 2012), provides guidance on actions bankers could consider implementing when their bank or savings association operates or has customers in areas affected by a natural disaster or other emergency.

Related Links

Media Contact

Stephanie Collins
(202) 649-6870

Office of the Comptroller of the Currency Issues True Lender Rule

News Release 2020-139 | October 27, 2020

WASHINGTON—The Office of the Comptroller of the Currency (OCC) today issued a rule that determines when a national bank or federal savings association (bank) makes a loan and is the “true lender,” including in the context of a partnership between a bank and a third party.

Banks’ lending relationships with third parties can facilitate access to affordable credit. However, increasing legal uncertainty regarding such relationships may discourage banks and third parties from partnering, limit competition, and chill the innovation that results from these partnerships. This may ultimately restrict access to affordable credit.

After carefully considering the comments, the OCC is adopting a final rule to resolve this uncertainty. The rule specifies that a bank makes a loan and is the true lender if, as of the date of origination, it (1) is named as the lender in the loan agreement or (2) funds the loan. The rule also specifies that if, as of the date of origination, one bank is named as the lender in the loan agreement for a loan and another bank funds that loan, the bank that is named as the lender in the loan agreement makes the loan.

The rule also clarifies that as the true lender of a loan, the bank retains the compliance obligations associated with the origination of that loan, thus negating concern regarding harmful rent-a-charter arrangements.

The rule takes effect 60 days after publication in the Federal Register.

Related Link

Media Contact

Bryan Hubbard
(202) 649-6870

United States and Thailand Partner to Strengthen Infrastructure Finance

WASHINGTON – U.S. Ambassador to Thailand Michael George DeSombre and Minister of Finance Arkom Termpittayapaisith met today to discuss and exchange signed copies of the Framework to Strengthen Infrastructure Finance and Market Building Cooperation, signed by U.S. Treasury Assistant Secretary Mitchell Silk and Permanent Secretary of Finance Prasong Poontaneat of the Government of Thailand on September 22, 2020.

This cooperative initiative is designed to achieve the mutual goals of the United States and Thailand to support infrastructure development through market-oriented, private sector investment.

Under this cooperative framework, the United States and Thailand will address regulatory, market, and legal barriers to private sector investment by focusing on the development of financial instruments, project finance, the local debt market, and capital markets.

“This framework supports economic growth and our shared goals to meet infrastructure needs through market-oriented, private sector investment in Thailand and across Southeast Asia. We are committed to working with our regional partners, especially in Southeast Asia, to realize the President’s vision for the Indo-Pacific region,” said Assistant Secretary Silk.

The United States and Thailand are highlighting the framework at the Indo-Pacific Business Forum in Hanoi, Vietnam on October 28.  The engagement supports the broader U.S. Government Indo-Pacific Strategy by complementing ongoing efforts under the Enhancing Development and Growth through Energy (Asia EDGE) and the Infrastructure Transaction and Assistance Network (ITAN).

####

Treasury Prohibits Cuban Military from Processing Remittance-Related Transactions

WASHINGTON – Today, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) amended the Cuban Assets Control Regulations (CACR) to remove Cuba’s military-run entities from the remittance process. Specifically, OFAC is amending the CACR to remove from the scope of certain remittance-related general authorizations any transactions relating to the collection, forwarding, or receipt of remittances involving entities or subentities identified on the State Department’s Cuba Restricted List (CRL). The CRL, as maintained by the State Department, is a list of entities and subentities under the control of, or acting for or on behalf of, the Cuban military, intelligence, or security services or personnel with which direct financial transactions would disproportionately benefit such services or personnel at the expense of the Cuban people or private enterprise in Cuba. This action is intended to restrict such entities’ and subentities’ access to fees, commissions, or other funds obtained in connection with remittance-related activities. As a result of these changes, persons subject to U.S. jurisdiction will no longer be authorized to process remittances to or from Cuba through FINCIMEX or any other entity or subentity on the CRL.

“Cuba’s military-run institutions such as FINCIMEX take advantage of ordinary Cubans who rely on remittances, extracting fees for the Cuban military’s own benefit,” said Secretary Steven T. Mnuchin. “The Cuban people should have the freedom to decide what to do with their own money, without interference from the military.”

For the latest changes to the CACR, which can be found at 31 Code of Federal Regulations (CFR) part 515, see here.

Prohibiting Cuban Military Processed Remittance-Related Transactions with Cuba Restricted List Entities and Subentities

OFAC is amending three general licenses to exclude from the scope of such authorizations any transaction relating to the collection, forwarding, or receipt of remittances involving any entity or subentity identified on the Cuba Restricted List. OFAC is also making corresponding amendments to clarify that such remittance transactions are not permitted as ordinarily incident to a licensed transaction where excluded from the relevant OFAC general or specific license.

This restriction applies regardless of whether the transaction with the CRL entity or subentity is direct or indirect, and is distinct from the prohibition on direct financial transactions that OFAC added to the CACR in November 2017.

This change provides for a 30-day implementation period before it is effective in order to allow for technical implementation of these additional restrictions.

For more information on Cuba sanctions, click here

 

####

Treasury Sanctions Key Actors in Iran’s Oil Sector for Supporting Islamic Revolutionary Guard Corps-Qods Force

Treasury Designates Iranian Ministry and Minister of Petroleum, National Iranian Oil Company, and National Iranian Tanker Company

Washington – Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is designating the Iranian Ministry of Petroleum, the National Iranian Oil Company (NIOC), and the National Iranian Tanker Company (NITC) pursuant to E.O. 13224, as amended, a counterterrorism authority, for their financial support to Iran’s Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF), an entity designated under E.O. 13224. Senior NIOC and NITC personnel have worked closely with Rostam Ghasemi, a senior IRGC-QF official and former Minister of Petroleum who was designated in 2019, and who has assumed a portion of former IRGC-QF Commander Qasem Soleimani’s role in facilitating shipments of oil and petroleum products for the financial benefit of the IRGC-QF. OFAC is also designating multiple entities and individuals associated with the Ministry of Petroleum, NIOC, and NITC, including front companies, subsidiaries, and senior executives. In addition, OFAC is designating four persons involved in the recent sale of Iranian gasoline to the illegitimate Maduro regime in Venezuela.

“The regime in Iran uses the petroleum sector to fund the destabilizing activities of the IRGC-QF,” said Secretary Steven T. Mnuchin. “The Iranian regime continues to prioritize its support for terrorist entities and its nuclear program over the needs of the Iranian people.”

In spring 2019 alone, an IRGC-QF-led network employed more than a dozen NITC vessels to transport nearly 10 million barrels of crude oil, mostly destined for the Assad regime. Iran continues to perpetuate the Syrian conflict with these kinds of transactions. These shipments, taken collectively, sold for the equivalent of more than half a billion dollars. Today’s action targets those who supply and transport the oil that generates revenue for the IRGC-QF.

NIOC, NITC, AND MINISTRY OF PETROLEUM

NIOC, overseen by the Ministry of Petroleum, is responsible for the exploration, production, refining, and export of oil and petroleum products in Iran. NITC, a subsidiary of NIOC, is responsible for the transportation of Iranian crude exports. NIOC and NITC provide both the oil and tankers for the sale of Iranian oil by the IRGC-QF. The cooperation and coordination between the IRGC-QF and these entities extends well beyond the simple sale of oil, including coordination between NIOC and the Central Bank of Iran to facilitate the collection of tens of millions of dollars in proceeds from the sale of oil that benefitted the IRGC-QF.

NITC has also played a significant role in oil deals used to generate revenue for the IRGC-QF and Hizballah. NITC personnel coordinated with the IRGC-QF on the loading of oil provided by NIOC, and NITC Managing Director Nasrollah Sardashti (Sardashti) worked with Hizballah on logistics and pricing for oil shipments to Syria. Sardashti also worked with Qatirji Group representative Viyan Zanganeh (Zanganeh) and a senior IRGC-QF official to facilitate the shipment of millions of dollars of oil by NITC. In 2018, OFAC designated Syrian regime-affiliated Qatirji Group for facilitating fuel trades between the Syrian regime and the Islamic State of Iraq and al Sham (ISIS), including providing oil products to ISIS-controlled territory. As of early 2020, the Qatirji Group’s Zanganeh continued to work closely with the IRGC-QF to coordinate NIOC’s provision of millions of barrels of oil and petroleum products to be shipped to Syria, as well as millions of dollars in payments back to Iran. In mid-2020, Zanganeh continued to act as an intermediary between the IRGC-QF and a Syrian regime-affiliated business, arranging for the funding of the release of a seized vessel and additional shipments of fuel oil.

The Iranian Ministry of Petroleum has been used by individuals at the highest levels of the Iranian regime to facilitate the IRGC-QF’s revenue generation scheme. In mid-2019, the Ministry of Petroleum arranged the loading of hundreds of thousands of barrels of oil for shipments to Syria, and in mid-2020 the IRGC-QF and senior regime officials coordinated to use the Ministry of Petroleum to procure U.S. dollars for the benefit of the IRGC-QF.

Furthermore, in order to obfuscate its involvement in shipping activity, NITC set up a front company in the United Arab Emirates (UAE), Atlas Ship Management. NITC officials also arranged to create a separate UAE-based front company, Atlantic Ship Management Company, ostensibly as an entity to replace Atlas Ship Management.

NIOC, NITC, the Ministry of Petroleum, and Viyan Zanganeh are being designated pursuant to E.O. 13224, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, the IRGC-QF. The Ministry of Petroleum is also being designated pursuant to E.O. 13224, as amended, for owning or controlling, directly or indirectly, NIOC.

Atlas Ship Management and Atlantic Ship Management Company are being designated pursuant to E.O. 13224, as amended, for being owned, controlled, or directed by, or having acted or purported to act for or on behalf of, directly or indirectly, NITC.

KEY FACILITATORS AND ASSOCIATED ENTITIES

Ali Akbar Purebrahim (Purebrahim), managing director of NIOC’s Switzerland-based subsidiary Naftiran Intertrade Company (NICO), has worked with the IRGC-QF on petroleum sales contracts, and worked with senior IRGC-QF official Ghasemi to arrange the shipment of oil, including pricing and payment for the shipment. Under Purebrahim’s leadership, NICO carried thousands of tons of liquified petroleum gas (LPG) belonging to NIOC as part of an arrangement to transport multiple shipments of LPG per month.

Ali Akbar Purebrahim is being designated pursuant to E.O. 13224, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, Rostam Ghasemi.

OFAC is also designating key subsidiaries of the Ministry of Petroleum. The National Iranian Oil Refining and Distribution Company (NIORDC), National Iranian Oil Products Distribution Company (NIOPDC), Iranian Oil Pipelines and Telecommunications Company, National Iranian Oil Engineering and Construction Company, Abadan Oil Refining Company, Imam Khomeini Shazand Oil Refining Company, and the National Petrochemical Company (NPC) are being designated pursuant to E.O. 13224, as amended, for being owned, controlled, or directed by, or having acted or purported to act for or on behalf of, directly or indirectly, the Ministry of Petroleum.

OFAC is targeting several leaders or officials of the designated entities, all of whom are being designated pursuant to E.O. 13224, as amended, including: Minister of Petroleum Bijan Zanganeh, for being a leader or official of the Ministry of Petroleum; NIOC Managing Director Masoud Karbasian, for being a leader or official of NIOC; NITC Managing Director Nasrollah Sardashti, for being a leader or official of NITC; NIORDC Director Alireza Sadiqabadi, for being a leader or official of NIORDC; and NPC Managing Director Behzad Mohammadi, for being a leader or official of the NPC.

OFAC is also identifying the vessels Longbow Lake and Wu Xian as property in which NIOC has an interest.

GASOLINE SHIPMENTS TO VENEZUELA

In January 2020, Mahmoud Madanipour (Madanipour) and UAE-based Mobin International Limited (Mobin) entered into an agreement with designated Venezuelan state-owned oil company Petroleos de Venezuela, S.A. (PdVSA) to ship gasoline obtained from NIOC to the illegitimate Maduro regime in Venezuela. Upon the request of NIOC’s subsidiary NIOPDC, Madanipour and Mobin chartered multiple vessels to support the transport of tens of thousands of metric tons of gasoline destined for Venezuela.

Mobin International Limited is being designated pursuant to E.O. 13224, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services in support of, the NIOPDC. Mahmoud Madanipour is being designated for having acted or purposed to have acted for or on behalf of, directly or indirectly, Mobin International Limited.

OFAC is also targeting two United Kingdom-based companies of Madanipour; Mobin Holding Limited and Oman Fuel Trading Ltd. Mobin Holding Limited and Oman Fuel Trading Ltd are being designated for being owned, controlled, or directed by, or having acted or purported to act for or on behalf of, directly or indirectly, Mahmoud Madanipour.

SANCTIONS IMPLICATIONS

All property and interests in property of these persons designated today subject to U.S. jurisdiction are blocked, and U.S persons are generally prohibited from engaging in transactions with them. Any entities that are owned, directly or indirectly, 50 percent or more by such persons are also blocked. In addition, foreign financial institutions that knowingly facilitate significant transactions for, or persons that provide material or certain other support to, the persons designated today risk exposure to sanctions that could sever their access to the U.S. financial system or block their property and interests in property under U.S. jurisdiction.

Concurrent with today’s action, OFAC is issuing amended General License 8A, issued pursuant to the Global Terrorism Sanctions Regulations and the Iranian Transactions and Sanctions Regulations, to continue to allow certain humanitarian trade transactions involving NIOC or any entities in which it owns, directly or indirectly, a 50 percent or greater interest.

View additional information on the individuals and entities designated and vessels identified today.