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From Banking and Finance Law Daily, March 7, 2014

FinCEN provides update on former officials of Ukraine; urges increased awareness

By Lisa M. Goolik, J.D.

The Financial Crimes Enforcement Network has issued an updated advisory, supplementing information previously provided to U.S. financial institutions, with current information regarding persons subject to sanctions and asset freezes because of their apparent role in the misappropriation of state assets or instability in Ukraine. The advisory reminds all U.S. financial institutions of their obligations to file a Suspicious Activity Report if it has reason to suspect that a transaction relating to a senior foreign political figure involves funds derived from illicit activity and to take “reasonable, risk-based steps” regarding the potential movement of assets related to senior officials resigning from their positions or departing Ukraine.

EU Council Regulation. Based on information it received from Ukraine, the European Union issued a Council Regulation on March 5, 2014, requiring the EU to freeze the funds and economic resources of former Ukrainian officials, their families, and their close associates. The government of Canada has taken similar action against the same individuals.

According to FinCEN, these measures increase the likelihood that the individuals will seek to move their assets in a deceptive fashion. As a result, FinCEN is updating an advisory it issued on Feb. 25, 2014, to provide the names of those 18 individuals, including: Viktor Fedorovych Yanukovych, former President of Ukraine; Vitalii Yuriyovych Zakharchenko, former Minister of Internal Affairs; Viktor Pavlovych Pshonka, former Prosecutor General; and Oleksandr Hryhorovych Yakymenko, former Head of Security Service.

Executive Order. FinCEN is also reminding institutions to be aware that on March 6, 2014, President Obama issued an Executive Order authorizing the Secretary of the Treasury, in consultation with the Secretary of State, to designate individuals or entities that contribute to the undermining of Ukraine’s democracy, peace, security, sovereignty, or territorial integrity, or are responsible for the misappropriation of Ukraine’s state assets. The order requires U.S. financial institutions, and any foreign branch, to block the assets of any designated individuals or entities that come under U.S. jurisdiction.

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