On March 14, 2019, the US Treasury Department’s Office of Foreign Assets Control (OFAC) introduced the List of Foreign Financial Institutions Subject to Correspondent Account or Payable-Through Account Sanctions (the CAPTA List).  The CAPTA List identifies foreign financial institutions (FFIs) that are prohibited from opening correspondent or payable-through accounts in the US, or for whom maintaining such an account is subject to strict conditions.¹  The CAPTA List is not, however, a new sanctions authority in its own right. Rather, it is a new organizational structure that consolidates several existing sanctions lists and authorities.

As of March 22, 2019, the CAPTA List contains only one party: the Bank of Kunlun Co. Ltd (Bank of Kunlun), which OFAC moved to the CAPTA List from one of the CAPTA List’s predecessor lists.

Sanctions authorities now utilizing the CAPTA List

The CAPTA List will be used to identify FFIs that are subject to correspondent and payable-through account sanctions pursuant to a range of existing US sanctions programs related to Iran, North Korea and Russia, as well as the Hizballah terror organization. Some types of activity that can trigger listing on the CAPTA List include the following:

Iran

• Being part of the energy, shipping or shipbuilding sectors of Iran; operating a port in Iran; or knowingly providing significant financial, material, technological or other support to, or goods or services in support of any activity or transaction on behalf of persons that are a part of the energy, shipping or shipbuilding sectors of, or operating a port in Iran, or Iranian persons on OFAC’s List of Specially Designated Nationals (SDN List).²
• Knowingly selling, supplying or transferring a precious metal or certain materials to or from Iran, directly or indirectly.³
• Knowingly facilitating a significant financial transaction on behalf of certain Iranian SDNs.⁴
• FFIs knowingly facilitating the efforts of the Government of Iran to acquire or develop weapons or delivery systems of mass destruction, or facilitating the activities of a person subject to UN financial sanctions against Iran.⁵
• FFIs knowingly conducting or facilitating any significant transaction with the Iranian National Oil Company (NIOC), the Naftiran Intertrade Company (NICO) or an entity owned or controlled by, or operating for or on behalf of, NIOC or NICO for the purchase or acquisition of petroleum or petroleum products from Iran, or for the purchase or acquisition of petrochemical products from Iran.⁶
• Knowingly conducting or facilitating any significant financial transaction involving Iran’s automotive sector; Iranian SDNs, including NIOC and NICO; petroleum or petroleum products, or petrochemical products from Iran; or the Iranian rial.⁷

North Korea

• Knowingly conducting or facilitating any significant transaction on behalf of persons sanctioned under the North Korea-related sanctions authorities, or “in connection with trade with North Korea.”⁸

Russia

• Knowingly engaging in significant transactions involving certain defense- and energy-related activities related to Russia, or knowingly facilitating significant financial transactions on behalf of persons sanctioned under the Russia-related sanctions authorities.

Hizballah

• Facilitating a significant transaction or providing significant financial services relating to Hizballah.⁹

CAPTA List key components

In addition to the name and address of the sanctioned FFI, the CAPTA List also details the prohibition or applicable strict condition(s) and the relevant sanctions program.  US financial institutions must comply with these measures, and, in some cases, may have to provide a report to OFAC on the closure of CAPTA List banks’ correspondent or payable-through accounts.¹⁰

Prior to the introduction of the CAPTA List, OFAC had created two separate sanctions lists to identify FFIs subject to sanctions on their US correspondent and payable-through banking relationships: the List of Foreign Financial Institutions Subject to Part 561 (the Part 561 List) and the Hizballah Financial Sanctions Regulations List (the HFSR List). The Part 561 List is now defunct, and the HFSR List was never published on OFAC’s website because OFAC did not sanction any FFIs pursuant to the Hizballah Financial Sanctions Regulations.

The CAPTA List is separate from the SDN List. Identification on the CAPTA List does not impose a general ban on doing business with the FFI at issue, or any blocking (freezing) requirements.

Identification of Bank of Kunlun

As noted above, the CAPTA List currently contains only one entry, the Bank of Kunlun, which is prohibited from opening or maintaining a correspondent or payable-through account at a US financial institution. OFAC sanctioned the Bank of Kunlun on July 31, 2012, pursuant to the Iranian Financial Sanctions Regulations for providing “significant financial services to more than six Iranian banks that were designated by the United States in connection with Iran's weapons of mass destruction programs or its support for international terrorism.”¹¹ Until March 14, 2019, when OFAC established the CAPTA List, the Bank of Kunlun was identified on the Part 561 List.

Looking ahead

The introduction of the CAPTA List does not, in itself, create a new sanctions authority or expand any existing authority. The CAPTA List does, however, consolidate several existing lists and, as a result, should be incorporated into sanctions screening and compliance programs.

1. Depending on the specific sanctions authority, such strict conditions may include measures such as the prohibition or restriction on any provision of trade finance through the US correspondent or payable-through account of a sanctioned FFI, or monetary limits on, or limits on the volume of, transactions that may be processed through the US correspondent or payable-through account of the sanctioned FFI.↩
2. Iran Freedom and Counter Proliferation Act of 2012, 22 U.S.C. 8801 et seq. § 1244 (IFCA).↩
3. IFCA, at § 1245.↩
4. IFCA, at § 1247.↩
5. 31 C.F.R. 561.201. ↩
6. 31 C.F.R. 561.204.↩
7. Exec. Order 13846 (Aug. 6, 2018).↩
8. 31 C.F.R. 510.210.↩
9. 31 C.F.R. 566.201.↩
10. For example, Section 510.211 of the North Korea Sanctions Regulations includes a reporting requirement pursuant to which a US financial institution that maintained a correspondent or payable-through account for an FFI whose name is added to the CAPTA List must file a report with OFAC that provides full details on the closing of each such account within 30 days of the closure of the account. ↩
11. Treasury Sanctions Kunlun Bank in China and Elaf Bank in Iraq for Business with Designated Iranian Banks, US Department of Treasury (July 31, 2012), https://www.treasury.gov/press-center/press-releases/pages/tg1661.aspx.↩