Facilitation of Ransomware Payment Sanction Risk

Nov 23

Written By CyberSecOp Cybersecurity & Breach News

US Treasury Department Issues Ransomware Advisory

The ransomware advisories provides guidances and tools to recognize, resist, and report attacks.

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is issuing this advisory to highlight the sanctions risks associated with ransomware payments related tomalicious cyber-enabled activities. Demand for ransomware payments has increased during the COVID-19 pandemic as cyber actors target online systems that U.S. persons rely on to continue conducting business. Companies that facilitate ransomware payments to cyber actors on behalf of victims, including financial institutions, cyber insurance firms, and companies involved in digital forensics and incident response, not only encourage future ransomware payment demands but also may risk violating OFAC regulations. This advisory describes these sanctions risks and provides information for contacting relevant U.S. government agencies, including OFAC, if there is a reason to believe the cyber actor demanding ransomware payment may be sanctioned or otherwise have a sanctions nexus.

Facilitating ransomware is harmful long term

Not only do ransomware payments fuel future attacks, OFAC explained it also threatens US national security interests given their profit and later ability to advance their cause. Paying ransom to a sanctioned entity or jurisdiction could fund activities in conflict with national interests.

What is Ransomware? Ransomware is a form of malicious software (“malware”) designed to block access to a computer system or data, often by encrypting data or programs on information technology systems to extort ransom payments from victims in exchange for decrypting the information and restoring victims’ access to their systems or data. In some cases, in addition to the attack, cyber actors threaten to publicly disclose victims’ sensitive files. The cyber actors then demand a ransomware payment, usually through digital currency, in exchange for a key to decrypt the files and restore victims’ access to systems or data.

Ransomware Payments with a Sanctions Nexus Threaten U.S. National Security Interests

Facilitating a ransomware payment that is demanded as a result of malicious cyber activities may enable criminals and adversaries with a sanctions nexus to profit and advance their illicit aims. For example, ransomware payments made to sanctioned persons or to comprehensively sanctioned jurisdictions could be used to fund activities adverse to the national security and foreign policy objectives of the United States. Ransomware payments may also embolden cyber actors to engage in future attacks. In addition, paying a ransom to cyber actors does not guarantee that the victim will regain access to its stolen data.

Facilitating Ransomware Payments on Behalf of a Victim May Violate OFAC Regulations

Under the authority of the International Emergency Economic Powers Act (IEEPA) or the Trading with the Enemy Act (TWEA),9 U.S. persons are generally prohibited from engaging in transactions, directly or indirectly, with individuals or entities (“persons”) on OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List), other blocked persons, and those covered by comprehensive country or region embargoes (e.g., Cuba, the Crimea region of Ukraine, Iran, North Korea, and Syria). Additionally, any transaction that causes a violation under IEEPA, including transactions by a non-U.S. person which causes a U.S. person to violate any IEEPA-based sanctions, is also prohibited. U.S. persons, wherever located, are also generally prohibited from facilitating actions of non-U.S. persons, which could not be directly performed by U.S. persons due to U.S. sanctions regulations. OFAC may impose civil penalties for sanctions violations based on strict liability, meaning that a person subject to U.S. jurisdiction may be held civilly liable even if it did not know or have reason to know it was engaging in a transaction with a person that is prohibited under sanctions laws and regulations administered by OFAC.

Victims of Ransomware Attacks Should Contact Relevant Government Agencies OFAC encourages victims and those involved with addressing ransomware attacks to contact OFAC immediately if they believe a request for a ransomware payment may involve a sanctions nexus. Victims should also contact the U.S. Department of the Treasury’s Office of Cybersecurity and Critical Infrastructure Protection if an attack involves a U.S. financial institution or may cause significant disruption to a firm’s ability to perform critical financial services.

U.S. Department of the Treasury’s Office of Foreign Assets Control

Sanctions Compliance and Evaluation Division: ofac_feedback@treasury.gov;
(202) 622-2490 / (800) 540-6322
Licensing Division: https://licensing.ofac.treas.gov/; (202) 622-2480

U.S. Department of the Treasury’s Office of Cybersecurity and Critical Infrastructure

Protection (OCCIP)
OCCIP-Coord@treasury.gov; (202) 622-3000
Financial Crimes Enforcement Network (FinCEN)FinCEN Regulatory Support Section: frc@fincen.gov 12 See FinCEN Guidance, FIN-2020-A00X, “Advisory on Ransomware and the Use of the Financial System to Facilitate Ransom Payments,” October 1, 2020, for applicable anti-money laundering obligations related to financial institutions in the ransomware context.

Contact Information for Other Relevant U.S. Government Agencies:

Federal Bureau of Investigation Cyber Task Force