Markets Wired

As Prepared for Delivery  

Good afternoon and thank you all for being here today. I have been looking forward to this conference and would like to thank the Integrity Council for the Voluntary Carbon Market (IC-VCM), the Global Carbon Market Utility (GCMU), and the Voluntary Carbon Markets Integrity Initiative (VCMI) for hosting this event. The focus of today’s conference – delivering high integrity carbon markets – is critically important to meeting our climate goals. As stated by Secretary Yellen, to meet the challenges of climate change, “We need to use all the tools at our disposal—creatively, thoughtfully, and at scale.”  

As the Secretary mentioned in her speech earlier today, several US government agencies came together to issue the Voluntary Carbon Markets Joint Policy Statement and Principles in May of this year. These VCM Principles acknowledged that the market, in its current state, isn’t working as well as it should.  They highlighted the need for improvements in supply integrity, demand integrity, and market integrity, each of which is a necessary condition to support the quality, consistency, and scale of the market.  

Today, I will be speaking mainly about market integrity issues in the VCMs. But before I do, I would like to acknowledge the critical and complementary efforts around supply and demand integrity.  

Before publishing the VCM Principles, buyers consistently told us that discovering and identifying high quality credits had been their most significant challenge. There are hundreds of methodologies in the market, and it can be difficult for any single buyer to discern the supply integrity of credits. Buyers still see this as a challenge, but I have been pleased to see that the market has begun to make some progress in this area, progress that needs to continue.

Institutions like IC-VCM are simplifying the search process by setting integrity floors for credit quality. A single Core Carbon Principle-Approved label that cuts across a wide range of methodologies and standards should make it easier for buyers and other market participants to assess and compare credits available for purchase.  

Credit standard bodies are updating methodologies to ensure projects deliver additional and durable emissions impacts. Carbon credit rating firms have continued to issue ratings on new and existing carbon credit projects, helping buyers to be more discerning in their choice of credits. And on the regulatory front, the CFTC recently published final guidance for regulated exchanges, allowing for industry-recognized standards to be used as tools for the evaluation of carbon credits underlying futures contracts. A more robust futures market will also help support market integrity, particularly with respect to price transparency.  

The VCM Principles published in May also spoke to the importance of demand integrity. Corporate buyers should prioritize reducing their own emissions through adopting net-zero targets, planning their climate transitions, and being transparent about their efforts and progress. However, VCMs can also play a significant and complementary role in these efforts. We support ongoing efforts in the market to create frameworks that allow companies to use high quality carbon credits to further accelerate their progress toward net-zero.  

Once a mechanism for ensuring the supply integrity of carbon credits and their appropriate use is in place, it is then equally important to ensure that the buying and selling of these credits is efficient, which is why I am pleased to open this conversation on market integrity.

A well-functioning market should make it easy for participants to buy and sell a given product through clear product disclosure, transparent price information, efficient settlement, and without excessive search costs.  Accordingly, the VCM Principles state that stakeholders should improve “transparency and the publicly available data of credit-generating projects and programs, including transaction volumes and prices.”  

Treasury’s responsibility for US financial markets leads us to naturally focus on the market structure of VCMs.  We hear from market participants that buying a carbon credit is an opaque and time-consuming process. Carbon credits from the same project can trade at vastly different prices, and some buyers have even told us that they spend over 50 percent of their carbon credit budget in search costs. The US capital markets are large, deep, liquid, and efficient. This is thanks not only to a robust and innovative private sector, but also to a combination of regulatory and market structures that promote transparency, efficiency, fairness, and measures that mitigate conflicts of interest.  

We can draw from our expertise in existing financial markets to help strengthen VCMs. I will suggest a few ideas today, ideas that we believe represent the most fundamental elements of market integrity that are currently lacking in VCMs and are essential to unlocking buyer demand. These ideas will focus on both improving data quality and comparability and enhancing price transparency in VCMs.  

Carbon markets have grown organically, with a broad ecosystem of registries, compliance programs, methodologies, measurement and verification systems, and products. There is no widely accepted and consistent data protocol across the industry at the current time. Collaboration and data sharing across parties is fragmented, cumbersome, and holding back the market’s evolution.  

Developing interoperable data protocols for carbon credits and making this information available to the public can promote market trust and integrity. A data protocol where every carbon credit includes consistent data tags for project location, rating, description, issuance, and units, among other features, regardless of its original crediting program, would allow for credits to become comparable across market platforms and registries. This would facilitate easier benchmarking and aggregation of product baskets, as well as the creation of global identifiers, and lead to more financial scalability and innovation.  

I understand that several market participants have begun to explore how to structure accessible data across the carbon credit lifecycle and make it available to the marketplace. Some examples include meta-registries from private market participants, and a blockchain-based open data platform. Some market integrity consultation groups have been formed recently to discuss global data protocols, among other topics. We commend these efforts and look forward to tracking progress on this topic as it develops.  

Today, the vast majority of transactions in voluntary carbon markets are over the counter (OTC), meaning buyers and sellers negotiate prices directly or through a broker. These OTC transactions are typically opaque, with pricing and transaction details generally remaining confidential. While we have seen the emergence of several OTC pricing data sources, these sources are heavily dependent on what buyers and sellers will report voluntarily. Data can be reported by market participants with a long lag of up to a year, and is often aggregated such that single transaction prices, date stamps, vintages, and other useful datapoints for price formation and discovery are unavailable.

Some platforms and exchanges aim to standardize this landscape by offering harmonized contracts that enhance transparency and accessibility for all market participants. Despite these efforts, a significant spread persists between OTC and exchange-listed prices, underscoring the market’s continued reliance on OTC mechanisms and highlighting the challenges in achieving a cohesive price discovery framework.  

Market participants should consider the benefits of price and transaction transparency in VCMs. Increased transparency will lead to market prices reflecting fundamental information more clearly, such as project details, integrity floors, and ratings, thereby mitigating information asymmetries. If price history were available to market participants, buyers could look across projects and credits to better understand and assess an appropriate price of carbon and use those prices to forecast and plan future purchases. More pricing credibility will lead to more buyers.  

Increasing transparency is not always easy, but it is a common theme in successful market evolution. A repository where price and transaction history for carbon credits are gathered, organized, and stored would have a transformative effect in VCMs.  In other established markets, such as the consolidated tape systems for equities, or the swap data repositories for swap markets and TRACE for corporate bonds, this shared data allows for deeper liquidity and investment, and ultimately enables the kind of long-term growth we need from VCMs to reach our climate goals.  

The Treasury Department continues to support a high-integrity voluntary carbon market and looks forward to contributing our expertise and convening power to help develop solutions to market integrity. With the right market structure in VCMs, we can succeed in unlocking buyer demand and strengthening trust and credibility in this market.  

To conclude, we are confident that with improved integrity and marketplace function, VCMs can reach their full potential. We applaud and thank the ICVCM, VCMI, and GCMU for co-hosting this event and organizing today’s session. I look forward to hearing new perspectives from those present and thank you again for the opportunity to share our views on this subject from the Treasury Department

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WASHINGTON – Today, the U.S. Department of the Treasury hosted a roundtable with representatives from financial institutions, technology providers, financial technology firms, small business associations, consumer advocacy groups, government agencies, Federal Reserve banks, and other stakeholders to discuss how financial institutions, including depository and non-depository institutions, can better support the small business community.  

At the roundtable, participants discussed the current state of small business finance, obstacles faced by small businesses owned by women and people of color, challenges faced by financial institutions in serving small businesses, and potential solutions to bridge financing gaps.  

Treasury Department officials led discussions on how recent market developments – such as the growth of nonbanks, rising interest rates, and emerging technologies like artificial intelligence – affected small business financing.  Participants also discussed factors that have contributed to the relative decline of small business financing by banks, disparities in capital access across demographic groups, and potential policy reforms that could help address these challenges.

Treasury recently released a report showing that small businesses have created over 70% of net new American jobs since 2019.  Recent data showed that accessing the necessary financing to grow their businesses remains a significant challenge for many small business owners.  Treasury will continue to engage with stakeholders to help facilitate a strong, competitive, and inclusive marketplace for small business capital. 

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Almost 1 in 5 small business owners and self-employed workers ages 21-64 rely on Affordable Care Act Marketplaces for coverage

WASHINGTON – Today, the U.S. Department of the Treasury released new analysis showing a total of 3.3 million small business owners and self-employed workers were covered by Affordable Care Act Marketplace coverage in 2022, amounting to 28% of all Marketplace enrollment in this age range. 

The Affordable Care Act Marketplaces are a disproportionately important source of coverage for small business owners and self-employed workers. In 2022, nearly one in five (18%) of small business owners and self-employed workers ages 21-64 relied on the Affordable Care Act Marketplaces for coverage. That compares to 6% of the rest of the population ages 21-64.

The 3.3 million small business owners and self-employed workers enrolled in the Marketplaces includes 2.7 million small business owners ages 21-64 and 1.7 million self-employed workers ages 21-64, with some overlap between these groups. Because overall Marketplace enrollment has grown since 2022, if small business owners and self-employed workers account for the same share of enrollment in 2024, 4.2 million small business owners and self-employed workers would have coverage. 

“The Affordable Care Act has been transformative for millions of small business owners and entrepreneurs who rely on the law for affordable and reliable health care coverage, including 3.3 million in 2022. The Affordable Care Act allows Americans with dreams of starting their own businesses to pursue new opportunities without fear of being unable to access or afford health insurance, creating a more dynamic and productive economy over the long run,” said U.S. Secretary of the Treasury Janet L. Yellen. “Marketplace enrollment has surged under the Biden-Harris Administration’s economic policies, which have made premiums far more affordable for American small businesses and entrepreneurs.” 

“It is no coincidence that the Biden-Harris Administration has seen a historic Small Business Boom alongside a surge in Marketplace enrollment among small business owners,” said SBA Administrator Isabel Casillas Guzman. “With 19.4 million new business applications since the President took office, millions of entrepreneurs continue to rely on the Affordable Care Act for health insurance in order to pursue their American dream of business ownership.”

Before the Affordable Care Act was enacted in 2010, small business owners and self-employed workers had limited options to purchase affordable, high-quality health coverage. While most Americans obtained health insurance through their jobs, small business owners and self-employed workers often needed to purchase health insurance on their own, in which case quality coverage was expensive and sometimes denied.

The new data confirms that the Marketplaces are a particularly important source of affordable coverage for small business owners and self-employed workers, and the Biden-Harris Administration’s improvements to Affordable Care Act Premium Tax Credits are critically important to this group as well.

The American Rescue Plan Act of 2021 and the Inflation Reduction Act of 2022 enhanced the Premium Tax Credit available to people purchasing coverage through the Marketplaces by increasing the size of the credit for low- and moderate-income people and expanding eligibility to middle-income people facing high premiums. Over 2.7 million, or 82%, of small business owners and self-employed workers enrolled in Marketplace coverage in 2022 claimed the Premium Tax Credit, including about 285,000 taxpayers with incomes over 400% of the poverty level. Premium Tax Credit improvements are scheduled to expire at the end of 2025, putting affordable coverage at risk for millions of small business owners and self-employed workers.  

Today’s news comes after the recent release of data showing that nearly 50 million Americans, or 1 in 7 U.S. residents, have been covered through the Marketplaces since January 2014. Under the Biden-Harris Administration, which has improved the affordability of Marketplace coverage by expanding the Premium Tax Credit, the number of Americans covered through the Marketplaces has significantly increased, reaching an all-time high of 20.8 million following open enrollment for 2024. 18.2 million Americans have enrolled for the first time since January 2021.

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WASHINGTON – The G7 Cyber Expert Group (CEG) – chaired by the U.S. Department of the Treasury and the Bank of England – released a public statement today highlighting the potential cybersecurity risks associated with developments in quantum computing and recommending steps for financial authorities and institutions to take to address those risks. 

Quantum computers are being built that will be able to solve computational problems currently deemed impossible for conventional computers to solve within a reasonable amount of time. While potentially providing significant benefits to the financial system, these powerful computers will also carry with them unique cybersecurity risks. One of the most significant is that cyber threat actors could use quantum computers to defeat certain cryptographic techniques that secure communications and IT systems, potentially exposing financial entity data, including customer information.

“The G7 CEG looks to help support the responsible use of emerging technologies like Cloud, AI, and Quantum in the financial sector while balancing the risks to the global economy,” said Treasury Deputy Assistant Secretary for Cybersecurity and Critical Infrastructure Protection Todd Conklin, Co-Chair to the G7 CEG. “Cyber experts across the financial sector have developed internal plans related to quantum innovation and resilience, and it is critical that they obtain the support needed for their successful implementation. The G7 CEG believes that planning for the quantum transition is important to economic security and prosperity, and strongly encourages financial institutions to provide funding and other resources needed to support it.”

While the exact timeline for developing quantum computers with these capabilities is uncertain, there is a real possibility that such capabilities could emerge within a decade. These quantum computers would not only put future data at risk, but also any previously transmitted data that cyber adversaries have been able to intercept and store with the intent of decrypting later with quantum computers. Due to the potentially long lead time needed to put in place quantum-resilient technologies, the time to start planning is now.

An initial set of quantum-resilient encryption standards was released by the National Institute of Standards and Technology (NIST) last month. Additional standards from NIST and other standard-setting bodies are expected in the future. It is important for financial entities to maintain the agility required to incorporate new encryption standards in a timely and appropriate manner as they become available.

With the availability of NIST’s standards, some financial entities may be in a position now to start making the needed changes to implement quantum resilient technologies within their systems. Others may be dependent on vendors and other third parties to develop implementations of the new standards that can be incorporated once they become available. No matter where entities are in their adoption timelines, the G7 CEG strongly encourages financial authorities and institutions to begin taking the following steps to build resilience against quantum computing risks:

1. Develop a better understanding of the issue, the risks involved, and strategies for mitigating those risks.
2. Assess quantum computing risks in their areas of responsibility.
3. Develop a plan for mitigating quantum computing risks.

The CEG statement provides additional details on quantum computing risks and the specific actions that financial entities can start taking to build quantum resilience within the financial system.

The G7 CEG’s membership includes representatives of financial authorities across all G7 countries as well as the European Union. It was founded in 2015 to serve as a multi-year working group that coordinates cybersecurity policy and strategy across the member jurisdictions. In addition to policy coordination, the G7 CEG also acts as a vehicle for information sharing, cooperation, and incident response.

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As Prepared for Delivery 

Thank you to Bloomberg Philanthropies for hosting this second Partnership for Global Infrastructure and Investment (PGII) Investor Forum. I’m glad to be here with World Bank President Ajay Banga, my colleagues Jake Sullivan and Amos Hochstein, and with the business leaders who have helped drive progress on this partnership. 

Over the past three and half years, the Biden-Harris Administration has scaled up financing and policy reform work to support emerging markets and developing countries. We know many of them face pressing challenges today, from the increasing severity and frequency of climate-related events to significant debt burdens. We also know government alone cannot overcome these challenges; we need the private sector in order to bring the necessary scale of investment.

That’s why, over two years ago, we launched the PGI to mobilize $600 billion for global infrastructure investments, recognizing that this moment demands wide-ranging international investment and public-private collaboration. The United States aims to contribute one-third of this total, and we’ve already mobilized $60 billion toward that goal. 

Along with mobilizing private capital toward PGI investments, we have also put private capital mobilization at the heart of our multilateral development bank evolution agenda. Thanks to President Banga’s leadership, we’ve seen the World Bank make private capital mobilization part of the scorecard it uses to measure and drive its results. 

Over the past two years, I know this group has discussed the barriers that hold back private sector investment. Since last year’s forum, I’m happy to say we’ve made progress in removing these barriers. 

For example, Treasury worked with the Investor Leadership Network to support the launch of a new $400 million debt fund and is helping grow the pipeline of bankable projects. This will help provide the stable, patient capital that is needed for critical investments in the energy transition. 

In addition, the World Bank launched a new Guarantee Platform housed at the Multilateral Investment Guarantee Agency (MIGA) that aims to triple guarantee issuances by 2030. This platform will streamline and expand guarantees against non-commercial risks like political risk, thereby providing investors with more protection in markets they would otherwise find risky. 

We also heard concerns about foreign exchange risk. That’s why over the past year—including through the Private Sector Investment Lab—I know the World Bank has made progress on developing and scaling innovative tools to create solutions for investors. 

To expand the ways in which the private sector can engage, the United States led the charge for  the Inter-American Development Bank’s private sector investment arm, IDB Invest, to implement a new business model predicated on an “originate-to-share” approach. This will create new opportunities for risk and return sharing with the private sector and catalyze financing into sustainable development projects in Latin American and the Caribbean. The business model incorporates blended finance to reduce risks for investors, simplifies project approval processes, builds out the advisory services and technical assistance, and will be supported by a $3.5 billion capital increase that doubles IDB Invest’s capital base. 

Across these projects and more, we are proud of this progress we have made. But we also recognize there is more to do to unlock greater investment. And we are committed to do so because these investments from American companies not only generate return for their investors, but they also address our global challenges, create economic opportunity around the world, and make Americans safer and more secure. 

I look forward to hearing others take stock of where we are today and discussing what together we need to do next. Thanks again for joining us today, and let me now give the floor to Jake.

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As Prepared for Delivery

Thank you, Annette, for the kind introduction. And let me thank the Global Carbon Market Utility, the Integrity Council for the Voluntary Carbon Market (IC-VCM), and the Voluntary Carbon Markets Integrity Initiative for hosting me and this event today.

Over the past three and a half years, the Biden-Harris Administration has pursued an aggressive climate agenda, and Treasury has been proud to play a leading role. We lead the implementation of the many tax provisions of the Inflation Reduction Act, which are driving a record level of private sector investment in clean energy. We published the Principles for Net-Zero Financing and Investment to support financial institutions in pursuing credible and consistent net-zero commitments. And we are working to identify and address climate-related financial risks.

What we know and what all of you know is that this challenge requires all of us—government, the private sector, nonprofit organizations, experts, and academics. The need for our collaboration is clear when we think about Voluntary Carbon Markets (VCMs).

VCMs have the potential to create both economic and climate opportunities by channeling private capital to high-impact and cost-effective climate projects across technologies, ecosystems, and geographies. But today’s markets face significant challenges that are holding back their growth.

That’s why in May, with partners across our government, we launched the Principles for Responsible Participation in Voluntary Carbon Markets. We hope that these Principles can bring us closer to achieving functioning, high-integrity VCMs that live up to both the economic and climate potential we all believe in. I’m grateful not only for those of you in this room who helped us form these Principles, but I’m also grateful for the work we’ve all done to make progress since their release.

The Principles emphasize the importance of supply integrity—the idea that credits should represent real emissions reductions or removals and avoid harm. In recent months, we’ve seen steps taken to improve supply integrity. For example, the IC-VCM has started applying its Core Carbon Principle approved label to several methodologies. And, the CFTC provided final guidance for listing voluntary carbon credits on exchanges. These approvals and regulatory guidance are technical steps. They may lack the luster of a splashy investment announcement. But they are the exact kinds of steps we have to take to achieve the ambitious goals we are aspiring to.

The Principles also emphasize demand integrity—the idea that companies should make every effort to reduce direct emissions within their own value chains and then pursue carbon credits to complement those efforts. We have been happy to see companies developing transition plans and pursuing other efforts, alongside considering participation in VCMs. Because while VCMs are crucial to our goals, they are not in themselves sufficient, especially in their nascent stage.

Lastly, the Principles emphasize market integrity—the need to improve a currently fragmented market with more transparency. Increasing transparency around pricing and transaction data would help buyers reduce their risk, developers better predict their revenues, and financiers develop new products. I’m glad that you’ll get to hear later today from Treasury Under Secretary Nellie Liang on these issues and how we can make progress.

There’s no question that we have much more work to do. We at Treasury look forward to continuing to work with counterparts across our government, civil society organizations, the private sector, and international partners—bilaterally, and through groups like APEC and the G20.

VCMs hold significant potential. But we can only realize their promise if we are willing to take steps to overcome their challenges. I have confidence we can meet the moment because of the creativity, talent, and leadership of those of you in this room.

Thank you again for having me here today; I look forward to being your partner in this work.

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WASHINGTON — Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is sanctioning a former member of Haiti’s parliament, Prophane Victor, for his role in forming, supporting, and arming gangs and their members that have committed serious human rights abuse in Haiti. OFAC is also designating Luckson Elan, the current leader of the Gran Grif gang, for his involvement in serious human rights abuse related to gang activity in Haiti’s Artibonite department.  

“Victor and Elan, through their influence over or leadership of the gangs in Haiti, have sought to perpetuate the horrific violence and instability,” said Acting Under Secretary of the Treasury for Terrorism and Financial Intelligence Bradley T. Smith. “Treasury remains committed to holding accountable those who seek to leverage human rights abuses, violence, and corruption to achieve their political aims.” 

Promoting accountability for gender-based violence is a top priority for the U.S. government. President Biden issued a Memorandum on Promoting Accountability for Conflict-Related Sexual Violence in November 2022 that directs the U.S. government to strengthen our exercise of financial, diplomatic, and legal tools against this scourge. The UN Panel of Experts report on Haiti states that the “levels of violence and the depths of cruelty that gangs will go to in violating human rights are unprecedented, with regular indiscriminate attacks against the population and the obstruction of humanitarian assistance. Sexual and gender-based violence and rape in particular have become one of the most horrific expressions of violence over the past two years. Such violence and insecurity not only undermine the political transition, but also decimate the national economy and threaten the future of the country.” Today’s action targets one actor directly responsible for gender-based violence and one that has provided material support to gangs, including those that have engaged in gender-based violence as a regular practice of intimidation, control, and extortion. 

serious human rights abuse IN ARTIBONITE, Haiti

Prophane Victor is a former Haitian legislator who started arming young men in Petite Rivière, Artibonite to secure his control over the area and his election in 2016. Those men went on to form the Gran Grif gang, which is currently the largest gang in the Artibonite department and the main perpetrator of abuses, including sexual violence. Prophane Victor materially supported Gran Grif until at least 2020. Prophane Victor has also trafficked weapons to Haiti and is known to have relationships with and provided funds to other gangs throughout Haiti, including rivals of Gran Grif. Prophane Victor’s gang affiliations and material support to them contribute to the climate of terror as the gangs engage in an array of cruelty and violence, fight for control, and leave residents to pay the consequences. 

Luckson Elan is the current head of Gran Grif gang. Luckson Elan and other members of the Gran Grif gang are responsible for serious human rights abuse including kidnapping, murder, beating, and raping of women and children, as well as looting, destruction, extortion, hijacking, and stealing crops and livestock. The situation is especially devastating for his child victims who have been subjected to forced recruitment and sexual violence. 

OFAC is designating Prophane Victor pursuant to Executive Order (E.O.) 13818 for being a person who has materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of an entity, including any government entity, that has engaged in, or whose members have engaged in, serious human rights abuse, where the activity is conducted by a foreign person.

OFAC is designating Luckson Elan pursuant to E.O. 13818 for being a foreign person who is responsible for or complicit in, or has directly or indirectly engaged in, serious human rights abuse. OFAC also is designating Luckson Elan pursuant to E.O. 13818 for being or having been a leader or official of an entity, including any government entity, that has engaged in, or whose members have engaged in, serious human rights abuse relating to the leader’s or official’s tenure.

SANCTIONS IMPLICATIONS

As a result of today’s action, all property and interests in property of the designated persons described above that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked. Unless authorized by a general or specific license issued by OFAC, or exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons. U.S. persons may face civil or criminal penalties for violations of E.O. 13818. Non-U.S. persons are also prohibited from causing or conspiring to cause U.S. persons to wittingly or unwittingly violate U.S. sanctions, as well as engaging in conduct that evades U.S. sanctions. OFAC’s Economic Sanctions Enforcement Guidelines provide more information regarding OFAC’s enforcement of U.S. sanctions, including the factors that OFAC generally considers when determining an appropriate response to an apparent violation.

Financial institutions and other persons that engage in certain transactions or activities with the sanctioned entities and individuals may expose themselves to sanctions or be subject to an enforcement action. The prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any designated person, or the receipt of any contribution or provision of funds, goods, or services from any such person. 

The power and integrity of OFAC sanctions derive not only from OFAC’s ability to designate and add persons to the Specially Designated Nationals and Blocked Persons (SDN) List, but also from its willingness to remove persons from the SDN List consistent with the law. The ultimate goal of sanctions is not to punish, but to bring about a positive change in behavior. 

For information concerning the process for seeking removal from an OFAC list, including the SDN List, please refer to OFAC’s Frequently Asked Question 897 here. For detailed information on the process to submit a request for removal from an OFAC sanctions list, please click here.

GLOBAL MAGNITSKY

Building upon the Global Magnitsky Human Rights Accountability Act, E.O. 13818 was issued on December 20, 2017, in recognition that the prevalence of human rights abuse and corruption that have their source, in whole or in substantial part, outside the United States, had reached such scope and gravity as to threaten the stability of international political and economic systems. Human rights abuse and corruption undermine the values that form an essential foundation of stable, secure, and functioning societies; have devastating impacts on individuals; weaken democratic institutions; degrade the rule of law; perpetuate violent conflicts; facilitate the activities of dangerous persons; and undermine economic markets. The United States seeks to impose tangible and significant consequences on those who commit serious human rights abuse or engage in corruption, as well as to protect the financial system of the United States from abuse by these same persons.

Click here for more information on the individuals and entities designated today.

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WASHINGTON — Today, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned more than a dozen entities and vessels for their involvement in the shipment of Iranian crude oil and liquid petroleum gas to Syria and East Asia on behalf of the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) and Hizballah. Among the vessels sanctioned today are four ships associated with the fleet of illicit shipping Syrian magnate Abdul Jalil Mallah (Abdul Jalil) and his brother Luay al-Mallah. Since Abdul Jalil’s June 10, 2021 designation for his support to the network of IRGC-QF-backed Houthi financial official Sa’id al-Jamal, Luay al-Mallah has continued to use their shipping empire to support Iran’s malign activities and those of its proxies. Luay al-Mallah is also being designated in this action.

“Iran continues to rely heavily on the illicit sale of oil and liquid petroleum gas by the IRGC-QF and Lebanese Hizballah to fund its terrorist proxies and destabilizing activities,” said Acting Under Secretary of the Treasury for Terrorism and Financial Intelligence Bradley T. Smith. “Treasury remains committed to disrupting the networks of shippers, brokers, and buyers that facilitate these schemes.”

Today’s action is being taken pursuant to counterterrorism authority Executive Order (E.O.) 13224, as amended. OFAC designated the IRGC-QF pursuant to E.O. 13224 on October 25, 2007, for providing material support to multiple terrorist groups. The U.S. Department of State designated Hizballah as a Specially Designated Global Terrorist group (SDGT) pursuant to E.O. 13224 on October 31, 2001.

HIzballah and IRGC-QF shipments

Marshall Islands-registered, People’s Republic of China (PRC)-based Star Ocean Shipmanage Ltd. is the ship manager, technical manager, and operator of the Panama-flagged vessel ETERNAL SUCCESS (IMO: 9307633), the Panama-flagged ETERNAL 8 (IMO: 9232448), and the Panama-flagged ETERNAL PEACE (IMO: 9259745). The IRGC-QF used the ETERNAL SUCCESS to facilitate illicit trade as recently as July 2024, manipulating its Automatic Identification System to disguise its movements while sailing toward East Asia, where it transferred its cargo to another tanker via a ship-to-ship transfer. Similar to its sister ship, the ETERNAL 8 has also been involved in transferring shipments for the IRGC-QF. 

Star Ocean Shipmanage Ltd. 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 to or in support of, the IRGC-QF. The ETERNAL SUCCESS, ETERNAL 8, and ETERNAL PEACE are being identified as property in which Star Ocean Shipmanage Ltd. has an interest. 

Marshall Islands-based Dragon Road Ltd is the registered owner of the Panama-flagged SERENE I (IMO: 9197832). As recently as summer 2024, the SERENE I loaded IRGC-QF-owned products in Iran on behalf of the U.S.-sanctioned, Lebanese Hizballah-affiliated, Lebanon-based company Concepto Screen SAL Offshore. Similarly, the Panama-flagged FENG TAI (IMO: 9248473) transported IRGC-QF-owned products, loaded in Iran, to the PRC on behalf of Concepto Screen SAL Offshore. Hong Kong-based Tai Feng Hai Shipping Limited is the registered owner of the FENG TAI.

Dragon Road Ltd and Tai Feng Hai Shipping Limited 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 to or in support of, the IRGC-QF. SERENE I and FENG TAI are being identified as property in which Dragon Road Ltd and Tai Feng Hai Shipping Limited have an interest, respectively. 

MALLAH SHIPPING NETWORK

Luay al-Mallah has assisted his brother, sanctioned Syrian shipping magnate Abdul Jalil Mallah, in running his family’s business following the latter’s designation for assisting the illicit shipping network of Sa’id al-Jamal, an IRGC-QF-backed Houthi financial official. The Mallah family’s ships, including the Panama-flagged CONFIDENCE P (IMO: 9178044), Sao Tome and Principe-flagged NOVA (IMO: 9141259), Panama-flagged RIVAL (IMO: 9117818), and Iran-flagged TIYARA (IMO: 9231224), have facilitated illicit trade between Syria and Iran for the benefit of the IRGC-QF and Hizballah.  As recently as 2021, Luay al-Mallah managed a shipment for Sa’id al-Jamal.  In 2021, Sa’id al-Jamal’s network used the NOVA and TIYARA to facilitate illicit trade between Iran and Syria. 

Luay al-Mallah owns the Abdul Jalil Mallah-directed, Türkiye-based Oryx Denizcilik Limited Sirketi. 

Luay al-Mallah 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 to or in support of, Abdul Jalil Mallah. Oryx Denizcilik Limited Sirketi is being designated pursuant to E.O. 13224, as amended, for being owned, controlled, or directed by, directly or indirectly, Luay al-Mallah. CONFIDENCE P, NOVA, RIVAL, and TIYARA are being identified as property in which Abdul Jalil Mallah has an interest.

SANCTIONS IMPLICATIONS 

As a result of today’s action, all property and interests in property of the designated persons described above that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC. In addition, any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked. Unless authorized by a general or specific license issued by OFAC, or exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons. U.S. persons may face civil or criminal penalties for violations of E.O. 13224, as amended. Non-U.S. persons are also prohibited from causing or conspiring to cause U.S. persons to wittingly or unwittingly violate U.S. sanctions, as well as engaging in conduct that evades U.S. sanctions. OFAC’s Economic Sanctions Enforcement Guidelines provide more information regarding OFAC’s enforcement of U.S. sanctions, including the factors that OFAC generally considers when determining an appropriate response to an apparent violation.

Furthermore, engaging in certain transactions with the individuals designated today entails risk of secondary sanctions pursuant to E.O. 13224, as amended. Pursuant to this authority, OFAC can prohibit or impose strict conditions on the opening or maintaining in the United States of a correspondent account or a payable-through account of a foreign financial institution that knowingly conducted or facilitated any significant transaction on behalf of an SDGT.

In addition, financial institutions and other persons that engage in certain transactions or activities with the sanctioned entities and individuals may expose themselves to sanctions or be subject to an enforcement action. The prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any designated person, or the receipt of any contribution or provision of funds, goods, or services from any such person. 

View identifying information on the individuals and entities designated today.

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