The Treasury Department's Financial Crimes Enforcement Network (FinCEN) issued a finding and notice of proposed rulemaking identifying transactions involving any company operating outside the United States that is controlled by the A7 Network as a class of transactions of primary money laundering concern. The action is taken under section 9714(a) of the Combating Russian Money Laundering Act, as amended by section 6106(b) of the National Defense Authorization Act for Fiscal Year 2022.

According to FinCEN, the A7 Network is a sanctions evasion and money laundering service with ties to Russia that has been leveraged by a range of illicit actors, including Iran and its terrorist proxies. The proposed rule would impose a prohibition on certain transmittals of funds by covered financial institutions involving transactions tied to the network's sub-agents.

While the rulemaking is aimed at financial institutions rather than federal contractors directly, GovCon firms with international subsidiaries, supply chain partners, or financial relationships touching sanctioned networks should monitor the rule's progress. Contractors subject to export control, sanctions compliance, or anti-money-laundering obligations under federal acquisition regulations may need to review third-party relationships for exposure to the A7 Network or its affiliated sub-agents once the rule is finalized.

Source: Federal Register