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Treasury Department Warns Ransomware Payment Facilitators of Legal Implications

The U.S. Department of the Treasury this week issued an advisory to warn companies that facilitate ransomware payments of the potential legal implications resulting from sending money to sanctioned entities.

The U.S. Department of the Treasury this week issued an advisory to warn companies that facilitate ransomware payments of the potential legal implications resulting from sending money to sanctioned entities.

The Treasury Department’s Office of Foreign Assets Control (OFAC) says there has been a rise in ransomware attacks on U.S. organizations, which has resulted in an increase in the demand for ransomware payments.

Many organizations from around the world, including several cities and universities in the U.S., have paid significant amounts of money to recover their files following a ransomware attack.

However, the Treasury Department warns, companies that facilitate ransomware payments to cybercriminals on behalf of victims not only encourage future attacks, but also risk violating OFAC regulations. The advisory specifically lists cyber insurance companies, financial institutions, and providers of incident response and digital forensics services as organizations that can facilitate ransomware payments.

The OFAC noted that many cyber threat actors have been sanctioned over the past years, including for attacks involving malware such as Cryptolocker (linked to a Russian individual), SamSam (linked to Iranians), WannaCry (linked to North Korea) and Dridex (linked to a Russian organization).

Companies are informed that making a ransomware payment to sanctioned people or countries could be used to fund activities “adverse to the national security and foreign policy objectives of the United States.” The advisory also points out that paying the ransom not only encourages the threat actor to launch more attacks, but there is also no guarantee that the victim will regain access to the compromised data.

“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,” the advisory notes.

In a fireside chat at SecurityWeek’s recent CISO Forum, Evan Wolff, a cyber-attorney and partner at international law firm Crowell & Moring, talked about the legal issues that CISOs could personally face due to their actions, and one of the examples he mentioned was paying to recover from a ransomware infection. The advisory from the Treasury Department reinforces Wolff’s warning about personal liability.

The advisory recommends that companies “implement a risk-based compliance program to mitigate exposure to sanctions-related violations,” and points out that reporting a ransomware attack to law enforcement in a timely manner and cooperating with law enforcement is considered a “significant mitigating factor in determining an appropriate enforcement outcome if the situation is later determined to have a sanctions nexus.”

“OFAC already provides a list of sanctioned entities. Victim organizations are required to check the list prior to paying extortion demands. However, the true identity of the cyber criminals extorting victims is usually not known, so it’s difficult for organizations to determine if they are unintentionally violating U.S. Treasury sanctions. Sometimes victims pay threat actors before they are sanctioned. For example, many victims have paid the ‘SamSam’ ransomware operators in the past, not knowing they were based in Iran at the time,” Charles Carmakal, SVP & CTO at FireEye Mandiant, told SecurityWeek.

“In recent months, the individuals (referred to as “EvilCorp”) involved with the Dridex banking malware have been connected with the WastedLocker ransomware family. Some extortion payment organizations have decided that they would not pay extortion demands associated with WastedLocker incidents out of fear of violating U.S. Treasury sanctions,” he added. 

Related: Netherlands University Pays $240,000 After Targeted Ransomware Attack

Related: U.S. Mayors Pledge Not to Give in to Ransomware Demands

Related: Alabama City to Pay $300,000 Ransom in Computer System Hack

Written By

Eduard Kovacs (@EduardKovacs) is a contributing editor at SecurityWeek. He worked as a high school IT teacher for two years before starting a career in journalism as Softpedia’s security news reporter. Eduard holds a bachelor’s degree in industrial informatics and a master’s degree in computer techniques applied in electrical engineering.

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