US Treasury Warns of Sanctions Violations for Paying Ransomware Attackers

As if getting hit with ransomware wasn't stressful enought, there's now a new element to worry about besides whether you'll get your data and servers back: paying ransom to a cybercriminal or group that has been hit with sanctions by the US Treasury Department.

In a surprising advisory issued today that likely will cause consternation among cybersecurity professionals and organizations faced with ransomware attacks, the Treasury's Office of Foreign Assets Control (OFAC) warned of possible US policy violations for organizations or individuals who pay ransom to ransomware attackers who have been officially sanctioned by OFAC. 

"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," the advisory said. 

Although law enforcement officials and experts advise victim organizations not to pay when hit with ransomware attacks, many victims have had to cough up cryptocurrency if they don't have protected backups of their locked-down systems, for example.

The advisory notes that the act of paying ransom to sanctioned individuals risks having those funds then used against the US.

"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," the advisory said.

The alarming advisory cites the International Emergency Economic Powers Act (IEEPA) or the Trading with the Enemy Act (TWEA), which prohibit US citizens 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." That includes countries and regions such as Cuba, the Crimea region of Ukraine, Iran, North Korea, and Syria.

OFAC warned that paying ransom to a sanctioned entity could result in civil penalties, regardless of whether or not the victim or third-party facilitator knew they were sending money to a sanctioned entity. 

It warns third parties who negotiate or provide support for ransom payments for the victim to make a plan.

"As a general matter, OFAC encourages financial institutions and other companies to implement a risk-based compliance program to mitigate exposure to sanctions-related violations," it advised. "This also applies to companies that engage with victims of ransomware attacks, such as those involved in providing cyber insurance, digital forensics and incident response, and financial services that may involve processing ransom payments (including depository institutions and money services." 

But the good news, if any, here is that the Treasury OFAC will cut ransomware victims some slack if they provide a "timely, complete report" of the attack to law enforcement.

"OFAC will also consider a company’s full and timely cooperation with law enforcement both during and after a ransomware attack to be a significant mitigating factor when evaluating a possible enforcement outcome," the advisory said.

And if a victim believes a ransomware attacker may be a sanctioned entity, OFAC says they should contact the Treasury's Office of Cybersecurity and Critical Infrastructure Protection "immediately."

Last month the Treasury imposed sanctions on Iran's APT39 (aka Chafer and ITG07) hacking team, as well as on 45 other associates and a front company known as Rana Intelligence Computing Company as part of a coordinated federal government effort to crack down on Iran's hacking of US interests.