Bank Fined for Payment for Goods Shipped to Sudan Not Caught by Screening Software
The Office of Foreign Assets Control announced Aug. 27 that a North Carolina-based bank has agreed to remit $19,125 to settle potential civil liability for one apparent violation of the Sudanese Sanctions Regulations.
According to OFAC, the bank’s interdiction software stopped a $20,000 payment destined for a third-country company’s account at a foreign financial institution when a name in the payment details appeared to match an entry on OFAC’s List of Specially Designated Nationals and Blocked Persons. The bank subsequently determined that the individual in question was a Sudanese national but failed to request additional information, such as a physical address. After determining that the name was not an SDN List match, a bank compliance specialist added a reference in the payment details that included “NATIONALITY: SUDANESE” and then approved the wire. When the bank’s interdiction software rescreened the transaction it failed to generate an alert because it did not contain the word “Sudanese” (or other similar terms relating to OFAC-sanctioned countries such as “Burmese,” “Cuban” or “Iranian”). After the bank processed the transaction it was notified that the individual referenced in the payment details was located in Sudan and that the payment was for merchandise being shipped to Sudan.
The base penalty amount for the apparent violation was $25,000. OFAC found the following to be aggravating factors in this case: the bank was aware of the conduct giving rise to the apparent violation, the bank’s lack of appropriate stop descriptors demonstrated an inadequate compliance program with regard to its sanctions screening process, the bank is a large and sophisticated financial institution, and the bank failed to provide all responsive records to OFAC’s administrative subpoena. On the other hand, OFAC considered the following to be mitigating factors: there was no actual harm to the sanctions program objectives because another financial institution rejected the transaction; the bank has not received a penalty notice or finding of violation from OFAC in the preceding five years, and the bank took appropriate remedial action in response to the apparent violation.