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$9.5 Million Fine on Russian Bank for Economic Sanctions Violations

Tuesday, January 28, 2014
Sandler, Travis & Rosenberg Trade Report

The Treasury Department’s Office of Foreign Assets Control announced Jan. 27 that a Russian bank has agreed to pay $9.5 million to settle potential civil liability for 69 alleged violations of an executive order and the Weapons of Mass Destruction Proliferators Sanctions Regulations. OFAC states that over an 18-month period this bank sent 69 funds transfers totaling $41.3 million for or on behalf of an entity designated as a weapons of mass destruction proliferator that were processed to or through the U.S.

The total base penalty amount for the alleged violations was $14.1 million. The bank did not voluntarily self-disclose the alleged violations, but OFAC deemed this a non-egregious case. Aggravating factors included the bank’s failure to exercise an appropriate degree of caution or care in avoiding the conduct that led to the alleged violations, the significant harm to U.S. sanctions program objectives that resulted from the bank’s conduct, the bank’s status as a large and commercially sophisticated financial institution, and the bank’s apparent lack of adequate compliance policies or procedures in place at the time the alleged violations occurred. Mitigating factors included the fact that the bank had not received a penalty notice or finding of violation from OFAC in the five years prior to the alleged violations, the remedial actions the bank took to improve its compliance with U.S. sanctions laws and regulations, and the bank’s cooperation with OFAC’s investigation.

OFAC states that this enforcement action highlights the particular sanctions risk faced by foreign financial institutions that maintain accounts for persons subject to OFAC sanctions and conduct significant business through the U.S. financial system. A similar action, with a similar warning, was announced Jan. 23.

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