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$4 Million Penalty for Sanctions Regulations Violations

Friday, September 20, 2019
Sandler, Travis & Rosenberg Trade Report

The Office of Foreign Assets Control reports that a London commercial bank will remit $4 million to settle charges that it violated the Sudanese Sanctions Regulations despite the fact that it has no offices, business, or presence under U.S jurisdiction. OFAC states that this bank used U.S. financial institutions to process 72 transactions totaling $190.7 million for Sudanese financial institutions for which it operated U.S. dollar accounts. U.S. economic sanctions prohibit U.S. persons, including U.S. financial institutions, from processing such transactions.

The base penalty amount for the violations was $381.4 million. Aggravating factors include that the bank appears to have demonstrated at least a reckless disregard for U.S. sanctions regulations and ignored warning signs, several members of senior management were aware of and involved in the conduct at issue, the violations conferred substantial economic benefit to persons in Sudan and caused significant harm to the integrity of a U.S. sanctions program and its associated policy objectives, and the bank is a commercially sophisticated financial institution.

However, OFAC determined that the bank would face “disproportionate impact” if required to pay the proposed penalty of $228.84 million. OFAC also considered the following as mitigating factors: the bank did not receive an OFAC penalty notice or finding of violation in the previous five years, the bank provided significant investigative leads and fully cooperated with OFAC’s investigation, and the bank undertook several remedial measures, including exiting the Sudanese market, hiring new senior management, and implementing improvements to its compliance program, including by centralizing its team and updating its processes and procedures pertaining to Know Your Customer, anti-money laundering, and sanctions. The bank also agreed to undertake certain compliance commitments to ensure that its OFAC sanctions compliance program remains strong over the next several years.

For more information on export sanctions, please contact export compliance attorney Kristine Pirnia.

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