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Bank Fined for Inadequate Efforts to Prevent Terrorism Sanctions Violations

Thursday, December 19, 2013
Sandler, Travis & Rosenberg Trade Report

The Treasury Department’s Office of Foreign Assets Control announced Dec. 17 that a bank has agreed to remit $32,400 to settle charges that it did not do enough to prevent financial transactions involving a blocked company and individual.

According to OFAC, the bank’s interdiction software flagged for manual review a funds transfer involving a company OFAC had named as a specially designated global terrorist and added to its Specially Designated Nationals and Blocked Persons List the day before. The bank subsequently received an MT 199 message from the remitting financial institution with information strongly suggesting that the payment originator was the blocked company (e.g., its owner was the blocked individual). However, the bank’s interdiction software at that time did not screen all MT 199 messages for potential OFAC matches. In addition, one of the bank’s compliance officers did not manually screen the names of the blocked company or individual against the SDN List or recognize them as potential SDGTs. Further, the bank’s senior manager of OFAC compliance failed to take any additional steps to interdict future transactions involving these entities even though an internal report he requested from the bank’s anti-money laundering unit suggested that future payments related to the same parties would be forthcoming. The bank subsequently processed two additional funds transfers that included the same order number and were destined for the same account as the originally flagged payment, although they did not reference a person appearing on the SDN List and had different originators.

The total base penalty amount for the apparent violations was $20,083. The settlement amount reflects OFAC’s consideration of the following mitigating factors: the bank voluntarily self-disclosed the apparent violations, took appropriate remedial action and now has a more robust compliance program in place, and has not received a penalty notice or finding of violation from OFAC for substantially similar apparent violations in the five years preceding the earliest date of the transactions giving rise to the apparent violations. On the other hand, aggravating factors include: bank managers and employees whose primary responsibility includes OFAC compliance were aware of the first apparent violation and had reason to be aware of the second and third apparent violations, the apparent violations resulted in actual economic benefit to an SDGT, the bank is a large and commercially sophisticated financial institution, the bank initially provided an incomplete response to an administrative subpoena, and at the time of the first apparent violation the bank’s compliance program did not screen all MT 199 messages for potential OFAC matches.

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