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Auto Finance Company Fined for Account with Narcotics Trafficker

Monday, April 29, 2013
Sandler, Travis & Rosenberg Trade Report

The Treasury Department’s Office of Foreign Assets Control has fined an auto finance company $23,400 for doing business with a prohibited person. OFAC alleged that this company maintained a loan account for, and processed instead of blocked 26 loan payments totaling $14,449 on behalf of, an individual designated as a specially designated narcotics trafficker.

The total base penalty amount for the apparent violations was $26,000. Mitigation was extended because the company had not received a penalty notice or a finding of violation from OFAC in the last five years, the apparent violations processed by the company likely would have been licensed by OFAC under licensing policy existing at the time, and the company cooperated with OFAC throughout its investigation and took appropriate remedial action.

On the other hand, OFAC states that the company’s failure to conduct an adequate review of an alert warning of a possible violation for nearly one year constituted a reckless disregard for U.S. sanctions requirements. Moreover, an employee placed in charge of OFAC compliance for the company’s retail and lease portfolios, who was aware that the company may have been maintaining an account for prohibited person, failed to exercise what OFAC considered to be a minimum degree of caution by clearing the alert without appropriate investigation after being unable to locate the relevant customer file. OFAC also notes that the company is a commercially sophisticated financial institution and that its compliance program at the time of the apparent violations was not adequate to handle the company’s volume of business.

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