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Bank Fined for Not Catching Payments for Shipments to Iran

Friday, September 05, 2014
Sandler, Travis & Rosenberg Trade Report

The Treasury Department’s Office of Foreign Assets Control announced Sept. 3 that a New York bank has agreed to remit $217,841 to settle potential civil liability for eight apparent violations of U.S. sanctions regulations.

OFAC states that the bank processed four export bill collection applications totaling $638,074.15 that involved the shipment of goods to Iran, and in two of those instances the Islamic Republic of Iran Shipping Lines, the property of which OFAC blocked in 2008. Although the bank had in its possession bills of lading, certificates of origin or shipment advice that contained references to Iran and/or IRISL, its operators did not review or screen that documentation.

Separately, on four occasions the bank processed four funds transfers totaling $133,786.73 involving entities appearing on OFAC’s List of Specially Designated Nationals and Blocked Persons (the SDN List). The bank’s interdiction software did not identify references to the sanctioned parties in the payment instructions and the bank processed the payments straight through without manual intervention.

The base penalty amount for the apparent violations was $484,091. OFAC found the following to be aggravating factors: bank employees did not review underlying documentation that included sanctions references in relation to the voluntarily self-disclosed apparent violations; the apparent violations resulted in harm to the sanctions program objectives; and Citibank is a large and commercially sophisticated financial institution. On the other hand, OFAC considered the following to be mitigating factors: no bank managers or supervisors were aware of the conduct that led to the apparent violations; U.S. financial institutions blocked some of the funds transfers, thereby limiting the economic harm to sanctions program objectives; the bank took remedial action to ensure that specific name variations were added to its interdiction filter; the bank has not received a penalty notice or finding of violation from OFAC in the last five years; and the bank cooperated with OFAC during the course of these investigations, including by responding thoroughly and promptly to OFAC’s requests for information in relation to all of these matters and by entering into a statute of limitations tolling agreement.

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