The Office of Foreign Assets Control announced July 15 that a U.S.-based company has agreed to pay $11.8 million to settle its potential civil liability for more than 12,000 apparent violations of multiple OFAC sanctions programs.
According to OFAC, for more than seven years the company provided services to persons in Iran, Cuba, Syria, and the Crimea region of Ukraine; processed trades in securities subject to the Chinese Military-Industrial Complex program; conducted transactions involving blocked persons under OFAC’s Russia, Global Magnitsky, Venezuela, and Syria sanctions programs; and engaged in new investment in Russia.
OFAC states that the statutory maximum civil monetary penalty applicable in this matter is $5.2 billion and the base penalty is the sum of one-half the transaction value for each apparent violation, which is $60.1 million.
Aggravating factors include the company’s failure to exercise due caution or care for its sanctions compliance obligations (particularly when it was aware or had reason to know of the violative conduct as it took place), its provision of access to the U.S. financial system for sanctioned and blocked persons, and its status as a highly-sophisticated, heavily-regulated, and technology-driven firm with global operations serving millions of clients worldwide.
Mitigating factors included the company’s clean penalty history over the previous five years, the limited economic benefit to the sanctioned party, the company’s investment of more than $10 million in significant remedial measures to address the sanctions compliance deficiencies at issue, and its actions to make other compliance improvement such as enhanced sanctions screening procedures and controls, enhanced IP geo-blocking measures, a risk-based approach to identifying and mitigating sanctions compliance risks, annual independent audits, and ongoing internal testing. The company also self-disclosed the apparent violations after a self-initiated compliance review and provided substantial cooperation with OFAC’s investigation by conducting several “voluminous, comprehensive multi-year transactional and data reviews in a timely fashion.”
OFAC advises companies utilizing real-time automated systems to manage large volumes of transactional activity to consider appropriate investments to ensure the modernization of their sanctions compliance programs alongside the innovation and development of their customer-facing platform technologies that interact with the U.S. financial system. Controls should be designed to address the particular sanctions risk presented by the business and its technologies, which may include appropriate, risk-based calibration of sanctions screening protocols and geo-blocking controls. OFAC strongly encourages the implementation of sanctions compliance tools and programs that are commensurate with the size, speed, and complexity of a business’ operations.
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