Posted by: mulrickillion | January 3, 2011

OFAC Imposes Civil Penalties on Two Financial Institutions and One Individual

Posted by Douglas Jacobson, International Trade Law News, Dec 22, 2010 —

The Treasury Department’s Office of Foreign Assets Control (OFAC) has issued its monthly enforcement report. The report indicates that OFAC assessed civil penalties on two financial institutions and one individual for alleged violations of OFAC’s sanctions programs.

Discover Financial Services paid a civil penalty of $8,720.00 to settle allegations that it violated the Foreign Narcotics Kingpin Sanctions Regulations by processing 28 credit card transactions for a person that had been designated by OFAC as a Specially Designated Narcotics Trafficker (“SDNTK”). The value of the transactions processed over three years totaled $23,252.This matter was voluntarily disclosed to OFAC, which reduced the potential penalty by 50% and the penalty was further reduced due to Discover taking steps to strengthen its OFAC compliance program and procedures, assigning a new employee to review the credit card portfolio against SDN list updates, and providing extra training to its employees.

Wells Fargo Bank, N.A. paid a civil penalty of $67,500 to settle allegations that it violated OFAC’s

Iranian Transactions Regulations by performing financial services in the U.S. on behalf of an account holder while the account holder was located in Iran. Wells Fargo did not voluntarily disclose this matter to OFAC. In addition, OFAC indicated that it had advised Wells Fargo about this account holder but the bank did not conduct an investigation until several years later. One of the remedial steps undertaken by Wells Fargo was to include the use of Internet Protocol (IP) addresses to identify registered users located in Iran. (Using an IP address tool is a useful, but not foolproof way, to determine the location of users of online banking or other Internet-based services.)

An individual (OFAC does not release the names of penalties imposed on individuals) agreed to pay  $30,000 to settle alleged violations of the Iranian Transactions Regulations for sending and attempting to send funds to Iran for investment in a catering business located there. The individual did not voluntarily disclose the violations to OFAC, however the violations were considered by OFAC to be non-egregious in nature.

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