Alert September 02, 2014

Bank Settles With OFAC Regarding Civil Action for Apparent Violation of Sudanese Sanctions Regulations

The Office of Foreign Assets Control (“OFAC”) posted a summary of a settlement with a bank (the “Bank”) relating to a transaction that OFAC alleged was processed by the Bank in violation of OFAC’s Sudanese Sanctions Regulations.  According to the summary, the Bank’s interdiction screening software flagged a wire transfer transaction requested by the Bank’s customer for manual review due to an apparent match with an entry on OFAC’s list of Specially Designated Nationals and Blocked Persons.  A compliance specialist at the Bank reviewed the transaction and determined that the individual referenced was a Sudanese national but did not request additional information, such as a physical address.  The compliance specialist then added the notation “Nationality: Sudanese” to the payment details and approved the wire for processing.  According to the OFAC summary, the Bank’s interdiction screening software rescreened the transaction but failed to generate an alert because the software did not contain the words “Sudanese” or other similar terms (such as “Burmese,” “Cuban” or “Iranian”) related to country-based sanctions programs.  OFAC’s Sudanese Sanctions Regulations generally prohibit, among other things, the facilitation by a U.S. person of the exportation or re-exportation of goods, technology, or services from Sudan to any destination or to Sudan from any location.  As described in OFAC’s summary, it turned out that the Sudanese national referenced in the payment order was physically located in Sudan and that the requested payment was related to merchandise being shipped to Sudan.  Another financial institution rejected the transaction.

Although this was apparently an isolated violation by the Bank, and the civil money penalty imposed was relatively small, this matter serves as a reminder that it is important for financial institutions and other U.S. persons required to comply with OFAC administered sanctions programs to recognize that certain OFAC sanctions programs are country based and that transactions may be prohibited even if a participant in the transaction is not actually named in OFAC’s list of Specially Designated Nationals and Blocked Persons.