On Wednesday, OFAC released the settlement details for Citi’s violations of the Iranian, WMD, terrorism and Kingpin sanctions programs. Here’s what happened:
Between April 2, 2009, and November 16, 2009, Citigroup Trade Services Malaysia (Citi
Penang) processed four export bill collection applications totaling $638,074.15 on behalf of
Citibank N.A. (Citibank), Hong Kong that involved the shipment of goods to Iran, and in two of
those instances the Islamic Republic of Iran Shipping Lines (IRISL), which OFAC designated on
September 10, 2008, pursuant to Executive Order 13382 of June 28, 2005, “Blocking Property of
Weapons of Mass Destruction Proliferators and Their Supporters.” Although the bank had
documentation in its possession related to the export bill collections that contained references to
Iran and IRISL, Citi Penang operators did not review or screen the bills of lading, certificates of
origin, or shipment advice which contained the references to Iran and/or IRISL.
Separately, on February 9, 2010, January 12, 2011, March 8, 2011, and October 29, 2012,
Citibank 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). Citibank’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.
For example, Citibank received and processed a funds transfer initiated by a third-country
financial institution’s customer, Higher Institute for Applied Science and Technology. Although
the SDN List contained an entry for an entity named Higher Institute of Applied Science and
Technology at the time of the transaction, Citibank did not stop the payment.
The Citi Penang violations were voluntarily self-disclosed, but the rest were not – and all were considered non-egregious. The base penalty $484,091 was knocked down to $217,841 on the basis of the following factors (reformatting mine):
OFAC found the following to be aggravating factors in this case:
- Citigroup Penang 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 of the ITSR, the WMDPSR, and the
FNKSR; and - Citibank is a large and commercially sophisticated financial institution.
OFAC considered the following to be mitigating factors:
- No Citigroup managers or supervisors
were aware of the conduct that led to the apparent violations; - U.S. financial institutions blocked
the February 9, 2010, January 12, 2011, and October 29, 2012, funds transfers, thereby limiting
the economic harm to the sanctions program objectives of the WMDPSR and GTSR with respect
to those transactions; - Citigroup took remedial action to ensure that specific name variations were
added to its interdiction filter, and implemented a programmatic fix in response to the January
12, 2011, apparent violation involving Higher Institute of Applied Science and Technology; - Citigroup has not received a penalty notice or Finding of Violation from OFAC in the five years
preceding the earliest date of the transactions giving rise to the apparent violations; and - Citigroup
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.
There are two lessons here: you have to screen all information you have in your possession, and you need to really understand your text matching methodology, and how it fits in with your risk posture.
Link:
Posted with BlogsyFiled under: Iranian Sanctions, Narcotics Trafficking, OFAC Updates, Settlements, Terrorism, Weapons of Mass Destruction Proliferation Sanctions
