On May 28th, 2019, US Department of Treasury’s Office of Foreign Assets Control (OFAC) issued a finding of violation to State Street Bank and Trust Co. (SSDT) for violations of the Iranian transactions and sanctions regulations. SSDT was found to have provided 45 pension payments between 2012 and 2015 to individuals living as residents of Iran, although they were US citizens with US bank accounts. A finding of violation means no monetary penalty was levied against SSDT.
Details of the State Street Bank Violation
State Street Bank knew that they were sending payments to persons in Iran because their sanction-screening software had detected the transactions. SSDT decided to voluntarily self-disclose these violations to OFAC. It was determined that the transactions were in violation of 56204 and 56410 of the ITSR, they were prohibited exportations or re-exportations, sale, or supply of services on behalf of persons in Iran.
OFAC determined a finding of violation was appropriate because SSDT reasonably should have known they were in violation of US law. They harmed the objectives of the policies of the United States with regard to services performed for persons in Iran. SSDT is a sophisticated financial institution and had procedures for revising their conduct.
OFAC determined that a finding of violation was appropriate rather than a civil monetary penalty because the managers/directors of SSDT were not aware of the conduct. A screen filter did identify Iran as the address of the pension payments’ beneficiaries, but the payments were likely not transferred to Iran, and remedial action was taken. The funds transfers may have been authorized if a specific license application was submitted to OFAC, and SSDT submitted a voluntary self-disclosure and entered into a tolling agreement with OFAC.
Contact an OFAC Attorney for Advice on Sanctions Compliance
It is important for financial institutions to ensure that their sanctions compliance programs are robust and updated. Any alerts of sanctions-related issues should be directly addressed as soon as possible to avoid any potential civil monetary penalties, enforcement actions, or notices of violation. A sanctions compliance attorney could help individuals or businesses involved in the financial industry review and update their sanctions compliance programs to avoid potential violations.