On November 9, 2021, the US Department of the Treasury’s Office of Foreign Assets Control issued a Finding of Violation (FOV) to Mashreqbank psc, a commercial bank based in the United Arab Emirates, for violating now-repealed Sudanese Sanctions Regulations. According to OFAC, the bank processed multiple payments involving US dollar transfers through US financial institutions from Sudanese bank accounts held outside of the US. OFAC’s decision to issue a FOV instead of a civil monetary penalty was partially due to Mashreq’s voluntary waiver of the statute of limitations. The FOV was issued as part of a broader global settlement between Mashreq, OFAC, the New York State Department of Financial Services, and the Federal Reserve Board of Governors.
According to OFAC, between 2005 and 2009, Mashreq’s London branch processed 1,760 outgoing payments worth more than $4 million through financial institutions in the US, in violation of the Sudanese Sanctions Regulations. The transactions were successfully processed and not blocked by US correspondent banks because the payment messages associated with the transactions failed to comply with international protocols, general banking practices and Mashreq’s own standard banking protocols. Specifically, Mashreq personnel failed to populate the “originating institution” field in the payment messages, which would have put US correspondents on notice that the payments originated from a Sudanese bank and were, therefore, prohibited.
According to OFAC, this enforcement action highlights the importance of financial institutions’ internal compliance and controls programs, and their ability to effectively ensure that financial transactions are processed in a transparent manner, including adequate information to enable US intermediary parties to identify possible OFAC-sanctioned parties.