Financial institution settles potential civil liability for apparent sanctions violations

The Office of Foreign Assets Control of the US Department of the Treasury has resolved its investigation of apparent sanctions regulations violations by T.D. Bank, N.A.  The bank has agreed to pay $115,005.04 to settle its potential civil liability for two separate matters.

The first apparent violations took place between December 2016 and August 2018 when, without a license from OFAC, TD Bank processed 1,479 transactions for employees of the North Korean mission to the United Nations, and maintained nine accounts for five of these employees.  According to OFAC, the bank examined the North Korean passports of the account holders when the accounts were first opened, but the passports did not trigger alerts within the bank’s sanctions screening system because bank employees either mislabeled the account holders’ nationality as “South Korean” or “Korean,” or left the citizenship field blank, and because TD Bank screened its customers against a list of Politically Exposed Persons that did not include the names of government employees of sanctioned countries.  The total value of the transactions was $382,685.38.  As described in the US Department of the Treasury’s enforcement release, the general license issued under the North Korea Sanctions Regulations, 31 CFR § 510.510(c), does not authorize US financial institutions to operate accounts for employees of the North Korean mission to the United Nations, and requires that financial institutions obtain specific OFAC authorization to do so. 

In assessing the penalty for TD Bank’s apparent violations, OFAC took into consideration aggravating factors such as the bank’s failure to exercise due caution in processing the 1,479 transactions, its status as a large and sophisticated commercial financial institution, and the fact that it had reason to know that the nine accounts it maintained were for North Korean nationals.  OFAC also took into account, as mitigating factors, the fact that although the transactions were not licensed, there were likely licensable, and the bank’s management appears to have had no actual knowledge of the accounts or the transactions.  In addition, the bank voluntarily disclosed the apparent violations and cooperated in the investigation, and has taken remedial measures to enhance its process for identifying government officials of sanctioned countries, escalating review of accounts held by such officials, and training bank employees accordingly.  The settlement amount for this matter is $105,238.65.

The second matter concerns 145 apparent violations of 31 CFR § 598.202 of the Foreign Narcotics Kingpin Sanctions Regulations.  According to OFAC, in February 2016 Esperanza Caridad Maradiaga Lopez was allowed to open two accounts at a TD Bank branch near Miami, Florida, despite her presence on the Specially Designated Nationals and Blocked Persons List since September 2013; the bank’s sanctions screening reviewers repeatedly dismissed the alerts generated by the bank’s sanctions screening system until February 2020, when the accounts were blocked and OFAC notified. 

The settlement of $9,766.39 for this matter reflects OFAC’s consideration of aggravating factors such as the bank’s failure to exercise due caution, allowing it to process over $35,000 in transactions by a person on the SDN list, despite the bank’s status as a large, sophisticated, global financial institution.  OFAC also took into account mitigating factors such as the bank’s voluntary disclosure and cooperation with OFAC, the lack of actual knowledge by managerial staff, the fact that the subject transactions would likely have been licensable, and the bank’s commitment to remedial measures and termination of the conduct that led to the apparent violations.

 Enforcement release

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