On May 27, 2022, the US Department of the Treasury’s Office of Foreign Assets Control announced a settlement that was reached with Banco Popular de Puerto Rico (BPPR), a Puerto Rican bank with branches in Puerto Rico and the Virgin Islands, to resolve apparent violations of Venezuela Sanctions Regulations, 31 CFR part 591. As part of the settlement, BPPR agreed to pay approximately $256,000 in civil penalties for processing 337 transactions totaling $853,126 on behalf of two low level employees of the Government of Venezuela (GoV) between 2019 and 2020. The settlement amount is based on OFAC’s determination that the apparent violations were voluntarily self-disclosed by BPPR and non-egregious in nature.
According to OFAC, the violations occurred during the 14 months following the issuance of Executive Order 13884 on August 5, 2019 that effectively prohibited transactions with “any political subdivision, agency, or instrumentality” of the GoV as well as any person that was “owned or controlled” by the GoV or who acted on its behalf. In November of 2019, the Venezuela Sanctions Regulations were amended to include the provisions in EO 13884. Shortly after EO 13884 was issued, BPPR’s compliance team began evaluating all customer accounts to determine if any were affected by the executive order. But it was not until October 26, 2020, 14 months after EO 13884 was issued, that BPPR was able to identify and block four personal accounts associated with two restricted customers – accounts belonging to a clerical level employee with GoV’s Diplomatic Representation Office and a customer service representative for a Venezuelan state-owned telephone and internet service provider. While a general license was issued by OFAC in November of 2019 to authorize transactions associated certain GoV individuals, neither of the account holders met the criteria in the general license. For this reason, OFAC considered the 337 transactions processed following the issuance of EO 13884 to be apparent violations of Venezuela Sanctions Regulations.
When BPPR discovered the apparent violations in 2020, it not only reported the transactions to OFAC in a timely and organized manner, but BPPR also enhanced its compliance program to include updated sanctions-related training and procedures, and additional resources and guidance in connection with sanctions alert reviews and dispositions.
In its enforcement release, OFAC emphasized that this case demonstrates how important it is for financial institutions to conduct timely due diligence following the imposition of new sanctions and urged financial institutions to take the steps outlined in FAQ 680 in order to better comply with Venezuela-related sanctions regulations.