On October 18, 2022, the US Department of the Treasury’s Office of Foreign Assets Control issued a Finding of Violation (“FoV”), in lieu of a civil monetary penalty, to Puerto Rico-based Nodus International Bank, Inc. for violating the Venezuelan Sanctions Regulations (“VSR”) and the Reporting, Penalties and Procedures Regulations (“RPPR”). OFAC issued the FoV following Nodus’ voluntarily self-disclosure that it violated the VSR when it processed three unlicensed transactions worth approximately $50,000 in which a blocked person – an individual on OFAC’s List of Specially Designated Nationals and Blocked Person (“SDN List”) – had an interest.
OFAC reports that an individual who held several accounts with Nodus, including an outstanding credit card balance and interest in certain securities, was added to the SDN List in 2017. Nodus promptly severed all ties with the blocked person and blocked the accounts, but then sought to redeem the securities and place them into a blocked account where they were not accessible to the blocked person. While the Commissioner of Financial Institutions of Puerto Rico (OCFI) authorized Nodus to redeem the securities, the bank failed to obtain an OFAC license before processing the securities for redemption, even though senior bank officials were allegedly aware of this requirement. Due to human error, Nodus also allegedly allowed an automatic debit from one the blocked accounts in order to credit the blocked credit card account – a credit card account that the bank eventually wrote off.
Nodus’ RPPR violations were discovered during the course of OFAC’s investigation. After the investigation had commenced, Nodus discovered that it no longer had access to the records or communications related to the bank’s handling of the blocked property following the bank’s compliance officer departure from the bank, a violation of RPPR recordkeeping requirements. OFAC also discovered that Nodus had submitted several inconsistent Annual Reports of Blocked property.
OFAC determined that, despite these violations, a FoV was appropriate because Nodus was a small institution that had not been penalized by OFAC in the five years prior to the current violations; the VSR violations were voluntarily self-disclosed; the sanctions harm was not significant; and the numerous remedial measures that were taken by the bank to prevent future violations, including hiring bank experts with OFAC compliance experience, hiring an in-house lawyer to focus on sanctions-related compliance, and updating its recordkeeping and account blocking practices and procedures.
Department of Treasury Enforcement Release