On September 21, 2023, the US Department of the Treasury’s Office of Foreign Assets Control announced that it had reached a settlement in which Emigrant Bank agreed to remit more than $31,000 to resolve its potential civil liability for 30 apparent violations of Iran sanctions. The apparent violations related to a Certificate of Deposit account that had been maintained by two Iranian individuals for approximately 26 years. Between June 2017 and March 2021, Emigrant processed 30 transactions that totaled just over $90,000 for the accountholders during this period, even though the bank had actual knowledge that the accountholders were located in Iran. According to OFAC, the 30 transactions processed by the bank violated the Iranian Transactions and Sanctions Regulation (“ITSR”), 31 CFR § 560.204. OFAC also determined that the bank’s conduct was non-egregious and voluntarily self-disclosed, and the settlement amount reflects this determination.
According to OFAC’s enforcement release, the account was opened for two Iranian residents in 1995, and closed by the bank in 2021. During this period the account was renewed every five years for accountholders who provided the bank with ample information concerning their Iranian residency, including letters to the bank and tax forms that reflected their address in Iran. The account was not flagged by Emigrant’s compliance program until 2016, when the accountholders requested a wire transfer from the account to a US resident account at another US bank. While the transaction triggered Emigrant’s screen filter, Emigrant erroneously concluded that the transfers were permissible as personal remittances, and processed the payment. Emigrant also subsequently corrected the account’s country code, changing it from US to Iran. When Emigrant upgraded its sanctions screening platforms in April 2019, the Iran country code triggered an alert – but Emigrant emplouyees overrode the alert based on the erroneous guidance from 2016. Emigrant management became aware of the account’s Iranian status in June 2021 as the result of a regulatory examination; this prompted the bank to initiate an investigation, and eventually close the account. The discovery also prompted Emigrant to implement additional sanctions training for its employees, and to search for other accounts whose owners reside in sanctioned jurisdictions.
The $31,000 settlement amount reflects OFAC’s consideration of aggravating factors such as Emigrant’s longstanding status as a privately-owned and sophisticated financial institution in the United States, and the fact that the account was opened shortly after the ITSR were issued. OFAC also considered certain mitigating factors, including Emigrant’s voluntary self-disclosure of the apparent violations; its cooperation with OFAC investigators; the prompt remedial measures that Emigrant took once the potential violations were discovered; and the fact that the payments resulted in negligible harm to US sanctions policy objectives because all of the transactions processed within the statute of limitations were sent to an Emigrant account belonging to the accountholders’ relatives, who are US residents.