OFAC Posts Information on Recent Civil Penalties

On December 16, 2010, Office of Foreign Assets Controls(OFAC) published recent civil penalty information: 

    ·    Discover Financial Services of Riverwoods, IL (Discover) has remitted $8,720 to settle allegations of the Foreign Narcotics Kingpin Sanctions Regulations (FNKSR) violations occurring from December 2005 to November 2007. OFAC alleged that Discover dealt in property in the United States in which a Specially Designated Narcotics Trafficker had an interest by maintaining a personal credit card account on his behalf.  Discover processed twenty-eight transactions through this personal credit card account.  The value of the transactions processed over three years totaled $23,252.  The base penalty amount was adjustment to account for several General Factors:  Discover voluntarily disclosed this matter to OFAC, took steps to strengthen its OFAC compliance program and its existing OFAC procedures, assigned a new employee to review the credit card portfolio against SDN list updates, and provided extra training to its employees.  In addition, Discover had no other known violations on record with OFAC prior to these allegations.

    ·    Wells Fargo Bank, N.A. (Wells Fargo) has remitted $67,500 to settle allegations of violations of the Iranian Transactions Regulations (ITR) from March 2005 to July 2006. OFAC alleged that Wells Fargo exported financial services to Iran by performing financial services in the United States on behalf of an account holder while the account holder was located in Iran.  The value of the transactions totaled $55,959.62.  Wells Fargo did not voluntarily disclose this matter to OFAC.  The base penalty amount for the apparent violations was $90,000. The settlement amount reflects OFAC's consideration of the following General Factors:  OFAC expressed to Wells Fargo an interest in this account holder as early as April 2002 but Wells Fargo failed to conduct an investigation until September 2006.  There were three prior penalty cases against Wells Fargo for violations of the ITR.  In addition, Wells Fargo created and implemented a risk-based OFAC compliance program, which includes the use of Internet Protocol addresses to identify registered users located in Iran. Finally, Wells Fargo established open and timely communications with OFAC, and entered into two tolling agreements with OFAC.

    ·    One unnamed individual was assessed a penalty totaling $30,000 for violating the Iranian Transactions Regulations (ITR). Specifically, the individual engaged in prohibited transactions in 2006 when he sent and/or attempted to send funds to Iran for investment in a catering business located in Iran.  The individual did not voluntarily disclose the violations to OFAC, however the violations were considered nonegregious in nature.  The assessment amount reflected OFAC's consideration pursuant to its Enforcement Guidelines this being the first individual's violation of an OFAC sanctions program.