Bank of America agreed this week to pay $16.6 million to the Department of Treasury for economic sanctions violations.
According to enforcement documents, Bank of America processed 208 transactions totaling roughly $91,192 on behalf of, and failed to properly block five accounts owned by, 10 individuals whom the Office of Foreign Assets Control (OFAC) previously added to its list of Specially Designated Nationals and Blocked Persons (SDN List).
Although BofA identified most of the apparent violations, OFAC said the disclosures weren’t voluntary, “because they were substantially similar to other apparent violations of which OFAC was already aware.” In addition, OFAC determined that 79 transactions BofA processed on or after October 2006 constituted “egregious” activity.
In determining the egregiousness of the behavior, OFAC said it took into consideration the following:
BofA demonstrated reckless disregard for U.S. sanctions requirements by failing for more than two years to adequately address a known deficiency in its OFAC screening tool that prevented the bank from identifying potential matches to individuals with multiple or multi-part last names on the SDN List.
As early as October 2006, even though at least one BofA official responsible for OFAC compliance, knew of the deficiency, the bank did not resolve it until February 2009;
The potential harm to the U.S. sanctions program was significant, given the number of transactions, the benefit conferred to the drug traffickers, and the length of time the violations occurred;
BofA is a “highly sophisticated” U.S. financial institution, and failed to take remedial action for more than two years after first identifying the deficiency in one of the bank’s screening tools;
BofA processed additional violations after it reported taking remedial actions to OFAC in 2006 and 2008; and
BofA sanctions history during the five years preceding the dates of the violations includes a settlement involving the operation of an account on behalf of a specially designated narcotics trafficker.
According to OFAC, the total base penalty for the violations was $83 million. OFAC said it reduced the penalty, in part, because BofA:
Took substantial remedial action by correcting the deficiency that led to the apparent violations;
Voluntarily rescreened its customer database to identify additional accounts it was operating or had operated for persons named on the SDN List and disclosed the results to OFAC;
Provided additional training to its OFAC compliance personnel;
Upgraded the OFAC screening tool, and invested in additional sanctions compliance personnel; and
Substantially cooperated with OFAC by conducting an internal investigation into the misconduct, providing relevant information to OFAC, and agreeing to toll the statute of limitations.
Additionally, OFAC said some of the violations might have been eligible for an OFAC license at the time the transactions occurred. OFAC said it further reduced BofA’s penalty for agreeing to enter into the settlement.
As Compliance Week previously reported, other banks that have paid fines to settle U.S. charges of breaching OFAC sanctions include BNP Paribas, Standard Chartered, Barclays, Royal Bank of Scotland, and Credit Suisse.