Amex to pay $430K to settle violations of sanctions against drug kingpin

Walter Marquez was designated to OFAC’s List of Specially Designated Nationals and Blocked Persons (SDN List) on May 7, 2018, in connection with illegal drug distribution and money laundering, the regulator stated Friday in an enforcement release.

In 2012, Marquez obtained “a supplemental American Express Centurion Card on an account maintained by a U.S. person at Amex,” the release said. American Express National Bank oversaw the account. When Marquez appeared on the SDN List in May 2018, Amex should have stopped processing transactions related to the account. But through a combination of human error and sanctions compliance program deficiencies, Amex processed 214 transactions worth $155,189 from May 7 to July 6, 2018, when the account was closed, according to OFAC.

The regulator noted the apparent violations were not voluntarily disclosed and the case was nonegregious.

The details: A few days after OFAC designated Marquez, Amex’s internal sanctions list screening system generated a “high confidence” alert on the account on which Marquez was listed as a subsidiary. But the alert was erroneously closed by an analyst, who also did not follow Amex’s procedure that such an alert required a second-level review, the enforcement release said.

The next day, instructions were given to immediately suspend the card, but the employee who entered the suspension code failed to include comments indicating the restriction was sanctions related. When the U.S. account holder called Amex the following day, a customer care representative removed the suspension.

Amex’s anti-money laundering (AML) team caught the error the following day and ordered the account be suspended again. The team that reinstated the suspension mistakenly applied the incorrect suspension code, which allowed the account to conduct seven additional transactions before it was closed July 6, the release said.

Amex cooperated with the investigation and has implemented remedial measures to address the problems highlighted in the apparent violations, OFAC said, including:

• Launching reporting and automated solutions to ensure a second-level review of high-confidence sanctions alerts;
• Launching a centralized account suspension system that cannot be removed without the approval of Amex’s sanctions compliance team;
• “Launching a sanctions referral flag in Amex’s AML case management system in order to enable automated escalation to Amex’s sanctions compliance team of AML cases with a potential sanctions nexus”; and
• Additional training for relevant personnel and further quality control testing to assure consistency and accuracy regarding the handling of alerts.

“This action highlights the importance of properly training employees on sanctions compliance procedures and ensuring that those procedures are followed appropriately, especially when high-confidence alerts are generated,” OFAC stated. “Also, consistent application of enterprise-wide compliance measures, including controls to prevent other departments or personnel from overriding a sanctions-related decision to suspend an account, can also help mitigate the risk of a sanctions violation.”

Amex response: In a statement, Amex said, “We take our sanctions compliance obligations seriously and fully cooperated with OFAC’s investigation. Since this issue occurred four years ago, we have made significant enhancements to our controls and procedures, including implementing additional training and enhanced sanctions screening and reporting protocols.”