New York-based Emigrant Bank agreed to pay nearly $32,000 as part of a settlement with the Treasury Department’s Office of Foreign Assets Control (OFAC) addressing apparent sanctions violations regarding an account it maintained for a pair of Iranian residents.
The alleged lapses were deemed non-egregious by OFAC, and Emigrant received a discounted penalty for its voluntary self-disclosure, cooperation, and remedial actions undertaken, the agency said in an enforcement release Thursday.
The details: In 1995, Emigrant opened a certificate of deposit (CD) account for the Iranian residents. The account was renewed every five years, a process that entailed the bank gathering and producing documentation that demonstrated its knowledge of the account’s Iranian roots.
In 2016, the Iranian customers requested a wire transfer from the account to a U.S. resident account at another U.S. bank. The payment was stopped for sanctions review, and Emigrant “erroneously concluded that the transfers were permissible as personal remittances and processed the payment forward,” according to OFAC.
That determination would cause Emigrant’s sanctions compliance team to ignore flags raised on the CD account again during screening in 2019, per the release.
In 2021, a regulatory examination prompted Emigrant management to put a hold on and ultimately close the account.
Between June 2017 and March 2021, Emigrant processed 30 transactions through the account totaling approximately $91,000 in apparent violation of Iran sanctions, OFAC found. The payments were found to be made to family and of “negligible harm to U.S. sanctions policy objectives,” the agency said.
Compliance considerations: Emigrant was faulted by OFAC for not implementing controls to identify and prevent prohibited account services to the Iranian residents despite being aware of their location.
After closing the account, the bank updated its customer data system to avoid screening inaccurate countries of residence, searching for other potentially violative accounts, and screening the permanent address of each account, the agency said.
“This case highlights the importance of properly vetting accountholders and understanding the restrictions on ‘Iranian accounts,’ i.e., accounts of persons who are ordinarily resident in Iran while they are located in Iran,” said OFAC. “… Although the [Iran sanctions regulation] does authorize personal remittances to or from Iran under certain conditions … the general license does not authorize debiting or crediting an Iranian account like the one at issue here.”
Emigrant did not respond to a request for comment.