Bank and Parent Company Settle OFAC Charges for Iranian and Syrian Sanctions Violations

A Romania-based bank and its U.S. parent company settled potential civil liability with OFAC for alleged violations of the Iranian Transactions and Sanctions Regulations and Syrian Sanctions Regulations.

According to OFAC, the Romania-based bank conducted a review of its operations in 2019 for the preceeding five years as a result of a red flag identified by the National Bank of Romania, the bank's regulator, regarding a U.S. dollar transaction that involved Syria. OFAC stated that the bank discovered violations involving the processing of (i) U.S. dollar payments on behalf of individuals or entities residing in Iran and Syria and (ii) Euro-denominated payments involving Iranian parties after the bank was acquired by a U.S. company in 2018.

OFAC found that the apparent violations resulted from the bank's failure to understand how U.S. economic sanctions may apply to financial institutions operating outside the United States. In particular, the bank did not adequately address the risk of indirectly exporting financial services by processing U.S. dollar transactions, or the risk of engaging in business with a comprehensively sanctioned jurisdiction like Iran while majority-owned by a U.S. parent company.

OFAC determined that the violations were voluntarily self-disclosed and non-egregious. OFAC noted that the bank and its parent company took steps to remediate their compliance procedures, including (i) modifying the bank's screening tool for potential sanctions violations, (ii) ending the bank's engagement with the customers involved in the transactions that were the subject of the apparent violations and (iii) putting in place diligence procedures to better identify potential sanctions-related risks.

To settle the matter, the bank and its parent company agreed to pay $862,318.