Since its last enforcement action against Banco Popular in late May, OFAC has been quiet on the enforcement front. Notwithstanding its silence, OFAC has been managing a robust and complex coordinated economic sanctions program against Russia. On its face this effort is more than Herculean, given the need to coordinate with the EU, Allies and partners. It has been truly unprecedented and OFAC’s performance has been masterful.
Even while managing a robust portfolio of sanctions, OFAC has been resolving various enforcement matters. In its most recent case, OFAC settled with American Express National Bank (“AENB”) for $430,500 for violation of the Foreign Narcotics Kingpin Sanctions. American Express National Bank is a subsidiary of American Express Company.
Over a two month period, AENB conducted 214 transactions that violated OFAC’s Kingpin sanctions. In particular, the transactions were linked to an account whose supplemental card holder was designated as part of an illegal drug distribution and money laundering organization. The violations stemmed from human error and sanctions compliance program deficiencies that resulted from $155,189 worth of transactions.
AENB did not voluntarily disclose the violations.
On November 16, 2012, Walter Alexander Del Nogal Marquez (“Marquez”) obtained a supplemental American Express Centurion Account linked to an account maintained by a U.S. person at AENB. Almost six years later, Marquez was designated by OFAC under the Kingpin Sanctions and he was added to the Specially Designated National List (“SDN”). Shortly after his designation, AENB’s sanctions screening system alerted as to Marquez and his association with the U.S. person account.
An AENB operations analyst who was responsible for conducting an initial review of the alert mistakenly closed the alert despite a match against multiple data elements, including name, date of birth and Venezuelan National ID number. Under AENB’s internal procedures, the closure of a high-risk alert should have been subjected to a second-level review.
Later, on June 26, 2018, an AML media alert identified and escalated Marquez’s connection to the account. The next day, instructions were given to suspend immediately charging privileges on all cards linked to the U.S. person’s account, including Marquez’s supplemental card. However, the AENB employee failed to note that the suspension was sanctions related. The next day, when the U.S. person inquired about the account, a customer care professional removed the suspension.
The AML team caught the error the next day and directed that the account be re-suspended. However, once again, the AML team applied the wrong suspension code, which allowed the account to conduct seven additional transactions after the suspension was lifted and before the account was closed on July 6, 2018.
Between May 7, 2018, and July 6, 2018, AENB processed 214 transactions totaling approximately $155,189, in violation of the Kingpin Sanctions program.
AENB conducted a robust internal investigation and cooperated with OFAC’s investigation. In addition, AENB implemented enhancement to ensure that second-level review for high risk matches, and centralized control of future suspensions occurred in the future. Additionally, AENB agreed to expand its training program, and transferring its screening operations to its parent company’s (American Express’s) compliance operation.
OFAC noted that this enforcement action highlighted the importance of properly training employees on sanctions compliance procedures, especially when high-risk alerts are issued. In addition, OFAC noted that internal controls across the enterprise have to be implemented to prevent an employee from overriding a compliance action such as a suspension.