U.S. company to pay $507,000 to settle violations of multiple sanctions programs

U.S. company to pay $507,000 to settle violations

The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) today announced that a Georgia company agreed to remit approximately $507,000 to settle its potential civil liability for apparent violations of multiple sanctions programs.

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According to the OFAC release [PDF 218 KB], the company allowed persons who appeared to have been located in the Crimea region of Ukraine, and in Cuba, North Korea, Iran, Sudan, and Syria to transact with merchants in the United States and elsewhere using digital currency on the company’s platform even though the company had location information about those persons prior to effecting the transactions. The company’s sanctions compliance program deficiencies enabled persons in these sanctioned jurisdictions to engage in approximately $129,000 worth of digital currency-related transactions with the company’s merchant customers. 

Summary

Between approximately June 2013 and September 2018, the company processed approximately 2,100 transactions on behalf of individuals who, based on Internet Protocol (IP) addresses and information available in invoices, were located in sanctioned jurisdictions. The apparent violations related to the company’s payment processing service that enabled merchants to accept digital currency as payment for goods and services. The company:

  • Received digital currency payments on behalf of its merchant customers from those merchants’ buyers who were located in sanctioned jurisdictions
  • Converted the digital currency to fiat currency
  • Relayed that currency to its merchants

While the company screened its direct customers—the merchants—against OFAC’s list of specially designated nationals and blocked persons (SDN List) and conducted due diligence, the company failed to screen location data that it obtained about its merchants’ buyers. Specifically, the company at times would receive information about the merchants’ buyers at the time of the transaction, including a buyer’s name, address, email address, and phone number. Beginning in November 2017, the company also obtained buyers’ IP addresses. However, the company’s transaction review process failed to analyze fully this identification and location data. As a result, buyers who, based on those information indicators, were located in Crimea, Cuba, North Korea, Iran, Sudan, and Syria were able to make purchases from merchants in the United States and elsewhere using digital currency on the company’s platform.

OFAC determined that the company did not voluntarily self-disclose the apparent violations and the apparent violations constitute a non-egregious case.


For more information on this topic or to learn more about KPMG’s Trade & Customs Services, contact:

Doug Zuvich
Partner and Global Practice Leader
T: 312-665-1022
E: dzuvich@kpmg.com

John L. McLoughlin
Principal and East Coast Leader
T: 267-256-2614
E: jlmcloughlin@kpmg.com

Andy Siciliano
Partner and National Practice Leader
T: 631-425-6057
E: asiciliano@kpmg.com

Steve Brotherton
Principal and Global Export and Sanctions Leader
T: 415-963-7861
E: sbrotherton@kpmg.com

Luis (Lou) Abad
Principal, Washington National Tax
T: 212-954-3094
E: labad@kpmg.com

Irina Vaysfeld
Principal
T: 212-872-2973
E: ivaysfeld@kpmg.com

Amie Ahanchian
Principal
T: 202-533-3247
E: aahanchian@kpmg.com

Christopher Young
Principal
T: 312-665-3229
E: christopheryoung@kpmg.com

Gisele Belotto
Managing Director
T: 305-913-2779
E: gbelotto@kpmg.com

George Zaharatos
Principal
T: 404-222-3292
E: gzaharatos@kpmg.com

Andy Doornaert
Managing Director
T: 313-230-3080
E: adoornaert@kpmg.com

Jessica Libby
Managing Director
T: 612-305-5533
E: jlibby@kpmg.com

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