UK financial institution agrees to pay $2.3 million to settle Sudan sanction violations

Potential civil liability for processing transactions in apparent violation of OFAC’s now-repealed Sudan sanctions program

Potential civil liability for processing transactions

The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) today announced that a UK financial institution has agreed to pay approximately $2.3 million to resolve its potential civil liability for processing transactions in apparent violation of OFAC’s now-repealed Sudan sanctions program that prohibited the exportation, directly or indirectly, to Sudan of any goods, technology, or services from the United States.

According to an OFAC release [PDF 208 KB], as a result of an internal investigation triggered by a Sudanese customer’s request to process a payment, the UK financial institution conducted a lookback review to identify potential Sudan-related transactions. That review identified two customers that had engaged in Sudan-related transactions that the UK bank processed through the financial system of the United States.

  • One of the customers was an entity incorporated outside of Sudan that maintained a branch in Sudan that, in 2014, became the instructing party and account signatory to transactions processed by the UK bank on behalf of the entity. Written communications from that customer contained references to the location of the branch in Sudan. The UK bank also processed certain transactions to recipients that appeared to be in Sudan at the time.
  • The other customer was a Sudanese subsidiary of an entity also incorporated outside of Sudan. The information provided by the subsidiary as part of the bank’s “know-your-customer” documentation identified the subsidiary as being registered in Sudan. 

In relation to both customers, the UK bank’s internal customer database did not include reference to Sudan in the name or address fields of either customer.

As a result of the compliance deficiencies, the UK financial institution’s staff failed to appropriately evaluate and escalate potential transactions with underlying account and transactional documentation indicating ties to Sudan. Consequently, the UK financial institution processed over 100 payments via U.S. correspondent banks between September 4, 2014, and February 24, 2016, totaling over $40 million in apparent violation of the Sudanese Sanctions Regulations.

The apparent violations were voluntarily self-disclosed and constituted 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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