Last week the United States Department of the Treasury Office of Foreign Assets Control (“OFAC”) issued a civil penalties report. That report contained information that two financial institutions, Discover Financial Services (“Discover”) and Wells Fargo, remitted $8,720.00 and $67,500.00, respectively, to settle alleged violations of OFAC administered sanctions programs.

Discover was alleged to have violated the Foreign Narcotics Kingpin Sanctions Regulations between December 15, 2005 to about
November 24, 2007. According to the civil penalties report, OFAC alleged that Discover maintained a personal credit card account on behalf of an individual who had been designated as Specially Designated Narcotics Trafficking Kingpin (“SDNTK”). During this time Discover processed twenty-eight transactions through this personal credit card account equaling a total of $23,252. In determining the settlement amount OFAC considered that Discover voluntarily disclosed the matter to OFAC. Discover has no other known violations on record with OFAC prior to these allegations.

Wells Fargo on the other hand was forced to remit a significant large amount to settle the allegations against them. Wells Fargo remitted $67,500 to settle allegations of violations of the Iranian Transactions Regulations, which occurred between March 2005 and July 2006. The allegations stemmed from Wells Fargo’s export of financial services to Iran by performing financial services in the United States on behalf of an account holder while the account holder was located in Iran. The total value of these transactions was $55,959.62. Unlike Discover, Wells Fargo did not voluntarily disclose this matter to OFAC. Nonetheless, OFAC did mitigate the penalty because Wells Fargo established open and timely communications with OFAC, and entered into two tolling agreements with OFAC. There are three prior penalty cases against Wells Fargo for violations of the Iranian Transactions Regulations.

In addition, to the aforementioned financial institutions, one individual received a $30,000 fine from OFAC for transferring funds to Iran for investment in a catering service in Iran. This transfer was in violation of the Iranian Transactions Regulations. OFAC did not deem the transfer of funds to be egregious and the violation was the individual’s first, however, OFAC still deemed a $30,000 fine to be appropriate.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC litigation. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.