Nov
14

No Cigar!

Posted by Clif Burns at 11:04 pm on November 14, 2007
Category: OFAC

Treasury on the MoneyThe Office of Foreign Assets Control (”OFAC”) yesterday released its monthly report on penalties imposed by the agency last month. And, for the first time since the invention of the Internet, no one got fined for buying Cohibas over the web. Instead, OFAC reports penalties relating to Sudan, Iran and Specially Designated Global Terrorists (”SDGTs”).

  • SKE Midwestern was fined $20,000 for brokering shipments between Sudan and Mexico between 2003 and 2005. The violation was not voluntarily disclosed.
  • Wachovia was fined $11,000 for rejecting, rather than blocking, one payment to a “Specifically [sic] Designated Global Terrorist” in 2004. The violation was voluntarily disclosed.
  • Rita Medical Systems was fined $2,750 for transactions between 2002 and 2003 by its predecessor company with Iran. The violation was not voluntarily disclosed.

    • Notice the interesting disparity between the violations that were voluntarily disclosed and those that weren’t. Wachovia voluntarily disclosed one rejected rather than blocked payment to an SDGT and got the maximum penalty for one violation, which in 2004 was $11,000. SKE and Rita made multiple shipments over a period of years and paid less than $11,000 per violation even though the violations were not voluntarily disclosed. OFAC has a good record of reducing penalties for voluntary disclosures, so it is not quite clear here why this didn’t happen for Wachovia.

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    2 Comments »

    • The comment comparing the Wachovia penalty with those for SKE and Rita doesn’t make sense unless we knew the size of the Wachovia payment, and whether it was occurred in circumstances that would support a multi-count penalty action. It could easily be that multiple potential counts were reduced to one count, or that the $11k represents a tiny fraction of a substantial transfer.

      Comment by Ex-OFAC — November 16, 2007 @ 11:30 am

    • Good point as to whether the conduct might have supported multi-count penalty claims, although it’s hard to see how that might be done with what appears to be one transaction that was rejected rather than blocked. It’s also unlikely that it was a willful violation and subject to the $50k penalty. Still that’s also possible. OFAC could eliminate much of this confusion if it brought more transparency to its penalty process.

      Comment by Clif Burns — November 16, 2007 @ 11:47 am

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