The Office of Foreign Assets Control (“OFAC”) announced that it had fined the New York branch of the National Bank of Pakistan $28,800 in connection by seven wire transfers made by the Bank in an amount totaling $55,952.14 to an entity on OFAC’s Specially Designated Nationals and Blocked Persons List. The transfers went to Kyrgyz Trans Avia, an airline headquartered in Bishkek, Kyrgyzstan. The transfers were from or to an account denominated “LC Aircompany Kyrgyztransavia.” Although the SDN List contains references to both Kyrgyz Trans Avia and Kyrgyztransavia, the Bank’s screening software failed to identify the match.
OFAC noted that the base amount for the penalty under its guidelines was $64,000. That the error was a software error, meaning that no one at the Bank was aware of the violation, was considered a mitigating factor. But this mitigation still resulted a substantial fine equal to approximately half of the funds transferred and far more than any conceivable profits the bank made on the transfers.
The interesting issue here is whether the Bank has any recourse against the unnamed software provider. The answer is probably no, given that it is quite likely that the software license includes standard language disclaiming any liability for consequential damages arising from any failures or errors by the software. The take-away is this: select your screening software carefully, audit it frequently and do your best to get an indemnification from the provider.
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A number of press reports today, including ![Cuba - Havana - Car by Didier Baertschiger [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://www.flickr.com/photos/didierbaertschiger/11785935544[cropped] Cuba - Havana - Car by Didier Baertschiger [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://www.flickr.com/photos/didierbaertschiger/11785935544[cropped]](https://www.exportlawblog.com/images/cuba_car2.jpg)
Okay, yes, the headline is clickbait, but it’s also not too far from the truth. (Unlike typical clickbait — such as “Four Foods You Eat That Are Poisonous: Number 4 Will Really Surprise You” or “Twelve Really Famous Movie Stars With Really Bad Teeth” — which is largely untrue.) The basis for this (slightly) sensationalized headline is something an official from the Office of Foreign Assets Control (“OFAC”) said yesterday at the meeting here in DC of the Association of University Export Control Officers.
Yesterday, the Office of Foreign Assets Control issued “

