First Data provided third party data processing services to a SDNT (Specially Designated Narcotics Trafficker), with a total value of $69,144. Since the violations were voluntarily self-disclosed and were non-egregious, the base penalty was cut in half to $34,572.
So, why did First Data pay about 2/3 of the base penalty?
- First Data failed to exercise a minimal degree of caution or care in
reviewing the information flagged by its interdiction software;
- First Data had reason to know that
it was providing services to an SDNT as early as February 25, 2011, the date on which First
Data’s automated interdiction software flagged the SDNT as a potential match;
- The alleged
violations caused significant harm to U.S. sanctions program objectives by conveying economic
benefit to an SDNT and undermining the policy objectives of U.S. counternarcotics sanctions;
- First Data is a highly sophisticated commercial entity;
- First Data has no prior sanctions history in
the five years preceding the date of the earliest transaction giving rise to the alleged violations;
- The majority of the alleged violations occurred due to a deficiency in First Data’s OFAC
compliance program that incorrectly categorized potential matches to OFAC’s List of Specially
Designated Nationals and Blocked Persons (the “SDN List”), and the remainder of the alleged
violations occurred due to a deficiency in First Data’s OFAC compliance program that allowed
its client to reactivate the SDNT’s access to First Data services even after First Data deactivated
the SDNT’s access in order to comply with OFAC regulations;
- First Data took remedial action to
correct the deficiency in its categorization of potential matches to the SDN List; and
- First Data
cooperated with OFAC during OFAC’s investigation of the alleged violations.
So, to sum it up, First Data was a little sloppy, and their program had some holes in it – but they were not willful, and that saved them from a much larger fine had it been judged to be egregious. Considering the statutory maximum for the narcotics programs can be as high as $1,075,000 per transaction, that’s a pretty big deal.