This one’s pretty cut and dried… a $343,315 fine for accepting the business of collecting the $5,730,680.33 debt from a company on the SDN List, and for actually successfully collecting $4,043,174.25 of it. The company did not voluntarily self-report, but the two violations were considered a non-egregious case. The resulting settlement was reduced from the $590,282 base penalty.
Here is what OFAC considered in its investigation:
The following were considered aggravating factors:
- ATCI did not undertake any meaningful analysis or otherwise seek confirmation from OFAC that assignment of the SDN’s debt and acceptance of payment from the Soho Mall Trust was permissible under existing authorizations; and
- ATCI is a subsidiary of a sophisticated global trade credit insurance and collections conglomerate.
The following were considered mitigating factors:
- ATCI has not received a penalty notice or Finding of Violation from OFAC in the five years preceding the earliest date of the transactions giving rise to the Apparent Violations; and
- ATCI voluntarily conducted a full internal review of the underlying facts and circumstances, provided documents from its internal review to OFAC in the course of the investigation, and took voluntary remedial action to address the cause of the Apparent Violations. ATCI also agreed to undertake certain compliance commitments to ensure that its OFAC sanctions compliance program remains strong over the next several years.
and the lesson we should learn:
This enforcement action draws particular attention to transactions related to the assignment of an SDN’s debt and highlights the importance of obtaining a specific license before engaging in activity that is not otherwise authorized.
One curious thing is that ATCI didn’t get credit for the fact that the debt collection may have been licensable: the SDN was in liquidation when ATCI took on the assignment. I know that OFAC has mentioned “could have been licensed” in other cases.
Also interesting is OFAC’s focus on some of these smaller cases. It used to be that the focus was on larger and more egregious patterns of behavior. When you really get down to it, this was a single transaction they got whacked for – maybe because they were a sub of a large firm, they got penalized just to make a point?