A $430,500 settlement with OFAC was knocked down from the base penalty of $574,000. The 214 violations of OFAC’s Kingpin Act counter-narcotics trafficking sanctions were non-egregious, but also not voluntarily self-disclosed. Here is OFAC’s math:
OFAC determined the following to be aggravating factors:
• Amex is a large and sophisticated financial institution with a global presence.
• Amex conferred $155,189.42 in economic benefit to an account associated with a person on the SDN List who was designated for involvement in illegal drug distribution and money laundering.
OFAC determined the following to be mitigating factors:
• Amex cooperated with OFAC and promptly responded to all requests for information
throughout the investigation.
• Amex has represented that it undertook the following remedial measures intended to minimize the risk of recurrence of similar conduct in the future:
o Launching reporting and automated solutions designed to ensure compliance with Amex’s internal requirement to perform a second level of review of high confidence sanctions alerts, and to notify Amex’s compliance leadership of high confidence sanctions alerts closed without a second level of review.
o Launching a centralized card account suspension process that can be deployed rapidly by a U.S.-based team and leverages a dedicated suspense code that cannot be removed without the approval of Amex’s sanctions compliance team.
o Conducting various forms of training for relevant personnel, migrating the relevant sanctions screening process to Amex’s centralized screening team, and launching further Quality Control reporting in efforts to ensure consistency and accuracy of alert adjudication.
o Launching a sanctions referral flag in Amex’s AML case management system in order to enable automated escalation to Amex’s sanctions compliance team of AML cases with a potential sanctions nexus.
• As part of its agreement with OFAC, Amex has undertaken to continue its implementation of these and other compliance commitments.
So, what actually happened?
On November 16, 2012, Walter Alexander Del Nogal Marquez (“Marquez”) applied for and obtained a supplemental American Express Centurion Card on an account maintained by a U.S. person at Amex. On May 7, 2018, OFAC designated Marquez pursuant to the Foreign Narcotics Kingpin Sanctions Regulations (FNKSR), 31 C.F.R. Part 598, and added him to OFAC’s List of Specially Designated Nationals and Blocked Persons (the “SDN List”). A few days after OFAC designated Marquez, Amex’s internal sanctions list screening system generated a “high confidence” alert, which was erroneously closed by an operations analyst responsible for conducting the initial review of the alert despite a match against multiple data elements (name, date of birth, and Venezuelan National ID number) and an internal procedural requirement for a second-level review for all high-confidence alerts.
On June 26, 2018, an analyst investigating an anti-money laundering (“AML”) media alert identified and escalated Marquez’s connection to the account. The next day, June 27, 2018, instructions were given to suspend immediately charge privileges on all cards linked to the U.S. person’s account, including Marquez’s supplemental card. However, the employee who entered the suspension code into the system did not include comments indicating that the restriction was sanctions related. Accordingly, when the U.S. person accountholder called the following day, on June 28, 2018, to inquire about the account status, a customer care professional removed the suspension. The AML team caught the error the following day and directed the account to be re- suspended. However, the team that carried out this task mistakenly applied the incorrect suspension code, which allowed the account to conduct seven additional transactions after the suspension was lifted on June 28, 2018, before the account was closed on July 6, 2018.
In sum, between approximately May 7, 2018 and July 6, 2018, Amex processed 214 transactions totaling $155,189.42 involving the account, in apparent violation of the FNKSR, 31 C.F.R. § 598.202 (the “Apparent Violations”).
To be clear, the settlement figure was almost triple the value of the transactions … don’t even think about how little revenue Amex generated from this.
And here’s OFAC’s lesson for you – which is probably pretty obvious, based on the facts of the violations:
This action highlights the importance of properly training employees on sanctions compliance procedures and ensuring that those procedures are followed appropriately, especially when high- confidence alerts are generated. Also, consistent application of enterprise-wide compliance measures, including controls to prevent other departments or personnel from overriding a sanctions-related decision to suspend an account, can also help mitigate the risk of a sanctions violation.