Press Room
 

To view or print the PDF content on this page, download the free Adobe® Acrobat® Reader®.

January 12, 2006
js-3076

OFAC Releases Sanctions Enforcement Procedures for Banking Institutions

The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) today published guidelines in the Federal Register titled "Economic Sanctions Enforcement Procedures for Banking Institutions Regulated by FFIEC-member Supervisory Agencies."

"As the administrator of U.S. economic sanctions, OFAC emphasizes in these internal procedures that the primary goal of enforcement actions is to promote more effective compliance within the particular institution, as well as throughout the industry," said OFAC Director Robert Werner.

The guidelines complement and expand upon OFAC's contribution to the Bank Secrecy Act Anti-Money Laundering Examination Manual published by the Federal Financial Institutions Examination Council on June 30, 2005.

The procedures spell out an institutional - rather than a transactional - approach to enforcement, taking into account risk-based efforts by financial institutions to ensure OFAC compliance, as well evaluating violations that appear to have occurred.

"OFAC recognizes the uniqueness of every institution's compliance program and how each program must be geared toward the size of a bank's accounts, its business volume, its customer base, and its product lines," Werner continued.

The procedures highlight OFAC's partnering with the functional bank regulators who will receive information related to apparent violations and compliance concerns as OFAC becomes aware of them. The regulators, in turn, will share with OFAC their evaluations of the adequacy of banks' compliance programs.

OFAC will be reviewing apparent violations on a periodic basis in the context of each institution's overall OFAC compliance program and specific OFAC compliance record. The reviews will include such factors as:

  • The opinion of a bank's primary federal regulator; 
  • The institution's history of OFAC compliance; 
  • The circumstances surrounding any apparent violation, including any patterns or weaknesses in an institution's compliance program and whether those weaknesses indicate negligence or fundamental flaws; 
  • Whether violations were voluntarily disclosed; 
  • Enforcement information provided by the institution to OFAC; 
  • The number of transactions or accounts that the institution handled improperly during the period under review and its responses to OFAC administrative subpoenas;
  • The number of transactions successfully blocked or rejected by the bank during the period; and
  • The actions taken by the bank to correct any violations and to ensure that similar violations do not recur.

After evaluating the information, OFAC will contact the bank to convey a preliminary assessment. OFAC's staff will discuss the results of its review, including any patterns or compliance weaknesses and will indicate what administrative action OFAC intends to take for each transaction or set of related transactions that appear to constitute violations.

Once OFAC has reached a final decision, it will notify the institution in writing and provide a copy of its evaluation letter to the institution's primary federal banking regulator. In the event that OFAC notifies a bank of its intent to pursue a civil penalty, existing civil penalty procedures under OFAC regulations will be followed, including the opportunity for informal settlement.

OFAC is soliciting comments for 60 days from the public about the new procedures, including suggestions on how OFAC Enforcement Procedures might be made to apply to state-regulated institutions, the insurance and securities industries, and the import/export community.

A copy of the guidelines may be accessed here: http://www.treas.gov/offices/enforcement/ofac/legal/regs/fr71_1971.pdf

Those wishing to submit comments should visit one of the following:

-30-