OFAC has announced a Finding of Violation –and not a penalty–against State Street Bank and Trust Co. (SSBT) for processing 45 pension payments totaling under $12,000 on behalf of a pension plan participant who was a US citizen with a US bank account but was living in Iran.
The violations stemmed from a defect in SSBT’s sanctions procedures. The sanctions screening system used by the business unit, which was separate from SSBT’s central Sanctions Compliance function, flagged each payment. Each flagged payment was escalated, not to SSBT’s sanctions compliance professionals but to compliance personnel associated with the business unit, and then processed. Upon discovering and reporting the compliance system deficiency to OFAC, SSBT revised its procedures so that pension payments would be screened by the centralized sanctions screening system and flagged transactions would be escalated to the central Sanctions Compliance unit.
A Finding of Violation was deemed appropriate for several reasons, including SSBT’s actual knowledge that the individual for whom payment was being processed was in Iran and the fact that SSBT was a large and commercially sophisticated financial institution. Mitigating factors included SSBT’s cooperation; its voluntary disclosure of the situation; the fact that while the payments were processed on behalf of someone resident in Iran, the payments themselves may not have actually been transferred to Iran; and the fact that the payment might have been authorized had a license been sought.