Kenneth Rijock

Kenneth Rijock

Thursday, December 6, 2018

US REGULATOR FINES COMPANY WHEN AUTOMATED SCREENING SOFTWARE FAILS


 A Virginia electronics manufacturer was assessed a civil penalty of $87,507 by OFAC, for shipping electronics to a Russian company majority owned by an OFAC-blocked corporation, after the manufacturer's screening software failed to identify and flag the transactions.

Apparently the software failed to detect the name of the blocked entity, after performing an exact match search, although the user had set the search criteria to detect partial matches. The company relied upon the automated screening, without conducting any additional, supplementary procedures.

The software's failure was costly to the electronics manufacturer, but the company must share some of the blame, for failing to have additional resources, to check and validate the results of the automated search. Good compliance officers never rely upon a single resource, but maintain alternative systems, so that they receive the compliance equivalent of a "second opinion." Never rely upon a single source, which may return false positives, or fail the user altogether, when its shortcomings are exposed through unsatisfactory performance. Apply Enhanced Due Diligence always; do not rely upon one resource.

Readers who wish to read the Enforcement Information on the case may access it here.

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