Sunday, August 17, 2014


Every week, OFAC names & shames American business that are involved in international trade. usually, it is for Iran sanctions violations, but also Cuba and Sudan show up regularly, and other jurisdictions from time to time. The civil fines can be high, often being in the millions of dollars, and you can add on the reputation damage that the companies suffer, from the negative publicity,  especially when it is stated that the corporation sought to conceal the violation.

In the vast majority of the listed violations, it is prominently listed that the offending company did not have a functioning compliance program, to deter trade with sanctioned jurisdictions, individuals or entities. This is often computed as an obviously aggravating factor in determining the amount of the civil penalty, though not required by law or regulation.

The time has come to contact your bank clients who are engaged in regular international commerce, and ask them to certify that they are operating a functional, effective compliance program, which insures that they do not, directly or indirectly, do business with, for for, a sanctioned entity, individual or jurisdiction, as end user of their products or services. You might want to be particularly assertive about obtaining such a certification, which should be signed by the president, or managing director, and the designated compliance officer, from clients who trade with Venezuela, Colombia, or the countries of the Middle East.

If the client delays delivery of such a document, you should advise them that you may be required to raise their level of transactional risk. In the most extreme, high-risk cases, you may want to exist the client, especially where you have previously filed SARs on one or more of their wire transfers.

While it is true that there is, at present, no legal requirement that non-financial entities maintain a compliance program,  as a practical matter, if they do have one, they has best do so immediately. Your clients' risk levels can impact your own institution , so ensure that your clients are protected, as their compliance programs also protect your bank. 

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