BMO Harris Bank HA (BMO) received a Finding of Violation from OFAC for transferring funds to a client in violation of the Iranian Transactions and Sanctions Regulations. Specifically, OFAC determined that between February and March 2011, a predecessor, Marshall and Ilsley Bank (M&I Bank), processed six funds transfers totaling $67,357 on behalf of a customer for the purpose of paying an outstanding balance owed to an Iranian entity located in Iran for the purchase of Persian rugs. M&I Bank stated that the company had been added to the bank’s “False Hit List” in 2009 (when the importation of Iranian-origin carpets was authorized under a general license) due to the word “Persian” in the company’s name. However, after OFAC removed the general license in 2011, M&I Bank did not remove the company from the False Hit List or implement additional measures that could have prevented the funds transfers in 2011.
OFAC issues a Finding of Violation when it wants to document a violation but determines the violation does not warrant a monetary penalty. The subject of a Finding of Violation may respond to OFAC’s determination of violation before the determination becomes final.
In issuing the Finding of Violation to BMO, OFAC considered that M&I Bank may have been unaware of the risks associated with a false hit list that is not periodically reviewed. To this end, OFAC has now issued guidance to companies on the importance of maintaining false hit lists. OFAC also considered that staff-level personnel had actual knowledge of the conduct, had reason to know that the transactions were in violation of the ITS and had failed to include procedures for updating internal sanctions lists and sanctions programs administered by OFAC. Mitigating factors included that fact that no managers or supervisors were aware of the conduct, no finding had been previously issued against M&I Bank and personnel at M&I Bank (and later BMO Harris) substantially cooperated with OFAC during the course of investigation.