On 21 October 2015, OFAC announced that it had issued a finding of violation to BMO Harris Bank NA for violations of the Iranian Transactions and Sanctions Regulations. Under OFAC’s enforcement guidelines, a “finding of violation” is a formal determination of a violation of the sanctions regulations without an accompanying civil monetary penalty. According to OFAC, in early 2011, a predecessor institution to BMO Harris processed six transactions, totalling $67,357, in early 2011 to an Iranian exporter of carpets. The predecessor bank had added the exporter to its “false hit” list in 2009 to prevent its sanctions interdiction software from alerting, because imports of Iranian carpets were authorised by an OFAC general licence at the time. Although the general licence for trade in Iranian-origin carpets was revoked in 2010, the bank failed to remove the entity from its false hit list.
In deciding to issue a finding of violation, OFAC noted, among other things, that the predecessor bank may have been unaware of the risks of failing to properly review and update false hit lists, that the transactions were known to lower-level bank employees but not management employees, and that the bank took prompt remedial action and cooperated with OFAC’s investigation.