On 4 November 2015, OFAC announced a settlement agreement with the New York branch of Banco do Brasil, S.A., for seven apparent violations of the Iranian Transactions and Sanctions Regulations. According to OFAC, from October 2010 to June 2011, the bank processed seven transactions totalling roughly $165,000 for Isfahan Internacional Importadora Ltda, a Brazilian importer of Iranian carpets. Although the name Isfahan, which is a city in Iran, caused an alert in the bank’s interdiction system, the bank placed it on a “Good Guy Exception List” in June 2010 after receiving assurances from the company that it did not deal in Iranian goods. BBNY later learned that it had processed transactions for Isfahan involving Iranian goods, but continued to maintain Isfahan on its exception list in reliance on Isfahan’s earlier representations. Although two transactions with a different address for Isfahan triggered alerts, compliance personnel erroneously cleared the transactions.

OFAC determined that the bank did not voluntarily disclose the apparent violations, that the apparent violations were not egregious, and that the base penalty under OFAC’s guidelines was $310,000. The bank agreed to remit $139,500 to settle its potential liability for civil penalties.

OFAC has recently issued guidance on the proper use and maintenance of false hit lists, which warns of the risks of overreliance on those lists (see Issue 44 of the Sanctions Alert).