U.S. Company Pays $7.59 Million for Multiple Sanctions Violations
The Treasury Department’s Office of Foreign Assets Control (OFAC) has announced that a U.S. company has agreed to pay $7.59 million to settle its potential civil liability for 65,942 apparent violations of multiple sanctions programs. The case involved an online digital asset trading and settlement platform that allowed customers to fund their accounts and conduct trading activity.
Sanctions Compliance Program Implemented 16 Months After Operations Began
OFAC found that the company did not implement a sanctions compliance program until 16 months after it began operations. Existing customers were not retroactively screened, and customers residing in sanctioned jurisdictions were generally able to continue using the platform. Although the company made efforts to identify and restrict accounts with links to sanctioned jurisdictions, some customers located in these areas continued to use the platform.
Penalties and Mitigating Factors
The statutory maximum civil monetary penalty in this matter is $19.7 billion, and the base penalty amount is $99.2 million. Aggravating factors included the company’s failure to exercise due caution or care for its sanctions compliance obligations, its inconsistent application of the compliance program across sanctioned jurisdictions and pre-existing accounts, and its knowledge that users involved in the apparent violations were located in sanctioned jurisdictions. Mitigating factors included the company’s clean penalty history, its status as a small start-up at the time of most of the apparent violations, the additional compliance measures taken after the company was acquired by another firm, and the fact that many of the transactions at issue were for a relatively small amount.
Importance of Sanctions Compliance for Emerging Technologies
The case highlights the importance of incorporating sanctions compliance into business functions at the outset, especially for emerging technologies seeking to offer financial services to a global customer base. Companies must prioritize sanctions compliance from the outset and implement a comprehensive program that includes retroactive screening of existing customers. Sanctions violations can result in significant monetary penalties, damaging reputational harm, and even criminal prosecution. It is crucial for companies to take proactive measures to avoid such violations and maintain a robust sanctions compliance program.
The OFAC settlement serves as a reminder that sanctions compliance is crucial for emerging technologies and must be incorporated into business functions at the outset. Companies must take proactive measures to avoid violations, including retroactive screening of existing customers. Violations can result in significant penalties and reputational harm. A robust sanctions compliance program is essential for global companies seeking to offer financial services to a diverse customer base.
Read source: https://www.strtrade.com/trade-news-resources/str-trade-report/trade-report/may/%247-6-million-penalty-shows-sanctions-dangers-for-emerging-technology-companies
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