OFAC issues a Finding of Violation to BMO Harris Bank NA

OFAC has issued a Finding of Violation to BMO Harris Bank NA (BMO) in connection with its predecessor, Marshall & Ilsley Bank (M&I), having processed $67,357 on behalf of a customer for the purpose of paying an outstanding balance owed to an Iranian entity, located in Iran, in relation to the purchase of Iranian carpets.  A general licence for the import of Iranian carpets was issued by the US in 2009, at which time M&I added the customer to its “false hit list” to prevent its compliance software generating alerts based on the word “Persian” in its name.  According to OFAC, when the general licence was revoked in 2010 M&I did not remove the customer from its false hit list, nor did it implement any additional measures to guard against possible violations involving the customer.

A Finding of Violation sets out the details of a sanctions breach committed by a person or entity, and is issued by OFAC when it considers that the conduct warrants an administrative response but falls short of demanding a monetary penalty. In this case, OFAC considered that a Finding of Violation was appropriate given that staff-level M&I personnel had knowledge of the conduct leading to the violations and reason to suspect that the customer, based on their line of business, may process additional transactions in violation of US sanctions.  However, OFAC added that no M&I managers or supervisors were aware of the conduct, M&I had received no previous penalty notices or a Finding of Violation from OFAC, M&I took appropriate remedial action in response to the violations, and it substantially cooperated with OFAC during its investigation, including by identifying and reporting four of the violations itself.

OFAC noted that this Finding of Violation “highlights the particular sanctions risks associated with failing to implement proper procedures and controls to ensure that internal proprietary sanctions lists are properly reviewed”. It has also issued guidance on the use and maintenance of false hit lists here.

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About Michael O'Kane

Michael O’Kane is a partner and Head of the Business Crime team at leading UK firm Peters & Peters. Described as ‘first-rate’ (Legal 500 2012), he “draws glowing praise from commentators” (Chambers 2013) for handling the international aspects of business crime, including sanctions, extradition and mutual legal assistance. Called to the Bar in 1992 and prior to joining Peters & Peters he was a senior specialist prosecutor at the Crown Prosecution Service Headquarters(CPS). At CPS HQ he was a key member of a small specialist unit responsible for the prosecution of serious and high profile fraud, terrorist and special interest criminal matters including the Stansted Airport Afghan hijacking and the prosecution of Paul Burrell (Princess Diana’s butler). Michael joined Peters & Peters in 2002. He became a partner in May 2004, and Head of the Business Crime team in May 2009. Since joining Peters & Peters, Michael has dealt with a wide range of business crime matters. He has particular expertise in international sanctions, criminal cartels, extradition, corruption, mutual legal assistance, and FSA investigations. Described as“ an influential practitioner in fraud and regulatory work, so much so that he is top of the referral lists of many City firms for independent advice for directors” (The Lawyer’s Hot 100 2009), he was recognised as one of the UK’s most innovative lawyers in the 2011 FT Innovative Lawyer Awards and included in the list of the UK's leading lawyers in 'The International Who's Who of Asset Recovery 2012. In 2012 he was the winner of the Global Competition Review Article of the Year. Michael regularly appears on television and radio to discuss his specialist areas and he is the author of the leading textbook on the UK Criminal Cartel Offence “The Law of Criminal Cartels-Practice and Procedure” (Oxford University Press 2009). Recent/Current Sanctions Work • Representing 109 individuals and 12 companies subject to designation by the European Council under targeted measures imposed against Zimbabwe. This is the largest and most complex collective challenge to a sanctions listing ever brought before the European Court. • Acting for a former Egyptian Minister and his UK resident wife, challenging their designation by the European Council of Ministers under targeted measures brought against former members of the Egyptian Government. • Advising a company accused in a UN investigation report to have breached UN sanctions imposed in relation to Somalia. • Advising a UK company in relation to ongoing commercial relationships with an Iranian company listed under both EU and UN sanctions. • Advising an individual in relation to a UK investigation for alleging breaching nuclear export controls.

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