OFAC fines Banco do Brasil for Iran sanctions violations

OFAC has fined Banco do Brasil, New York Branch (BBNY) $139,500 in settlement of the Bank’s civil liability for 7 apparent violations of US sanctions on Iran between 2010 and 2012.  As in the case of OFAC’s recent enforcement action against BMO Harris Bank NA, a substantial factor underlying BBNY’s violations was a failure to adequately review and update its false hit list (see previous blog).

In June 2010, BBNY’s parent company added Isfahan Internacional Importadora (Isfahan) to its false hit list following recurring alerts resulting from the fact that “Isfahan” is a location in Iran.  In adding Isfahan to its false hit list, the parent company relied on verbal representations from Isfahan that it did not trade with Iran. On several occasions, BBNY processed transactions involving Isfahan and payments for Iranian-origin goods, in violation of US sanctions.  The transactions, involving around $192,000 in total, were allowed by BBNY to continue after a US intermediary financial institution examined documents relating to one such transaction and rejected the transaction “due to Iran involvement”.

The base penalty amount for BBNY’s violations, which it did not voluntarily self-disclose, was $310,000. OFAC noted that the breaches were aggravated by the fact that several BBNY employees failed to exercise a minimal degree of caution or care in relation to the conduct leading to the violations, including reliance on a partially illegible invoice to assess sanctions compliance, that staff-level BBNY personnel and/or a BBNY senior compliance officer knew of the conduct and had reason to know Isfahan might process additional prohibited transactions, and that 4 of the 7 transactions harmed the objectives of US sanctions on Iran.  In mitigation, OFAC said that BBNY may have been unaware of the risks associated with a false hit list that was not regularly updated and reviewed, that BBNY took appropriate remedial action in response to the violations, that the bank substantially cooperated with OFAC during the course of its investigation, including by identifying four apparent violations, and that it had not previously received a penalty notice or Finding of Violation.

OFAC’s enforcement information on the matter is here.

This entry was posted in Iran, USA by Michael O'Kane. Bookmark the permalink.

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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