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Emigrant Bank settles with OFAC for apparent violations

New York, NY
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Emigrant Bank, located in New York, has agreed to remit $31,867.90 to settle its potential civil liability for 30 apparent violations of the Iran sanctions administered by the Office of Foreign Assets Control (OFAC). For approximately 26 years, Emigrant maintained a Certificate of Deposit (CD) account on behalf of two individuals ordinarily resident and located in Iran, for which it processed 30 transactions between June 2017 and March 2021 totaling $91,051.13. Emigrant had actual knowledge of the Iranian address and apparent location of the accountholders during this period. The settlement amount reflects OFAC’s determination that Emigrant’s conduct was non-egregious and voluntarily self-disclosed.

In 1995, Emigrant opened a CD account (“the account”) for two Iranian residents, which it renewed every five years until it closed the account in 2021. During this period, the accountholders provided ample information to Emigrant indicating their Iranian residency, including letters from the accountholders to the bank showing their Iranian address and tax forms reflecting an address in Iran. Emigrant, in turn, demonstrated its knowledge of the Iranian residency and addresses through various documents, including an interest check, tax documents, periodic statements, and internal discussions and decisions.

On June 25, 2016, the accountholders sent a letter requesting a wire transfer from the account to a U.S. resident account at another U.S. bank. This transaction triggered Emigrant’s screening filter for such payments, which stopped the payment for review. Prior to this, Emigrant’s compliance processes had not flagged any such account activities for potential sanctions issues. When the beneficiary bank requested additional information regarding the Iranian address, Emigrant analyzed the account and erroneously concluded that the transfers were permissible as personal remittances and processed the payment forward.

Separately, Emigrant later changed the account’s country code in Emigrant’s customer database from the United States to Iran. Emigrant’s compliance program initially failed to flag for sanctions issues this address change to Iran. In April 2019, Emigrant upgraded certain sanctions screening platforms, which then triggered an alert on the account due to the accountholders’ country of residence being listed as Iran. However, Emigrant employees overrode the alert because they relied on the erroneous guidance from 2016.

Two years later, in June 2021, Emigrant management became aware of the account’s Iranian status due to a regulatory examination and initiated an investigation. Emigrant initially placed a restriction on the account that prevented outgoing transfers, and ultimately closed the account. Emigrant also took remedial action by implementing additional sanctions training and searched for other accounts whose owners reside in comprehensively sanctioned jurisdictions.

Between June 30, 2017 and March 31, 2021, Emigrant processed 30 transactions through the account totaling $91,051.13, in apparent violation of the Iranian Transactions and Sanctions Regulations (ITSR), 31 C.F.R. § 560.204 (the “Apparent Violations”).

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