Banco do Brasil OFAC Settlement: $139.5K (2015)

BBNY processed seven apparent violations of § 560.204 of the ITSR. On June 7, 2010, BBNY manually added Isfahan Internacional Importadora Ltda ("Isfahan"), a customer of Banco do Brasil, S.A., Brazil ("BB-Brazil"), to its "Good Guy Exception List" after its OFAC interdiction software generated recurring alerts due to the word "Isfahan" (a location in Iran) in the company's name. BBNY relied on verbal representations made to BB-Brazil by Isfahan that Isfahan did not export products to or import products from Iran.

Between October 22, 2010 and February 11, 2011, BBNY processed three funds transfers totaling $70,244.61 originated by Isfahan's account at BB-Brazil and destined for a third-country beneficiary's account at multiple third-country financial institutions. BBNY's payment system cleared the alert against the phrase "Isfahan" due to the originator's inclusion on the Good Guy Exception List; BBNY later determined these transfers, in part, constituted payments for Iranian-origin goods.

On October 24, 2011, BBNY processed a $27,364.14 funds transfer from Isfahan's BB-Brazil account to a third-country beneficiary. A U.S. intermediary financial institution subsequently requested supporting documentation, including copies of related invoices. BBNY's Compliance Department reviewed the invoice, described as "of poor quality," and determined it did not reference Iran, relaying that conclusion to the intermediary without requesting a more legible copy or additional clarity from BB-Brazil. On November 10, 2011, the U.S. intermediary identified references to Iran on the invoice and rejected the transaction, returning the funds to BBNY "due to Iran involvement."

Despite receiving this rejection notice, BBNY processed three additional funds transfers totaling $94,714.28 between November 14, 2011 and June 4, 2012 involving Isfahan and payments for Iranian-origin goods. One cleared automatically via the Good Guy Exception List; two were stopped for manual review due to an address discrepancy but released without requesting additional information. In one instance, two OFAC analysts and a Senior Compliance Officer relied on the investigation conducted in connection with the October 24, 2011 transfer and released the payment. In another, two Compliance Department employees released the transfer after concluding it had been stopped solely due to the word "Isfahan."

OFAC determined that BBNY did not voluntarily self-disclose the apparent violations and that the apparent violations constitute a non-egregious case. The total base penalty amount for the apparent violations was $310,000. The settlement amount of $139,500 reflects OFAC's assessment that the bank may have been unaware of the risks associated with a false hit list that was not reviewed and updated regularly, as well as OFAC's consideration of the facts and circumstances pursuant to the General Factors under OFAC's Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A.

This enforcement action highlights the risks associated with failing to review multiple OFAC warning signs with respect to a particular customer, including transactions blocked or rejected by other financial institutions specifically due to OFAC sanctions, as well as the risks posed by relying on incomplete or inaccurate information when assessing a potential OFAC alert or match.

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