Banco Popular de Puerto Rico OFAC Settlement: $255.9K

Executive Order 13884 (E.O. 13884), issued on August 5, 2019, blocked property and interests in property of the Government of Venezuela (GoV), defining the GoV to include any political subdivision, agency, or instrumentality of the GoV, any person owned or controlled, directly or indirectly, by the GoV, and any person who acted or purported to act directly or indirectly for or on behalf of any such entity. E.O. 13884 was incorporated into the amended Venezuela Sanctions Regulations (VSR), 31 C.F.R. part 591, on November 22, 2019.

Shortly after the issuance of E.O. 13884, BPPR began planning the methodology for the review of accounts that might be impacted by the executive order. It was not until October 26, 2020 — 14 months after E.O. 13884 was issued — that BPPR identified and blocked the four personal accounts of the two customers. Documentation BPPR had at the time E.O. 13884 was issued showed that one customer worked in a clerical level position in the GoV's Diplomatic Representation Office, and the other was a customer service representative of Compañía Anónima Nacional Teléfonos de Venezuela (CANTV), a Venezuelan state-owned entity. OFAC had issued General License 34A on November 5, 2019, which authorized transactions involving certain GoV persons, but neither individual met the criteria for GL 34A. BPPR's 14-month delay in identifying these customers resulted in 337 apparent violations of the VSR, 31 C.F.R. § 591.201, totaling $853,126.

The statutory maximum civil monetary penalty applicable in this matter is $105,295,110.80. OFAC determined that BPPR voluntarily self-disclosed the Apparent Violations and that the Apparent Violations constitute a non-egregious case. Accordingly, under OFAC's Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A, the base civil monetary penalty applicable in this matter equals the sum of one-half of the transaction value for each apparent violation, which is $426,563. The settlement amount of $255,937.86 reflects OFAC's consideration of the General Factors under the Enforcement Guidelines.

As noted in Frequently Asked Question (FAQ) 680 in the context of E.O. 13884, OFAC expects financial institutions to conduct due diligence on their own direct customers (including, for example, their ownership structure) to confirm that those customers are not persons whose property and interests in property are blocked. This case demonstrates the importance of financial institutions conducting timely due diligence, such as taking the steps outlined in FAQ 680, following the issuance of new sanctions prohibitions.

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