HSBC Bank USA, N.A. OFAC Settlement: $32.4K (2013)

On December 9, 2010, OFAC designated Husayn Tajideen (also known as Hussein Tajideen) and Tajco as Specially Designated Global Terrorists ("SDGTs") and added them to the SDN List. That same day, HBUS updated its interdiction software to reflect these designations. On December 10, 2010, HBUS received an $11,492.86 funds transfer originated by a third-country financial institution on behalf of Tajco, destined for the HSBC Bank Middle East Limited ("HBME") account of a food production and distribution company. HBUS' interdiction software identified Tajco as a potential match and routed the payment into a suspense queue for manual review. In response to HBUS's request for additional information, the remitting institution sent an MT 199 SWIFT message confirming the originator's full name as "Tajco Company Limited," at "9 Picton Street, Banjul, The Gambia" (the SDN List identifies one of Tajco's addresses as "1 Picton Street, Banjul, The Gambia"), and stating Tajco was owned by "Hussein Tajideen." HBUS' interdiction software did not screen this incoming MT 199 message because the bank did not screen all MT 199 messages for potential OFAC matches at the time. An HBUS Compliance Officer reviewing the information did not manually screen the names Hussein Tajideen and Tajco against the SDN List or recognize them as potential SDGTs, and authorized the payment. HBUS processed the funds transfer on December 27, 2010.

An internal AML Unit report obtained in early January 2011 flagged the December 10, 2010 payment and noted it referenced "40 Percent Advance Payment Order No 1011284," suggesting future payments involving the same parties would be forthcoming. Despite reviewing this information, HBUS Compliance did not take any additional steps to interdict future transactions involving the same parties or referencing that order number. On January 7, 2011, and April 7, 2011, HBUS processed two additional funds transfers valued at $14,963.25 and $13,709.96, respectively, that appear to have involved an interest of Tajco. While the subsequent payments did not reference a person appearing on the SDN List and each had a different originator, the payment instructions included the same order number and were destined for the same HBME account of the same food company as the December 10, 2010 transaction.

OFAC determined that HBUS voluntarily self-disclosed the apparent violations and that the apparent violations constituted a non-egregious case. OFAC concluded that the apparent violations were not the result of willful or reckless conduct. The total base penalty amount was $20,083. After considering aggravating and mitigating factors pursuant to the General Factors under OFAC's Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A, OFAC further reduced the proposed penalty in light of HBUS' agreement to settle its potential liability for the apparent violations, resulting in a final settlement amount of $32,400.

The case illustrates how gaps in automated screening and manual review can compound across multiple transactions. HBUS' interdiction software correctly flagged the initial payment for review, but the bank's policy at the time excluded all MT 199 messages from automated screening — allowing the remitting institution's response message, which named both Tajco and Hussein Tajideen, to pass without a system match. The compliance officer who reviewed that MT 199 response also did not manually screen the disclosed names against the SDN List. After the first violation, the HBUS VP/Senior Manager of OFAC Compliance reviewed the transaction and noted language referencing a forthcoming advance payment order involving the same parties, but did not take additional steps to monitor or interdict transactions referencing that order number. The two subsequent violations, processed in January and April 2011 with different originators, were linked to the same underlying order and destined for the same account — connections that a targeted interdiction step could have surfaced.

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