IMG Academy, LLC OFAC Settlement: $1.7M (2026)

Between 2018 and 2022, IMG Academy entered into yearly tuition enrollment agreements (TEAs) with two Specially Designated Nationals — "SDN 1" and "SDN 2" — sanctioned under the Foreign Narcotics Kingpin Designation Act for providing financial support and services to a sanctioned Mexican Drug Trafficking Organization (DTO) and/or its principal leader. The agreements covered the enrollment and attendance of the SDNs' two student-athlete children.

SDN 1 enrolled their child in one of IMG Academy's boarding programs in January 2018. IMG Academy and SDN 1 renewed their TEAs annually for five academic years until Student-Athlete 1's graduation in Spring 2023. SDN 1's payment obligations ranged from $47,026 for half a semester to $98,867 for a full academic year. SDN 2 enrolled their child in July 2020, and IMG Academy renewed TEAs with SDN 2 annually until Student-Athlete 2 withdrew in June 2022. SDN 2's payment obligations ranged from $100,549 to $102,235 for each full academic year.

SDN 1 and SDN 2 primarily satisfied their payment obligations through third-party wire transfers and credit card payments. IMG Academy received wire transfers from non-designated third-party individuals and entities primarily located in Mexico into its account at a U.S. financial institution, for further credit to each student-athlete account. IMG Academy also charged payments to credit cards on file for each student-athlete and, when a positive end-of-year balance existed, applied those amounts to satisfy a portion of the next academic year's TEA.

Between 2019 and 2025, IMG Academy dealt in the property or interests in property of SDN 1 and SDN 2 on 89 occasions in apparent violation of 31 C.F.R. § 598.202 of the Foreign Narcotics Kingpin Sanctions Regulations (FNKSR) — specifically, by entering into three TEAs with SDN 1, three TEAs with SDN 2, and engaging in 83 transactions to satisfy tuition and related payment obligations associated with those TEAs.

OFAC determined that IMG Academy did not voluntarily self-disclose the apparent violations. Although IMG Academy informed OFAC of the apparent violations as soon as it became aware of them, OFAC had already initiated an investigation at the time IMG Academy made its disclosure. OFAC also determined that the apparent violations constitute a non-egregious case. Under OFAC's Economic Sanctions Enforcement Guidelines, 31 C.F.R. Part 501, app. A., the base civil monetary penalty applicable in a non-egregious, non-VSD matter equals the applicable schedule amount, which is $1,720,000. The settlement amount of $1,720,000 reflects OFAC's consideration of the General Factors under the Enforcement Guidelines.

This case highlights the pervasiveness of sanctions risk across a wide variety of sectors and institutions. Even for entities operating largely domestically, the presence of international touchpoints creates opportunities for impermissible dealings with sanctioned actors. Academic institutions are not immune. Sanctioned persons may wish to avail themselves or their families of opportunities available in the United States, including potentially to distance their children from their own illicit activities. Consequently, academic institutions should be on the lookout for payment arrangements that may involve sanctioned persons.

In addition to courting and enrolling students from around the world, schools and universities often host visiting faculty from other countries and engage in international exchange programs. They may collaborate with foreign institutions, maintain international research and commercial ties, invest in companies located abroad, or operate global campuses. Certain of these activities may be exempt from sanctions or covered by a general license, but others are not. Academic institutions must be sure they understand all sources of sanctions risk and implement effective controls to ensure their activities do not violate U.S. sanctions prohibitions.

Strong management commitment and a comprehensive risk assessment are the logical first steps. As a starting point, it may be advisable to screen students, counterparties to tuition agreements, and payors against OFAC's SDN List, in addition to using available information to understand whether any associated parties are located in a comprehensively sanctioned jurisdiction or otherwise have ties to a sanctioned person or entity. A determination can then be made regarding whether the activity is exempt or authorized, or whether applying for a specific license from OFAC is appropriate. Academic institutions may also wish to conduct regular independent testing and auditing to ensure their controls are operating effectively and provide training for all relevant personnel to facilitate ongoing compliance.

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