JPMorgan Chase Bank, N.A. OFAC Settlement: $5.3M (2018)

JPMC operated a net settlement mechanism that resolved billings by and among various airlines and other participants in the airline industry on behalf of its client, a U.S. entity and its approximately 100 members, and a non-U.S. entity and its over 350 members. Between approximately January 3, 2008 and February 8, 2012, JPMC processed 87 transactions through the U.S. financial system that may have contained interests attributable to a sanctions-targeted party. Each transaction represented a net settlement payment between JPMC's client and the non-U.S. person entity, whose members included eight airlines that were at various times on OFAC's List of Specially Designated Nationals and Blocked Persons, blocked pursuant to OFAC sanctions, or located in countries subject to sanctions programs administered by OFAC. The 87 net settlement payments had a total value of $1,022,408,149, of which approximately $1,500,000 (0.14%) appears to have been attributable to interests of sanctions-targeted parties. The apparent violations do not include transactions exempt from the prohibitions of the International Emergency Economic Powers Act (IEEPA); they include non-exempt transactions such as airline freight charges.

JPMC did not have, prior to January 2012, a process to independently evaluate the participating member entities of the non-U.S. person entity for OFAC sanctions risk, despite receiving red flag notifications regarding OFAC-sanctioned members on at least three occasions. As a result, for a number of years prior to February 2012, JPMC processed net settlement payments that appear to have violated the Cuban Assets Control Regulations, 31 C.F.R. Part 515 (CACR); the Iranian Transactions and Sanctions Regulations, 31 C.F.R. Part 560 (ITSR); and the Weapons of Mass Destruction Proliferators Sanctions Regulations, 31 C.F.R. Part 544 (WMDPSR).

OFAC determined that JPMC voluntarily self-disclosed the apparent violations and that the apparent violations constitute a non-egregious case. The total base penalty amount for the apparent violations is $7,797,290. The settlement amount of $5,263,171 reflects OFAC's consideration of the facts and circumstances pursuant to the General Factors Affecting Administrative Action under OFAC's Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A.

This enforcement action highlights the risks associated with a U.S. person failing to take adequate steps to ensure that transactions that it processes are compliant with U.S. economic sanctions laws, particularly in instances in which a U.S. person has actual knowledge or reason to know, prior to the transaction being effected, of an SDN's past, present, or future interest in such a transaction.

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