TD Bank, N.A. OFAC Settlement: $115K (2021)

Two separate matters are at issue.

In the first matter, between December 20, 2016 and August 15, 2018, TDBNA processed 1,479 transactions totaling $382,685.38 and maintained nine accounts on behalf of five employees of the North Korean mission to the United Nations without a license from OFAC. At account opening, the account holders of all nine accounts presented North Korean passports to TDBNA. These passports did not generate an alert during the customer screening process because TDBNA relied heavily on a vendor-supplied Politically Exposed Persons (PEP) list that did not include government employees of sanctioned countries. In addition, TDBNA employees often misidentified North Korea (referring to it as Korea or South Korea or using a country code meant for South Korea), or left the citizenship field blank in customer profiles. As a result, TDBNA's screening system did not flag any of these accounts because the citizenship information was missing or incorrect. Under the North Korea Sanctions Regulations (NKSR), 31 C.F.R. § 510.510(c), the general license authorizing certain transactions with the North Korean Mission to the United Nations specifies that it does not authorize U.S. financial institutions to open and operate accounts for employees of the North Korean mission, and requires U.S. financial institutions to obtain OFAC specific licenses for such services. Because TDBNA did not have a specific license, its conduct resulted in apparent violations of 31 C.F.R. § 510.201.

In the second matter, TDBNA maintained two accounts for more than four years for a U.S. resident listed on OFAC's SDN List, in apparent violation of the Foreign Narcotics Kingpin Sanctions Regulations.

Both matters were voluntarily self-disclosed and determined to be non-egregious.

For the North Korea-related matter, the statutory maximum civil penalty is $460,800,198. Because the apparent violations were voluntarily self-disclosed and the matter is non-egregious, the base civil monetary penalty equals the sum of one-half the transaction value for each apparent violation, which is $191,343. The settlement amount for this matter is $105,238.65, reflecting OFAC's consideration of the General Factors under the Enforcement Guidelines. Penalty calculation details for the second matter are not stated in the available source text.

The apparent violations in both matters resulted from multiple sanctions compliance breakdowns, including screening deficiencies and human error, and highlight the importance of maintaining and following proper escalation procedures and ensuring adequate employee training.

In the North Korea-related matter, TDBNA's screening failure stemmed in part from relying on a vendor-supplied PEP list that did not include government employees of sanctioned countries. Employees also frequently misidentified North Korea or left the citizenship field blank in customer profiles, preventing alerts from being generated even for account holders who had presented North Korean passports at account opening. The NKSR general license at 31 C.F.R. § 510.510(c) authorizing certain transactions with the North Korean Mission to the United Nations does not cover accounts for mission employees; specific OFAC licenses are required for such services.

TDBNA's remedial measures included enhanced controls for identifying government officials of sanctioned countries, updated procedures requiring escalation of reviews for customers in or affiliated with sanctioned jurisdictions, and targeted training on adjudication criteria for potential PEPs from sanctioned countries and the escalation requirements applicable in such cases.

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