TD Bank, N.A. OFAC Settlement: $9.8K (2021)

In the Foreign Narcotics Kingpin matter, Esperanza Caridad Maradiaga Lopez was added to the SDN List in September 2013. In February 2016, Lopez opened two joint accounts at a Miami-area TDBNA branch. A sanctions screening alert was generated the day after account opening. Despite first and last name and date-of-birth matches to the SDN List entry for Lopez, the reviewer dismissed the alert because there was "no match on full name DOB and geographical location." Over the next four years, four additional high-confidence sanctions screening alerts were generated, three of which were manually dismissed for similar reasons. Only the fifth and final alert, in February 2020, was determined by a reviewer to be a true hit, triggering the blocking of Lopez's accounts four years late and disclosure to OFAC. After the accounts were blocked, TDBNA's Fraud Unit, unaware of the sanctions-related reason for account closure, credited one of Lopez's accounts, causing it to be re-opened. The mistake was identified a few days later and the account was re-closed.

The failure to correctly identify Lopez as a person on the SDN List resulted from human error and a breakdown in TDBNA's sanctions compliance procedures. Lopez's name appeared in TDBNA's systems as "Esperanza Maradiaga Lopez," while the OFAC SDN List entry has the name "Esperanza Caridad Maradiaga Lopez." The date of birth information TDBNA had on file also matched the date of birth in the SDN listing. In addition to incorrectly dispositioning these alerts, TDBNA analysts contravened TDBNA procedures which require alerts to be escalated if a match occurs in first and last name and any additional information field. This conduct resulted in 145 apparent violations of 31 C.F.R. § 598.202 of the Foreign Narcotics Kingpin Sanctions Regulations.

Both matters were voluntarily self-disclosed and determined to be non-egregious. For the Foreign Narcotics Kingpin matter, the statutory maximum civil monetary penalty is $224,470,875. Because TDBNA voluntarily self-disclosed the apparent violations and the violations constitute a non-egregious case, the base civil monetary penalty under OFAC's Enforcement Guidelines equals the sum of one-half the transaction value for each apparent violation, which is $17,757. The settlement amount of $9,766.39 for this matter reflects OFAC's consideration of the General Factors under the Enforcement Guidelines.

These two actions highlight the importance of developing and implementing appropriate sanctions screening controls, following internal escalation procedures, and providing comprehensive training to relevant employees.

The North Korea-related matter emphasizes that banks and other financial institutions should consider taking steps to ensure accurate recordkeeping, including the correct identification of nationality, especially when providing financial services in connection with diplomatic accounts. Banks and other financial institutions should also consider implementing appropriate controls to flag highly relevant information in customer profiles that may indicate a sanctions nexus, such as accountholder passports issued by a sanctioned jurisdiction.

In the Foreign Narcotics Kingpin-related matter, the bank's compliance program flagged an account multiple times for a possible SDN List match, but an incorrect evaluation was made multiple times and the potential match was not escalated, in contravention of existing compliance policy. This action demonstrates the necessity of not merely developing appropriate procedures and policies for adjudicating and escalating sanctions screening alerts, but also ensuring that they are followed and implemented accordingly. This action also highlights the need for proper coordination of compliance efforts and actions across various departments and business units within a financial institution, such that a decision to block an account by one department cannot be overturned by another without appropriate controls.

Both matters highlight the need for comprehensive and thorough staff training, especially for employees tasked with reviewing customer onboarding information and adjudicating potential sanctions matches. Such training helps ensure that internal policies and procedures are followed and that potential matches are properly escalated consistent with those policies and procedures.

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