NY Bank Settles With OFAC for Maintaining Accounts Linked to Iran

OFAC said Emigrant first opened the CD account in 1995 and renewed it every five years before closing it in 2021. The agency said the two Iranian residents “provided ample information” to the bank “indicating their Iranian residency,” and the bank had “actual knowledge” of their Iranian address.

In 2016, the account holders requested a wire transfer from the account to a U.S. resident account at another U.S. bank. When the beneficiary bank asked for information about the Iranian address, Emigrant analyzed the account and “erroneously concluded that the transfers were permissible as personal remittances and processed the payment forward,” OFAC said.

It wasn’t until 2019, when the bank upgraded its sanctions screening platform, that its compliance function flagged the account. But OFAC said Emigrant employees “overrode the alert” on the account because of “erroneous guidance” from 2016. Emigrant management became aware of the account’s ties to Iran in 2021 “due to a regulatory examination” and began an investigation, OFAC said. The bank closed the account and voluntarily disclosed the matter to OFAC.

The agency said it could have imposed a $9,928,410 penalty against Emigrant but decided on the lesser fine because the agency had not issued a penalty notice to the bank in the previous five years and because the bank took “appropriate remedial steps” to fix the issue. OFAC also said all of the transactions within the statute of limitations were sent to the Emigrant account of the account holders’ son and daughter-in law, who are U.S. residents, and the payments “resulted in negligible harm to U.S. sanctions policy objectives.”

OFAC also pointed to several aggravating factors, including the fact that Emigrant “acted without due caution or care” in failing to implement effective sanctions compliance controls. It also noted that Emigrant is a “longstanding” private bank and a sophisticated financial institution.