OFAC Fines MoneyGram for Sanctions Violations, 'Misunderstanding' of Compliance Obligations
The Office of Foreign Assets Control fined a Texas money transfer company more than $34,000 for committing over 350 sanctions violations, OFAC said April 29. The company, MoneyGram Payment Systems, voluntarily disclosed the violations in 2017 (see 2011040041) after it provided services to blocked people in U.S. prisons and processed transactions on behalf of a sanctioned person and people doing business in Syria. OFAC said MoneyGram “had reason to know” the transactions “may” have exposed them to sanctions but followed through with them because of screening failures or “based on an erroneous misunderstanding” of its compliance obligations.
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In total, the company processed 359 transactions totaling about $105,000 for 40 people on OFAC’s Specially Designated Nationals List and two others connected to Syria. These transactions led to violations of OFAC’s kingpin sanctions, narcotics trafficking sanctions, weapons of mass destruction proliferators sanctions as well as regimes covering Syria, the Congo and the Central African Republic.
Between 2013 and 2016, the company worked with the Department of Justice’s Federal Bureau of Prisons to provide money transfer services to inmates, which allowed them to send and receive money in their personal commissary accounts. But MoneyGram didn’t screen the inmates against OFAC’s SDN List even though it knew some of them may have been included. “[I]t erroneously believed that such screening of inmates in federal prison was not expected under the” Federal Bureau of Prisons program, OFAC said.
MoneyGram eventually began screening the transactions but still continued to provide their services to sanctioned people due to “screening, technology, and fuzzy logic failures,” OFAC said, as well as human errors. Similar failures led to more sanctions violations when the company processed a “limited number” of transactions for an “additional blocked person” and certain commercial transactions related to Syria, the agency said. OFAC said MoneyGram analysts “improperly determined” that the Syria transactions qualified as “non-commercial, personal remittances.”
OFAC said MoneyGram’s violations were non-egregious and pointed to several mitigating factors, including its cooperation with OFAC’s investigation, that the majority of its transactions would have been eligible for a license and that it hadn’t received a penalty notice in the previous five years. OFAC also said MoneyGram discovered the violations as part of “ongoing efforts” to improve its compliance program, and took “strong remedial measures,” including retiring its legacy screening program and launching a new system with more features to “screen, monitor, and resolve sanctions and other compliance-related alerts.” The company also now screens all transactions related to the Federal Bureau of Prisons program, established more training in its “agent network” and hired 128 new compliance employees in 2016.
OFAC also pointed to a few aggravating factors, including that MoneyGram knew sanctioned people would be receiving the payments but didn’t screen them because it didn’t understand its compliance obligations. OFAC also said the company is a “large and commercially sophisticated international financial institution.”
Global money service businesses should fully understand its sanctions risks and take steps to mitigate them, OFAC added. It said the case highlights the importance of maintaining “robust” screening software, “especially for U.S. companies that operate globally.”