NATIONALLY RECOGNIZED FEDERAL LAWYERS
Last Updated on: 19th September 2023, 04:00 am
Largest OFAC Fines: Costliest Sanctions Settlements
The Office of Foreign Assets Control (OFAC) imposes heavy fines on companies that violate U.S. sanctions laws and regulations. OFAC penalties for sanctions breaches have reached hundreds of millions of dollars in some cases. This article examines the highest OFAC fines to illustrate the severe sanctions enforcement climate.
What Are the Largest OFAC Sanctions Settlements?
Here are the top 10 largest sanctions settlements paid to OFAC since 2000:
- BNP Paribas (France) – $8.9 billion (2015) – Processed over $190 billion in illegal transactions involving Sudan, Iran and Cuba.
- HSBC Holdings (UK) – $1.9 billion (2012) – Failed to prevent money laundering and processed Iran, Libya, Sudan, Burma transactions.
- ING Bank (Netherlands) – $619 million (2012) – Stripped data from Iran and Cuba wire transfers.
- Credit Suisse (Switzerland) – $536 million (2009) – Concealed Iranian transactions and provided unauthorized services to Iran and other sanctioned entities.
- Standard Chartered (UK) – $327 million (2012) – Processed Iranian transactions while concealing client identities.
- Societe Generale (France) – $617 million (2018) – Violated Cuba sanctions and manipulated LIBOR rate.
- Commerzbank (Germany) – $258 million (2015) – Dealt with Iranian and Sudanese entities while concealing transactions.
- UniCredit Bank (Germany) – $253 million (2019) – Processed over $500 million in transactions with sanctioned Iranian entities.
- ZTE Corporation (China) – $100 million (2017) – Exported telecom equipment to Iran and North Korea.
- JP Morgan Chase (U.S.) – $88.3 million (2011) – Processed wire transfers referencing sanctioned parties in Sudan.
OFAC fines have skyrocketed as sanctions rules proliferate and enforcement intensifies. Even billion-dollar banks are at risk.
Notable Recent OFAC Sanctions Settlements
In addition to the top 10 largest cases above, other substantial OFAC sanctions settlements in recent years include:
- PayPal (U.S.) – $7.6 million (2015) – Processed payments for goods exported to sanctioned countries.
- Western Union (U.S.) – $5.7 million (2017) – Transmitted wire transfers on behalf of sanctioned individuals and entities.
- Cobham Holdings (UK) – $87 million (2019) – Exported aircraft parts and services to sanctioned countries through intermediaries.
- Ericsson (Sweden) – $1.06 billion (2019) – Bribed government officials and violated FCPA.
- eBay (U.S.) – $1.1 million (2015) – Allowed exports of goods to sanctioned countries through its marketplace.
- Halliburton (U.S.) – $304,706 (2010) – Exported oilfield services to Iran while concealing the end user.
Even non-financial companies face major sanctions risks requiring compliance care.
Factors That Lead to Large OFAC Fines
Why do some OFAC sanctions violations result in hundred million or billion-dollar fines, while others involve much smaller penalties? Key factors include:
- Extent of prohibited transactions – Large volume and dollar amount of illegal transactions raise fines.
- Duration of violations – Violations lasting many months or years incur higher fines than one-off incidents.
- Intentional deception – Efforts to conceal prohibited dealings through cover payments, falsified records, etc. are penalized heavily.
- Harm to sanctions goals – Activities enabling major economic activity in sanctioned countries and sectors increase fines.
- Prior warnings – Prior OFAC cautions about sanctions risk areas lead to harsher fines for later violations.
- Lack of compliance programs – Weak or non-existent sanctions compliance programs signal lack of diligence.
- Multiple sanctions programs violated – Violating Iran, Cuba, and Russia sanctions concurrently brings much larger fines than breaching just one program.
- Aggravating factors – Obstruction of investigation, involvement of managers, and actual knowledge of dealings all increase fines.
How Are Base Penalty Amounts Calculated?
For significant civil monetary penalties, OFAC first calculates a base penalty amount using several factors:
- The transaction value of the prohibited dealings, which serves as a penalty ceiling.
- The apparent egregiousness of the conduct based on the entity’s knowledge and the harm caused by undermining sanctions goals.
- Compliance program adequacy at the time of the apparent violations. Strong programs may reduce penalties.
- The compliance history of the entity in terms of prior OFAC warnings or penalties.
OFAC then adjusts the base penalty amount based on aggravating factors like willful deception or obstruction and mitigating factors like voluntary self-disclosure and cooperation. This yields the final penalty.
Do OFAC Fines Get Reduced Through Settlements?
Many of the largest OFAC settlements involve reductions from initial penalty proposals put forward by OFAC. Companies targeted by OFAC have leverage to negotiate lower fines through:
- Voluntary self-disclosure – Coming forward before an OFAC investigation begins typically reduces penalties significantly.
- Extraordinary cooperation – Disclosing extensive details, making personnel available