Romania’s First Bank Resolves OFAC Violations for $ 862,318 (Part IV of IV) | Michael volkov
The First Bank of Romania and JC Flowers have agreed to pay OFAC $ 862,318 to settle violations of the sanctions programs against Iran and Syria. First Bank is owned by its US parent company, JC Flowers & Company. In 2018, JC Flowers acquired a majority stake in First Bank, subjecting Frist Bank to OFAC sanctions.
In early 2019, First Bank’s regulator, the National Bank of Romania, reported a US dollar transaction that First Bank processed for a shipment of timber from Romania to Syria. First Bank launched a five-year retrospective analysis to deter whether there had been any other prohibited transactions. Once concluded, First Bank voluntarily disclosed the conduct to OFAC and cooperated with the investigation.
During the period from March 2016 to December 2018, First Bank processed 34 outgoing payments through US banks where the end user of the transaction was located in Iran. Payments were made on behalf of First Bank’s Iranian customers.
From July 2016 to December 2018, First Bank processed 36 outgoing payments through US banks where the underlying trade finance documentation revealed that the importers were located in Syria.
Between October 2018 and March 2019, First Bank processed 28 euro payments involving Iranian parties and interests while First Bank knew or had reason to know that the payments were intended for Iranian parties.
In sum, First Bank processed 98 transactions totaling $ 3.5 million through US banks on behalf of individuals and entities located in Iran and Syria.
OFAC noted that First Bank had misunderstood the application of US sanctions to its operations outside the United States. OFAC specifically cited First Bank’s deficient training and procedures to monitor transactions involving trade finance and shipping documents or transaction processing. In particular, OFAC said First Bank did not understand that its controlling stake in a US company, JC Flowers, triggered the application of sanctions to a wider range of financial activities.
According to OFAC, First Bank has shown reckless disregard for US sanctions regulations by failing to implement the appropriate controls over payments related to the US financial system and, after 2018, payments involving a bank. controlled by a US entity. OFAC noted that First Bank knew or had reason to know that it was processing payments for people in Iran and Syria because the underlying documents referred to those countries.
To address its compliance shortcomings, First Bank: (i) updated its sanctions screening tool; (ii) the termination of relations with clients who are parties to the transactions in question; and (iii) implemented enhanced due diligence procedures to collect more information on the nature of transactions and the potential for involvement with jurisdictions, territories or sanctioned parties; (iv) implemented improved policies and procedures; (v) doubled its compliance staff to oversee sanctions and related matters to provide more resources for improved oversight and oversight; (vi) organized additional training on sanctions with staff; and (vii) issued a new global sanctions policy. OFAC stressed the importance for companies to perform due diligence on sanctions before and after acquisitions, and to monitor the compliance of newly acquired subsidiaries with OFAC.