by Jeremy Paner
Today, OFAC announced a settlement of apparent violations of U.S. sanctions imposed on an Iranian terrorism support network. This enforcement action demonstrates the broad reach of terrorism sanctions placed on Iran. The U.S. Treasury Department has warned that these terrorism sanctions will remain in place against Iran regardless of any potential lifting of “nuclear-related sanctions.” As the Acting Under Secretary of the Treasury explained to a Congressional Committee, “even if we are able to secure a nuclear deal with Iran, the United States will continue to counter Iran’s support for terrorism, its commission of human rights abuses, and its destabilizing activities throughout the Middle East, including through the active use of our financial tools.”
According to the OFAC announcement for this settlement, between June 6, 2013 and January 31, 2014, the New York branch of the National Bank of Pakistan processed seven funds transfers for which Kyrgyz Trans Avia was either the originator or beneficiary. The National Bank of Pakistan’s U.S. branch should have blocked these transfers and filed a report with OFAC.
OFAC designated Kyrgyz Trans Avia on May 31, 2013 for providing support or services to Mahan Air. This Iranian airline was previously designated for providing support to the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF), one of Iran’s main terrorist groups. Although designations such as the listing of the Kyrgyzstani airline are frequently mischaracterized as “secondary-sanctions,” OFAC has a long history of making derivative designations against support networks, irrespective of their nationality or location.
OFAC and the National Bank of Pakistan agreed to settle the apparent violations for $28,000. This is the fifth OFAC enforcement action of 2015. In total, OFAC has assessed $267,151,232 in civil penalties this year. Today’s enforcement announcement should serve as a reminder to compliance officials of the importance of regular and methodical testing of their sanctions interdiction filters. OFAC noted that the bank’s “interdiction filter failed to generate an SDN alert in seven separate transactions” over a period of eight months.