Earlier this month, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) issued a Finding of Violation to MasterCard International Incorporated ("MasterCard") related to the Reporting, Procedures and Penalties Regulations (RPPR). The RPPR require U.S. persons to report to OFAC when they hold property blocked under U.S. sanctions laws (e.g., the blocked property of persons on OFAC's Specially Designated Nationals (SDN) List). MasterCard held accounts in which two Iranian banks (the "Banks") had an interest at the time OFAC added the Banks to the SDN List. MasterCard had already restricted the accounts prior to the SDN designations due to broader U.S. sanctions targeting Iran, and the accounts had become dormant. Nonetheless, the assets in the accounts remained with MasterCard, but MasterCard did not report the blocked accounts to OFAC following the SDN designations as required under the RPPR.
MasterCard was not penalized for the violations. In reaching this resolution, OFAC considered certain aggravating factors, including that (1) MasterCard had reason to know about the funds in the accounts associated with the designated Banks, (2) MasterCard is a large sophisticated corporation that deals primarily with financial institutions, (3) the failure to report resulted in OFAC making incomplete reports to Congress, and (4) MasterCard's compliance program was inadequate to prevent or timely identify the violations. OFAC also considered the following as mitigating factors: (1) MasterCard personnel did not have actual knowledge of the conduct leading to the violations, (2) the Banks were not able to access the blocked funds, (3) MasterCard had no similar sanctions enforcement history in the previous five years, and (4) MasterCard substantially cooperated with OFAC in the investigation.
For additional information, see the OFAC enforcement notice and Bloomberg reporting.
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