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Volume XII, Number 139

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Canadian Bank Settles OFAC Charges for Potential North Korea and Narcotics Kingpin Sanctions Violations

A Canadian bank (the "Bank") settled OFAC charges for apparent violations of the North Korea Sanctions Regulations and the Foreign Narcotics Kingpin Sanctions Regulations.

With respect to North Korea, OFAC asserted that the Bank maintained nine accounts for five employees at the North Korean mission to the United Nations in New York, and processed 1,479 transactions, totaling $382,685.38, without authorization from OFAC. Under the North Korea Sanctions Regulations, U.S. financial institutions are not permitted to open and operate accounts for employees of the North Korean mission without an OFAC license. OFAC claims that the Bank misidentified North Korea in its reporting statements by using a code meant for South Korea, while in some cases the Bank avoided assigning any country of citizenship in connection with the North Korean accounts.

The second matter relates to a lapse in the sanctions screening alert system for the Bank related to accounts opened by a Miami-based individual who was added to the OFAC Specially Designated Nationals and Blocked Persons List. The individual attempted to open two joint accounts with the Bank, and despite triggering the Bank's sanctions screening alert system, the Bank still opened the accounts because there was "no match on full name, DOB and geographical location." According to OFAC, the repeated failure to properly flag the accounts belonging to the individual was a result of human error, and caused a breakdown in the Bank's sanctions compliance. This conduct resulted in 145 apparent sanctions violations with a total value of $35,514.

The Bank agreed to pay $115,005.04 to settle its potential civil liability arising from these apparent violations, and also to undertake training and other remedial measures to address the compliance lapses at issue.

Primary Sources

  1. Settlement Agreement between the U.S. Department of the Treasury’s Office of Foreign Assets Control and TD Bank, N.A.

  2. North Korea Sanctions

  3. Counter Narcotics Trafficking Sanctions

© Copyright 2022 Cadwalader, Wickersham & Taft LLPNational Law Review, Volume XI, Number 357
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