JPMorgan Chase fined for ‘reckless’ sanctions violations

OFAC said the multimillion dollar fines resulted from improper screening and missed “red flags” involving an international airline billing program.    The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) said JPMorgan Chase Bank has agreed to remit $5,263,171 for violations involving the processing of 87 transactions for the airline industry worth about $1 billion, which included about $1.5 million for U.S.-sanctioned individuals and entities.
   In addition, OFAC assessed the bank a fine of $7,797,290 for the violations.
   The illicit financial transactions, which occurred between Jan. 3, 2008, and Feb. 8, 2012, were made on behalf of an airline industry billing clearinghouse. 
   Among the numerous airlines within the billing settlement activity, eight were found to be at various times on OFAC’s List of Specially Designated Nationals and Blocked Persons, blocked pursuant to OFAC sanctions, or located in countries subject to the sanctions programs administered by OFAC.
   JP Morgan Chase (JPMC) voluntarily self-disclosed the violations to OFAC, which involved the Cuban Assets Control Regulations, the Iranian Transactions and Sanctions Regulations and the Weapons of Mass Destruction Proliferators Sanctions Regulations.
   According to OFAC, the bank did not appear to have a satisfactory process in place before January 2012 to properly screen participating member entities for U.S. sanctions risk. The agency said JPMC “appears to have acted with reckless disregard for its sanctions compliance obligations.”
  “JPMC engaged in a pattern of conduct throughout the relevant period during which JPMC missed red flags and other warning signs on several occasions, including two separate occasions in 2011 when the bank received express notification from its client regarding OFAC sanctioned entities participating in the settlement mechanism,” the agency added.
   OFAC said the bank cooperated with its investigation, and since the violations has increased its compliance staff, enhanced employee training and implemented sanctions-screening software.
   However, between Aug. 4, 2011, and April 29, 2014, it was discovered that JPMC processed 85 transactions totaling $46,127.04 and maintained eight accounts on behalf of six customers identified on OFAC’s Specially Designated Nationals and Blocked Persons (SDN) List. From 2007 to October 2013, the bank used a vendor-screening system that failed to identify the six customers as potential matches to the SDN List. 
   “The system’s screening logic capabilities failed to identify customer names with hyphens, initials or additional middle or last names as potential matches to similar or identical names on the SDN List,” OFAC said.
   JPMC transitioned to a new system in late 2013 and rescreened 188 million client records for potential U.S. sanctions violations, OFAC said.