On April 29, 2021, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a settlement with MoneyGram Payment Systems, Inc. (MoneyGram), a global payments and money transfer company. Under the settlement, MoneyGram agreed to pay a $34,000 civil penalty for 359 apparent violations of multiple OFAC sanctions programs. MoneyGram provided services to blocked individuals incarcerated in U.S. federal prisons without a license from OFAC, processed transactions on behalf of an additional blocked person, and processed transactions for individuals who initiated commercial transactions involving Syria.
According to the enforcement release sheet, between March 2013 and April 2016, MoneyGram provided money transfer services to the Department of Justice’s Federal Bureau of Prisons (BOP), which allowed inmates to send and receive funds into and out of their personal commissary accounts. In providing these services, however, MoneyGram did not screen the inmates against OFAC’s Specially Designated Nationals (SDN) List, even while knowing that some inmates could be on the list. It erroneously thought such measures were not necessary under the BOP program. Despite making corrections and beginning to screen the money transfers, MoneyGram “continued to process transactions on behalf of blocked persons in federal prisons due to other screening, technology, and fuzzy logic failures, as well as limited instances of human error.” This included processing commercial transactions related to Syria, a U.S.-sanctioned country. Overall, the apparent violations totaled over $105,000 for approximately 40 persons on the SDN List and two persons involving Syria transactions.
The conduct resulted in apparent violations of numerous OFAC sanctions programs: (i) Foreign Narcotics Kingpin Sanctions Regulations; (ii) Narcotics Trafficking Sanctions Regulations; (iii) Syrian Sanctions Regulations; (iv) Democratic Republic of the Congo Sanctions Regulations; (v) Central African Republic Sanctions Regulations; and (vi) Weapons of Mass Destruction Proliferators Sanctions Regulations. While the maximum civil penalty was over $300,000, OFAC determined that MoneyGram voluntarily self-disclosed the matter and it constituted a non-egregious case. Specifically, OFAC noted MoneyGram’s efforts to improve its compliance program and the implementation of a new and more robust screening system.
OFAC made the following statement: “This action highlights that money services businesses that are processing transactions for individuals worldwide, including individuals potentially ordinarily resident in, or doing business in, countries subject to U.S. sanctions — like all financial service providers — should understand the sanctions risks associated with those services and should take steps necessary to mitigate those risks.”