Law Firm: OFAC Sanctions Fine Shows Compliance Programs Must Go Beyond the 'Superficial'
The Office of Foreign Assets Control's $11.8 million sanctions fine levied on Interactive Brokers earlier this month is another sign that the agency intends to focus enforcement on "financial gatekeepers," including investment firms, accountants and wealth advisers (see 2506230023), Baker Botts said in a client alert.
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OFAC said the online investment broker illegally provided services to sanctioned people and restricted countries, and it processed trades in securities of blocked Chinese military companies (see 2507150080). The settlement shows that those types of firms must "deploy dynamic compliance programs that go beyond superficial information to identify and mitigate sanctions risks," regardless of how complex their transactions may be. "The severity of the [penalty] and related enforcement actions emphasizes the growing need for sanctions vigilance across all financial sectors."
The law firm said financial institutions are increasingly expected to implement "risk-based calibration" and geo-blocking controls; carry out regular audits of their systems; and complete "proactive reviews" to uncover any issues that may warrant a voluntary disclosure. Disclosures can offer "significant value," Baker Botts said, noting that Interactive Brokers was able to reduce a potential $2 billion maximum fine to $11.83 million "by identifying and reporting its own extensive sanctions violations. This demonstrates that taking initiative to uncover and address compliance deficiencies, along with substantial cooperation and remediation, can lead to a far more favorable outcome."