MoneyGram Settlement Illustrates the Need to Maintain Robust Controls

On April 29, 2021, the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”), the agency that enforces and administers U.S. economic and trade sanctions, announced a settlement with Dallas-based  MoneyGram Payment Solutions, Inc. (“MoneyGram”) for violations of multiple U.S. sanctions programs.  MoneyGram is a global payments company that allows customers to send money worldwide. 

From March of 2013 to April of 2016, MoneyGram processed transactions on behalf of certain blocked persons in the U.S. federal prison system listed on OFAC’s List of Specially Designated Nationals and Blocked Persons (“SDN List”).  MoneyGram identified the issue as part of a compliance improvement program.  However, even after it began to screen prison transactions for blocked persons, it continued to process transactions on behalf of blocked persons due to technological failures and human error.  MoneyGram also processed transactions related to Syria due to human error.  In total, MoneyGram processed 359 transactions on behalf of blocked persons on the SDN List, as well as for two individuals who initiated transactions involving Syria.  These transactions resulted in violations of multiple regulations.

Despite a significant potential penalty, MoneyGram settled with OFAC for just $34,328.78.  OFAC pointed to MoneyGram’s voluntary self-disclosure of the violations and its remediation as key factors in determining the settlement amount.  Specifically, MoneyGram launched a more robust screening system, provided additional training to its employees, increased the staff in its compliance department and appointed a new Chief Compliance Officer.

In its enforcement release, OFAC highlighted the importance of understanding sanctions risk and mitigating that risk, particularly by maintaining robust sanctions screening software and processes. 

While financial service providers are particularly susceptible to sanctions risk, MoneyGram’s case illustrates that the failure to implement robust controls can open any organization up to potential sanctions.  Companies can manage that risk by implementing effective controls and by reevaluating those controls on a regular basis.

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