Mitigating Penalties for OFAC Violations

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In this scenario, the BSA officer has been notified that the bank's OFAC interdiction software has had a glitch, causing wires to be transmitted to a bank on the SDN (Specially Designated Nationals) list. This means that the bank has potentially violated OFAC regulations, and the BSA officer must take immediate action to mitigate any penalties.

According to the OFAC Enforcement Guidance, the first step in such a situation is to stop and hold all wires to the bank on the SDN list. This step is crucial to prevent any further violations of OFAC regulations and to show a good faith effort to correct the error.

Once the wires have been stopped and held, the BSA officer should review the bank's OFAC wire policies and procedures to determine how the errors occurred. This will help the bank identify any weaknesses or gaps in its OFAC compliance program and take corrective actions to prevent similar errors from happening in the future.

In addition to reviewing the bank's policies and procedures, the BSA officer should investigate the customer who sends the wires. This will help the bank determine if the customer is aware of the OFAC violations and if they have any connection to the SDN list. The investigation may also help the bank identify any suspicious activity that needs to be reported to law enforcement.

Finally, if the BSA officer determines that a violation has occurred, the bank should self-report the activity to OFAC. Self-reporting is important because it shows a willingness to cooperate with regulators and can help mitigate any penalties that may be imposed.

In summary, the BSA officer should first stop and hold all wires to the bank on the SDN list, then review the bank's OFAC wire policies and procedures, investigate the customer who sends the wires, and self-report the activity to OFAC if a violation has occurred.