2023 in Review: Noteworthy Sanctions List Violation Penalties
This report reviews the most notable sanctions violation penalties from 2023. It was an astonishing year that sent jitters through the spines of many in the global sanctions community. Regulators dished out billions of dollars in fines for compliance failings by Microsoft, British American Tobacco (BAT), Deutsche Bank, Binance, and many more.
And remember - sanctions.io has published dedicated articles for each case on the list (links provided) with in-depth analysis for the compliance community. With no further ado, here are the ten notable cases we'll discuss in this 2023 roundup.
Sanctions Penalties in 2023:
- Microsoft (April 2023)
- British American Tobacco (April 2023)
- Swedbank (June 2023)
- Deutsche Bank (July 2023)
- Tornado Cash (August 2023)
- Wise (September 2023)
- 3M (September 2023)
- Emigrant Bank (November 2023)
- DaVinci Payments (November 2023)
- Binance (December 2023)
And remember that our crucial lessons learned from sanctions violations in 2023 accompanies this report. You can read it here:
5 Crucial Lessons Learned From Sanctions Violations in 2023
1. Microsoft's $3.3 Million Sanctions Penalty
Microsoft is one of the world's most well-known brands and likely has a sanctions compliance budget that most regulatory teams would envy. But that doesn't mean it's immune to getting its global sanctions compliance program wrong.
In April 2023, the US Department of Commerce's Bureau of Industry and Security (BIS) and the Department of the Treasury's Office of Foreign Assets Control (OFAC) issued a joint penalty of $3.3 million for sanctions relations relating to Crimea, Cuba, Iran, and Syria.
Key aspects of this case:
- Sanctions screening failures
- Compliance culture failings
Read about the case and key learning points here.
2. British American Tobacco's $635 Million North Korea Sanctions Penalty
British American Tobacco (BAT) is one of the world's largest cigarette manufacturers globally. And in 2023, it had the unenviable distinction of facing an astronomical $635 million North Korea sanctions penalty.
Between 2009 and 2019, BAT and its subsidiary, BAT Marketing Singapore (BATMS), admitted to violating US sanctions by supplying millions of dollars of cigarettes to North Korea's Singaporean embassy. The tobacco likely made its way to the isolated communist nation in Kim Jong Un's fleet of ghost ships stealthily crisscrossing the world's oceans.
Key aspects of this case:
- Internal controls failings
- Compliance culture failings
Read about the case and key learning points here.
3. Swedbank's $3.4 Million Sanctions Penalty
Swedbank, founded in 1829, is one of Sweden's big three banks. It's also a financial powerhouse in Lithuania, Estonia, and Latvia.
On June 20, 2023, OFAC announced a $3,430,900 settlement with Swedbank Latvia (a subsidiary of Swedbank) for apparent violations of OFAC's Crimea sanctions. The Riga-based bank isn't a small fish - with over one million customers, it's one of the country's largest financial institutions by assets.
Key aspects of this case:
- Correspondent banking risks
- Continuous monitoring failings
Read about the case and key learning points here.
4. Deutsche Bank's $186 Million Sanctions and AML Penalty
Deutsche Bank needs no introduction. After all, it's one of the largest banks in the world.
In 2023, it was slapped with a multi-million dollar penalty - one of the largest of the year - from the US Federal Reserve Board (the Fed) for sanctions and anti-money laundering (AML) violations. The Fed issued the 2023 fine because Deutsche Bank failed to make sufficient progress after the Fed and the New York State Department of Financial Services levied more than $300 million in penalties on the company between 2015 and 2017.
Key aspects of this case:
- Correspondent banking risks
- Compliance culture failings
Read about the case and key learning points here.
5. Tornado Cash: Money Laundering and Sanctions Charges
Tornado Cash is a now infamous Ethereum-based digital asset tumbler that's blacklisted by the US treasury (making it illegal for US citizens, residents and companies to use).
On August 23, 2023, the US Attorney's Office Southern District of New York, announced that Tornado Cash founders Roman Storm and Roman Semenov had been charged with laundering more than $1 billion in criminal proceeds. The defendants were also charged with "conspiracy to commit sanctions violations and conspiracy to operate an unlicensed money transmitting business."
Note that this case is ongoing, and no verdict has yet to be reached. Read about the case and key learning points here.
6. Wise's 2023 Sanctions Penalty
Wise (formerly TransferWise) is a UK-based foreign exchange financial technology company founded in 2011. In 2023, the company received the UK's Office of Financial Sanctions Implementation's (OFSI) first-ever Disclosure Notice regarding a lesser sanctions breach.
It's a fascinating case because, according to OFSI, Wise allowed a customer appearing on OFSI's consolidated list against Russia to withdraw £250 ($316) in cash. This withdrawal occurred the day after the Designated Person (Wise's customer) was placed on the list.
Key aspects of this case:
- Challenge of false positives in sanctions screening
- One day of non-compliance led to a penalty
Read about the case and key learning points here.
7. 3M's With $9.6 Million Sanctions Fine
3M is an American multinational conglomerate that's famous for being the inventor of the Post-it note (or sticky note). But something the Minnesota-based conglomerate didn't stick to in recent years is US sanctions against Iran.
On September 21, 2023, OFAC published an Enforcement Release announcing that it had settled with 3M for $9,618,477 for apparent violations of the Iranian Transactions and Sanctions Regulations.
Key aspects of this case:
- Subsidiaries and elevated sanctions violation risk
- Non-financially regulated companies get penalized too
Read about the case and key learning points here.
8. Emigrant Bank's Sanctions Penalty
Emigrant Bank is the oldest savings bank in New York City, steeped in history. But they found themselves on the wrong side of sanctions compliance history in 2023.
On September 21, OFAC announced that Emigrant Bank will pay a penalty of $31,867 for apparent violations of the Iranian transactions and sanctions regulations.
The monetary penalty was relatively small. But what's far larger is the significant lesson compliance professionals can learn from the case regarding the sanctions screening country fields problem.
Key aspects of this case:
- Country fields problem in sanctions screening
- The importance of data quality in sanctions checks
Read about the case and key learning points here.
9. DaVinci Payment's Sanctions Violations
In November 2023, OFAC slapped a six-figure penalty on a financial services and payments firm offering prepaid reward card programs to corporate clients.
Here's what happened: OFAC, in its enforcement release regarding the case, stated that between November 2017 and July 2022, the company enabled reward cards to be redeemed from persons resident in sanctioned jurisdictions (Iran, Syria, Cuba, Crimea).
Key aspects of this case:
- Importance of using all available data in sanctions compliance
- Voluntary Self-Disclosure is crucial for penalty reduction
Read about the case and key learning points here.
10. Binances's $4.3 Billion Record-Breaking Penalty
Binance, the largest cryptocurrency exchange globally, had a brutal end to November 2023. Its CEO admitted money laundering and sanctions offenses, plus a historic $4.3 billion settlement with US authorities is seismic (announced on November 21)
The US Treasury Department said the exchange failed to report more than 100,000 suspicious transactions linked to money laundering, ransomware attacks, terrorist financing, and many more heinous crimes.
OFAC distributed an enforcement release stating that it had settled with Binance for almost $1 billion for apparent violations of multiple sanctions programs (the specific amount is $968,618,825).
Key aspects of this case:
- Disregarding compliance issues
- US Government warning to crypto and DeFi companies
Read about the case and key learning points here.
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