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Posted August 25, 2011 by publisher in OFAC

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OFAC Civil Penalties Release

JPMorgan Chase Bank has agreed to remit $88,300,000 to settle potential civil liability for apparent violations of, among violations of other Regulations, the Cuban Assets Control Regulations or CACR that were determined to be “egregious” by OFAC.

JPMorgan Chase processed 1,711 wire transfers totaling approximately $178.5 million between December 12, 2005, and March 31, 2006, involving Cuban persons in apparent violation of the CACR.

In November 2005, another U.S. financial institution alerted JPMorgan Chase that it might be processing wire transfers involving a Cuban national through one of its correspondent accounts.  After such notification, JPMorgan Chase conducted an investigation into the wire transfers it had processed through the correspondent account. The results of this investigation were reported to JPMorgan Chase management and supervisory personnel, confirming that transfers of funds in which Cuba or a Cuban national had an interest were being made through the correspondent account at JPMorgan Chase. Nevertheless, the bank failed to take adequate steps to prevent further transfers.

JPMorgan Chase did not voluntarily self-disclose these apparent violations of the CACR to OFAC. As a result of these apparent violations, considerable economic benefit was conferred to sanctioned persons. The base penalty for this set of apparent violations was $111,215,000.

In reaching its determination that the above-referenced apparent violations were egregious because of reckless acts or omissions by JPMorgan Chase, OFAC considered all of the information in its possession related to these apparent violations, as well as the General Factors Affecting Administrative Action set forth in OFAC’s Economic Sanctions Enforcement Guidelines. OFAC determined that JPMorgan Chase is a very large, commercially sophisticated financial institution, and that JPMorgan Chase managers and supervisors acted with knowledge of the conduct constituting the apparent violations and recklessly failed to exercise a minimal degree of caution or care with respect to JPMorgan Chase’s U.S. sanctions obligations.

OFAC mitigated the total potential penalty based on JPMorgan Chase’s substantial cooperation, including conducting an historical transaction review at OFAC’s request and entering into tolling agreements with OFAC, and the fact that OFAC had not issued a Penalty Notice or Finding of Violation against JPMorgan Chase in the five years preceding the transactions at issue.  Mitigation was also extended because JPMorgan Chase agreed to settle these apparent violations.

The OFAC civil penalties release is here.

—————————————- Havana Journal Comments—————————————-

I find it interesting to find the US Treasury using descriptive phrases like:

“violations were egregious”

“the bank failed to take adequate steps to prevent further transfers”

“did not voluntarily self-disclose these apparent violations”

“reckless acts or omissions”

“managers and supervisors acted with knowledge of the conduct constituting the apparent violations and recklessly failed to exercise a minimal degree of caution or care”

I would go a step further and call JPMorgan Chase’s behavior “reckless” and “intentional”.

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