Building Your Compliance System: Even AMEX Makes Mistakes
On July 15, 2022 the Office of Foreign Asset Control (OFAC) released a notice for a settlement agreement with American Express National Bank (AMEX) regarding 214 apparent violations of OFAC's Kingpin sanctions. The Kingpin sanctions were instituted to block criminals suspected to be related to drug trafficking activities.
AMEX fell into violation of these sanctions and accumulated all 214 apparent violations from allowing a single blocked person to be authorized as a user of one of their credit cards. The blocked individual used his AMEX card for two months and was flagged several times before his account was closed. He was able to conduct $155,189.42 in transactions and after several mitigating and agitating factors, AMEX agreed to settle the potential civil liabilities for $430,500.
This is a case of an excellent OFAC compliance system failing due to human error. The blocked individual opened a supplemental credit card under the account to a U.S. citizen. He was immediately flagged by AMEX's electronic system due to matches between his name, date of birth, and national I.D. number to the sanctions list. Then an operations analyst settled the review process of the blocked person's account even though they were alerted to these matches.
This blocked individual fell under investigation again as he caught the attention of one of AMEX's anti-money laundering analysts. The analyst suspended the account, but when the U.S. citizen that was tied to the account called and inquired about the issue, the suspension was lifted. The suspension did not have any comments attached informing customer service that it was sanctions related. The anti-money laundering team noticed this and immediately reinstated the suspension. However, this new suspension was incorrectly placed on the account, allowing the blocked individual to continue to make some transactions. The account was then closed a week later.
This was a very costly lesson in the importance of clear communication in a compliance system. In this instance, there were human errors made on three separate occasions that allowed this blocked individual to continue to make transactions and exponentially increase the amount that AMEX had to pay in settlement.
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