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Financial Sanctions Regimes in Puerto Rico: Banco Popular de Puerto Rico Pays $256,000 Penalty for Violations
In a recent settlement, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced that Banco Popular de Puerto Rico (BPPR), a major bank with branches in Puerto Rico and the Virgin Islands, will pay approximately $256,000 in civil penalties for apparent violations of Venezuela Sanctions Regulations.
Background
Between 2019 and 2020, BPPR processed 337 transactions totaling $853,126 on behalf of two low-level employees of the Government of Venezuela. These transactions occurred after the issuance of Executive Order 13884 on August 5, 2019, which prohibited transactions with any political subdivision, agency, or instrumentality of the Government of Venezuela as well as any person owned or controlled by the government or acting on its behalf.
Violations
The bank’s compliance team began evaluating customer accounts shortly after the executive order was issued, but it wasn’t until October 26, 2020 - 14 months later - that BPPR identified and blocked four personal accounts associated with two restricted customers. The transactions were not authorized by a general license issued by OFAC in November of 2019, which allowed for certain Government of Venezuela individuals to conduct transactions.
Response
In response to discovering the violations, BPPR reported the transactions to OFAC in a timely and organized manner and enhanced its compliance program by providing:
- Updated sanctions-related training
- Procedures for sanctions alert reviews and dispositions
- Additional resources and guidance for sanctions alert reviews and dispositions
Enforcement Takeaways
The enforcement release emphasizes the importance of conducting timely due diligence following the imposition of new sanctions and urges financial institutions to take steps outlined in FAQ 680 to better comply with Venezuela-related sanctions regulations. This case serves as a reminder of the consequences of non-compliance with financial sanctions regimes, particularly for financial institutions operating in Puerto Rico.
Conclusion
Financial institutions operating in Puerto Rico must be aware of the importance of complying with financial sanctions regimes and conducting timely due diligence following the imposition of new sanctions. Failure to comply can result in severe penalties and reputational damage.