CUNA: Small CUs Should Get Special Treatment in OFAC Sanctions

WASHINGTON-Violations of Office of Foreign Assets Control requirements by smaller financial entities should be considered in a different light than larger institutions, CUNA wrote in an official comment letter to OFAC. CUNA touted Office of Foreign Assets Control’s publication of its updated internal Economic Sanctions Enforcement Guidelines because it would ease access to them and help prevent potential violations. The trade organization suggested that the guidelines should also be accessible online for even easier retrieval. CUNA also warned that some of its members could be shuttered if hit with a proposed civil penalty notice and fine, but should instead receive a warning letter. CUNA advocated a $50 million threshold, the same as it has for NCUA’s small credit union definition, for determining whether the warning or the prepenalty notice would be appropriate. CUNA agreed with OFAC’s proposal to take mitigating factors into consideration and added that size should also be a mitigating factor because small credit unions cannot afford to purchase software to aid in OFAC compliance. Small credit unions also have less wiggle room to absorb a fine, according to CUNA, so the group recommended that fines be proportional to the size of the financial services provider. Finally, CUNA supported reduced penalties for institutions voluntarily disclosing OFAC violations. The proposed 50% reduction, however, is not enough. “In our opinion, no penalty should be assessed for reporting first offenses; and penalties for subsequent violations that are voluntarily reported should be mitigated by at least 50% or more. Low penalties for voluntarily reporting will motivate a larger number of institutions to come forward, thereby increasing the overall availability and timeliness of information provided to OFAC and other law enforcement agencies,” CUNA’s letter read. CUNA also offered to work with OFAC to ease the burden of credit unions that have to manually review paper checks against OFAC’s Specially Designated Nationals and Blocked Persons List. According to CUNA’s letter the reviews have resulted in lengthy delays in check processing.