The conduct in this case was not a screening miss. The notice describes a procedure, written down and used in a Tokyo operations centre, whose purpose was to stop US sanctions controls from seeing the sanctioned party.
What the notice says happened
Between 3 April 2006 and 16 March 2007, BTMU’s Tokyo operations “engaged in practices designed to conceal” the involvement of sanctioned countries or persons in transactions it sent through financial institutions in the United States. Under written operational instructions used in the Tokyo operations centre, employees “systematically deleted or omitted” from payment messages any information referencing US sanctions targets that would cause the funds to be blocked or rejected.
The payments then went on to BTMU’s New York branch or to other US banks, which received messages that no longer carried the reference that would have triggered a block or a rejection. OFAC counted at least 97 funds transfers with an aggregate value of about $5,898,943. They were apparent violations of the Burmese, Iranian, Sudanese and Cuban sanctions regulations and of Executive Order 13382, which targets proliferators of weapons of mass destruction.
Where the control sat
The notice says the messages were sent on to BTMU’s New York branch or to other US banks after the sanctions references had been removed. That is the payment data manipulation pattern: a screen can only read the message it is given, so the integrity of the message is the integrity of the control. The notice does not describe how the Tokyo procedure came to be written, or how long before April 2006 it had been in use, and it should not be read as saying more than that.
How it came to light
The notice records only that in 2007 BTMU’s senior management “learned of these practices”, began an internal review of historical transaction data, and initiated a voluntary self-disclosure to OFAC. It does not say what prompted senior management to learn of the practice.
The penalty
OFAC found the case egregious and set the settlement at $8,571,634. It cited these aggravating factors:
- the conduct concealed the involvement of sanctions targets and “displayed reckless disregard”;
- the general manager of the Tokyo Operations Center knew or had reason to know that procedures instructing employees to manipulate payment instructions had been put in place;
- the conduct gave a substantial economic benefit to targets of OFAC sanctions; and
- BTMU is a large, commercially sophisticated institution.
Mitigation came from BTMU’s significant remediation of its compliance policies and procedures, its substantial cooperation (including detailed, organised information and a tolling agreement), and a clean OFAC history. The notice does not state a base penalty or a statutory maximum.
What the record shows
- The evidence was the bank’s own paperwork. The practice rested on written instructions, which is why the notice can describe it as systematic rather than as isolated error.
- The reference was removed before the message left Tokyo. The notice places the discovery in BTMU’s own 2007 review of historical transaction data.
- A senior manager’s awareness mattered. OFAC’s finding that the Tokyo general manager knew or had reason to know is one of the listed reasons the case was treated as egregious.