A large European bank was targeted in civil anti-terrorism litigation in South Carolina. It was alleged that the bank was suspected of financing a paramilitary organization, having organized a monetary transfer into cash of millions and daily transfers of hundreds of euros on payment cards that had been given to the paramilitary forces. Throughout this period, the US Treasury Office of Foreign Assets Control administered and enforced economic and trade sanctions against the bank and several separatists by placing them on the Specially Designated National and Blocked Persons List. An expert was needed to consult on the case and opine on how similar systems of card payments function with regards to banks.
Question(s) For Expert Witness
- 1. Are you familiar with how these payment card programs work? Can you speak about how it specifically relates to international banking and how these cards are filled?
- 2. Are you familiar with the OFAC SDN List designations? Can you speak about their impact?
Expert Witness Response E-099586
I was a federal special agent and supervisor for the Internal Revenue Service’s Criminal Investigation Division (IRS-CID) for over 20 years. In my various roles at the US Treasury, I led investigations of complex financial money laundering schemes and oversaw large international money laundering and tax avoidance cases involving banks. I led a project on identifying individuals on the OFAC list and conducted/supervised federal investigations of individuals and entities who use credit cards and prepaid cards to launder money as well as avoid tax. Specifically, as the special agent in charge of a field office, I led over 300 special agents in an investigation that resulted in the then-largest financial fine assessed against a financial institution for OFAC violations of wire stripping.
As for this case, I have the expertise and financial institution contacts to advise. The electronic service used by the bank has both virtual and plastic credit card accounts. Prepaid cards, as seen in this case, can be “open,” easily loaded with money and accessible to anyone almost anywhere.
Expert Witness Response E-099811
I have extensive knowledge of economic sanctions based on a career as a senior compliance practitioner, consultant, and regulator at a Federal Reserve Bank. As a compliance practitioner, I managed economic sanctions programs, created sanctions compliance risk frameworks, and wrote policies and procedures in the economic sanctions space. I am familiar with how card programs as described in this case work. Assuming USD transactions, an entity outside the US can debt money to a card that is linked to its US bank account. This card is then given to an individual/entity to use up to a designated amount. Payments could have occurred in a system similar to travelers’ checks as well.
The OFAC SDN lists are economic sanction tools utilized by the US government, intended to forbid and/or restrict doing business with individuals, entities, and vessels. These restrictions apply to all US persons, which include US citizens working in the US and abroad; green card holders in the US and abroad; and foreign persons operating on US soil. OFAC SDN lists are used as diplomatic leverage to alter the behavior of a country or region. It also has strict liability, regulatory impact on US entities (predominantly banks) that pay heavy fines for doing business with those on the SDN list.