OFAC Designates Syria International Islamic Bank

Despite maintaining their own OFAC compliance program, Syria International Islamic Bank winds up on the OFAC SDN List

The United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) has added Syria International Islamic Bank (SIIB) to their list of Specially Designated Nationals (SDN) pursuant to the Non-Proliferation of Weapons of Mass Destruction (NPWMD) sanctions program. As a result all assets of SIIB under U.S. jurisdiction are blocked and U.S. persons are prohibited from engaging in transactions with the bank. It is not clear if the designation was made by OFAC or by the State Department. Both have authority to designate individuals and entities under the NPWMD sanctions. Typically, if OFAC is behind the designation they will issue a press release through the Department of the Treasury’s website. There was no such press release from them, so I am assuming this designation came from the Department of State.

SIIB is the largest privately owned financial institution in Syria and is 49% owned by Qatari nationals, of which 30% is owned by the Qatar International Islamic Bank. The remaining 51% of the bank was sold in an initial public offering to over 15,000 subscribers. It will be interesting to see if any of these private parties are willing to push the bank to seek a reconsideration of its SDN designation since the bank will undoubtedly suffer a loss in business as a result of the designation.

What is perhaps more interesting though, is that SIIB publishes their Anti-Money Laundering (AML) procedures on their website, and believe it or not, SIIB’s AML policy requires checks against the OFAC List. According to this policy:

“It is the policy of the Bank that all Money Transmission transactions performed by the customer of the Bank are checked against the FIU & UN & OFAC lists. If a customer appears as a hit on the UN or OFAC list it is the policy of the Bank to review the transaction to determine if in fact the customer is not listed on OFAC or UN Lists but has the same name. It is the Policy of the Bank that if a transaction was done for money transmission activity, a send transaction, and the sender is listed on the FIU UN & OFAC, the assets are immediately frozen.”

It’s strange to see an entity which is not required to abide by OFAC regulations, maintain an OFAC compliance program, and yet, still find themselves on the OFAC SDN List. Clearly, their compliance department is going to have fits over this designation.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.

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