New Blog Post · 6-minute read
Most schools think sanctions compliance is a bank problem. OFAC disagrees. A $1.72M settlement shows why your tuition revenue chain is your biggest risk.
In February 2026, OFAC announced a $1,720,000 settlement with IMG Academy tied to 89 apparent violations of counternarcotics sanctions. The issue was not a complicated trade transaction. It was tuition enrollment agreements and payments connected to two Specially Designated Nationals (SDNs), tied to a Mexico-based drug cartel.
This matters because it highlights something most institutions still miss: sanctions risk shows up through everyday business operations, including tuition contracts, third-party payments, refunds, credits, and overpayments.
OFAC’s enforcement release describes a pattern that will feel familiar to any institution with international touchpoints:
The Takeaway: OFAC noted that the SDNs provided full name details that matched SDN List entries. Minimal due diligence during application or enrollment would have revealed the issue. If you accept tuition from the wrong party, you create liability, even if your core mission is education.
Most programs focus on screening the student. That is not enough. A safer model is to screen the full tuition chain of responsibility.
Parent or guardian who signs the tuition agreement.
Payor on the account, including third-party payors or wire originators.
Sponsors, donors, scholarship funders, or agents.
Why? Because sanctions exposure is often attached to the person controlling funds, not the person receiving services.
A practical sanctions control program triggers screening at moments money or contractual obligations change:
Good intentions do not survive audits. Proof does. Your evidence trail needs:
Universities are not exempt from OFAC and BIS regulations. Institutions must screen the entire "money chain"—including students, parents, and third-party sponsors—to ensure tuition payments do not involve sanctioned entities or embargoed countries.
A recent settlement highlighted university exposure regarding tuition agreements involving sanctioned individuals.
Compliance requires screening the "money chain," including guardians, sponsors, and third-party payors.
Federal updates now require institutions to retain screening and transaction records for a full decade.
| Data Field | Compliance Value |
|---|---|
| Full Name | Mandatory: Primary identifier for sanctions list matching. |
| Date of Birth (DOB) | High: Essential for distinguishing between individuals with common names. |
| Country/Nationality | Medium: Critical for detecting embargoed country risk (e.g., Iran, North Korea). |
Import tuition payor lists via CSV for automated cross-referencing against global watchlists.
Route potential hits to a central queue for manual "clear" or "block" decisions.
Generate tamper-proof "Audit Packets" containing screening results and decision logs for regulators.
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