IMG Academy Fined $1.7M for Reckless Tuition Payments Tied to Mexican Drug Cartels, Exposing Lapses in Sanctions Screening and Compliance from 2018-2022

The U.S. Treasury Department has imposed a $1.7 million fine on IMG Academy for accepting tuition payments linked to parents associated with Mexican drug cartels. The violation involved payments to the elite sports and academic institution for two students enrolled between 2018 and 2022.

According to the Office of Foreign Assets Control (OFAC), the parents of these students were designated under sanctions for supporting a Mexican Drug Trafficking Organization (DTO) and its principal leader. IMG Academy accepted a total of 89 tuition, lodging, and related fee payments despite these sanctions.

The tuition fees ranged annually between $97,867 and $102,235. Wire transfers processed included sums from third parties based in Mexico, violating the Foreign Narcotics Kingpin Sanctions Regulations. The enforcement release stressed that this gave sanctioned individuals access to the U.S. financial system and commerce.

Federal investigators revealed that IMG Academy reported the apparent violations promptly after detection, although an investigation was already underway. However, OFAC criticized IMG for showing “reckless disregard” by accepting these payments and lacking proper sanctions screening procedures.

Officials noted that the payments allowed the children of designated DTO leaders to attend the academy and receive elite academic and athletic training within the United States. This situation exposed vulnerabilities in the institution’s compliance mechanisms.

Despite the gravity of the case, the Treasury Department acknowledged that IMG Academy had no prior sanctions violations in the preceding five years. Following awareness of the issue, the academy implemented a detailed compliance program and cooperated fully with investigators.

IMG Academy released a statement emphasizing its commitment to compliance and integrity. The institution admitted that from 2018 to 2022, it lacked an OFAC sanctions compliance program and unknowingly accepted funds from individuals on the Specially Designated Nationals (SDN) list.

Since discovering the issue, IMG Academy has taken extensive steps to correct its processes. Measures include establishing a comprehensive sanctions compliance program to prevent future violations and ensure adherence to U.S. regulations.

Key Points of the Violation and Settlement:

1. Two students enrolled at IMG Academy between 2018–2022 had parents linked to a sanctioned Mexican drug cartel.
2. Tuition and related fees totaled 89 payments, wire-transferred through Mexican third parties.
3. Payments ranged from approximately $97,867 to $102,235 per academic year.
4. The violation contravened the Foreign Narcotics Kingpin Sanctions Regulations.
5. IMG Academy lacked proper sanctions screening during the violation period.
6. The school self-reported the issue and cooperated with the Treasury investigation.
7. A $1.7 million civil penalty was agreed upon by IMG Academy and OFAC.
8. Post-incident, a compliance program was put into place to prevent recurrence.

This case illustrates crucial enforcement of sanctions regulations aimed at curbing illicit finance linked to drug trafficking organizations. It underscores the importance of rigorous due diligence by educational institutions accepting international payments.

IMG Academy’s experience serves as a warning for similar entities to establish thorough compliance frameworks. Timely screening against sanction lists is essential to avoid unintentional facilitation of prohibited financial activities.

The Treasury Department continues to monitor and penalize violations of sanctions laws to uphold the integrity of the U.S. financial system. Organizations are expected to diligently verify counterparties before processing significant payments to ensure compliance with federal sanctions.