On February 12, 2026, Treasury’s Office of Foreign Assets Control (OFAC) announced the settlement of an enforcement action against IMG Academy (“IMG”) that highlighted the sanctions risks that U.S. academic institutions face and the steps OFAC recommends the institutions to take the address the risks. The enforcement action stemmed from IMG accepting tuition payments from two Specially Designated National (“SDN”) individuals who had been sanctioned under the Foreign Narcotics Kingpin Designation Act for providing support to a sanctioned Mexican Drug Trafficking Organization (“MDTO”).
IMG is an elite sports training and boarding school for grades 6-12 that is located in Bradenton, Florida. IMG’s student body includes athletes from all over the world. In two separate instances, SDNs enrolled their children in IMG’s boarding programs, entering into yearly tuition contracts for each academic year. One child of an SDN attended IMG for five academic years, from 2018 until graduation in 2023. The other child attended IMG for two academic years, from 2020 to 2022. Tuition for each child was around $100,000 a year.
In connection with tuition payments, IMG received wire transfers from non-designated third party individuals and entities, primarily located in Mexico, into IMG’s U.S. bank account, for further credit to each student’s account. IMG also charged payments to credit cards that were on file for each student.
During this time, IMG had no sanctions compliance program and apparently did not know that parents of two students were SDNs even though the SDNs used their full names in the application process and in executing tuition contracts. Of course, knowledge is not a requirement for liability in these circumstances. OFAC may impose civil penalties for sanctions violations based on strict liability, meaning that a person may be held civilly liable even if the person did not know that it was engaging in a transaction that was prohibited under sanctions regulations administered by OFAC. In this case, OFAC determined that IMG engaged in 89 separate transactions in violation of sanctions and imposed a civil penalty of $1,720,000 on IMG.
OFAC’s Enforcement Release indicates that IMG did not disclose the apparent violations to OFAC until after OFAC had initiated an investigation of the matter. While there is no information provided regarding how the violations were discovered, it’s hardly surprising that they came to the attention of the government. One can assume that U.S. law enforcement and intelligence agencies devote substantial resources toward tracking transfers of money associated with MDTOs. It’s likely that there is a similar focus on financial transactions that can be linked to sanctioned oligarchs and senior government officials in countries targeted for sanctions.
OFAC’s Enforcement Release includes a discussion of the compliance considerations for academic institutions, which are not immune from sanctions risks. “Sanctioned persons, like many others, may wish to avail themselves or their families of the opportunities available in the United States, including potentially to distance their children from their own illicit activity.” The Release also pointed out that, in addition to enrolling students from around the world, many schools engage in a range of international programs, including collaborating with foreign institutions and organizations and operating global campuses.
After noting that “academic institutions must be sure that they understand all sources of sanctions risk and implement effective controls to ensure their activities do not violate U.S. sanctions prohibitions,” the Enforcement Release detailed the steps that schools should take to reduce the chances of violating sanctions.
Consistent with OFAC’s long-standing advice, the Release described strong management commitment and a comprehensive risk assessment as the “logical first steps” for sanctions compliance. Schools face “unique risks,” because of “the variety of parties who may satisfy financial obligations for a student.” To address these risks, the Release made several recommendations. First, “it may be advisable to screen students, counterparties to tuition agreements, and payors against OFAC’s SDN List, in addition to using available information to understand whether any associated parties are located in a comprehensively sanctioned jurisdiction or otherwise have ties to a sanctioned person or entity.” In addition, “[a]cademic institutions may … wish to conduct regular independent testing and auditing to ensure their controls are operating effectively and ensure training for all relevant personnel to facilitate ongoing compliance.”
The guidance provided by OFAC in its Release is specific, which is helpful. But, depending upon the circumstances, including the size of the student population, the screening recommended in the Release could be quite challenging. This is particularly true when one considers that many schools charge a fee to apply for admissions, so the universe of those engaging in transactions with the school is broader than just enrolled students. Academic institutions should consider carefully the sanctions risks they face and how to address those risks as part of their overall compliance programs.
Please contact the authors if you have questions about sanctions compliance or responding to an enforcement inquiry from OFAC.