The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has reached a $1.72 million settlement with IMG Academy following an investigation into violations of U.S. counternarcotics sanctions involving individuals linked to a Mexican drug trafficking organization.
The enforcement action covers conduct between 2018 and 2022, during which IMG Academy entered into tuition agreements and processed payments connected to two individuals listed under the Foreign Narcotics Kingpin Designation Act, which authorizes sanctions against major narcotics traffickers and their associates.
According to OFAC, the individuals were included on the agency’s Specially Designated Nationals (SDN) list because of their connections to a sanctioned Mexican drug trafficking organization. Transactions with SDNs are generally prohibited under U.S. law.
Violations Involved Tuition Agreements and Financial Transactions
OFAC determined that IMG Academy committed 89 apparent sanctions violations, including:
- Six tuition enrollment agreements, and
- 83 related financial transactions
with the sanctioned individuals.
The Bradenton, Florida–based institution agreed to pay $1,720,000 to settle potential civil liability.
Although OFAC categorized the violations as “non-egregious,” the agency noted that the conduct was not voluntarily self-disclosed by IMG Academy.
The penalty amount was calculated under federal sanctions enforcement guidelines and reflects several mitigating factors, including the institution’s cooperation with investigators and corrective actions taken after the conduct was identified by management.
Sanctioned Individuals Enrolled Children at the Academy
The matter centers on IMG Academy’s enrollment of two student-athletes whose parents or guardians were later identified as sanctioned individuals.
Beginning in January 2018, one sanctioned individual signed annual tuition agreements for their child to attend the academy. The student remained enrolled through graduation in 2023. Tuition and associated costs ranged from approximately $47,000 per semester to nearly $99,000 annually.
A second sanctioned individual enrolled their child in 2020, entering similar agreements that covered two academic years before the student withdrew in mid-2022. Payments in that case ranged from roughly $100,000 to more than $102,000 per year.
Under the enrollment agreements, the sanctioned individuals were responsible for tuition, housing, and other fees. Payments were typically made through third-party wire transfers from Mexico, while credit cards were sometimes used for additional charges. In certain instances, unused funds from prior academic terms were applied to future tuition payments.
OFAC concluded that these arrangements constituted transactions involving the property or interests of sanctioned persons, which are prohibited under federal sanctions regulations.
“Even indirect or third-party payment structures do not exempt institutions from compliance obligations when the underlying transaction benefits a designated individual,” the agency stated.
Lack of Basic Screening Led to Violations
In its enforcement release, OFAC said IMG Academy failed to conduct basic sanctions screening during the application and enrollment process.
The sanctioned individuals had provided their legal names during admissions and contract execution, and those names matched entries on the SDN list.
According to OFAC, minimal due diligence at any stage of the enrollment process would likely have identified the sanctions risk, but the lack of screening allowed the violations to continue over multiple years.
The agency characterized the conduct as showing “reckless disregard” for U.S. sanctions requirements, although it did not conclude that IMG Academy knowingly engaged with sanctioned individuals.
OFAC also emphasized the seriousness of the violations, noting that the transactions provided members of a drug trafficking organization access to U.S. educational services and the financial system.
Mitigating Factors Reduced the Penalty
Despite the violations, OFAC cited several mitigating factors when determining the penalty.
The agency noted that IMG Academy:
- Had no prior sanctions enforcement actions in the previous five years,
- Cooperated extensively with investigators, and
- Implemented significant remedial measures after discovering the issue.
Following a change in ownership in June 2023, IMG Academy introduced new leadership, including a chief legal officer, and conducted an internal compliance review.
The institution subsequently established a risk-based sanctions compliance program designed to prevent similar issues in the future.
OFAC also noted that IMG Academy agreed to toll the statute of limitations during the investigation and provided detailed responses to agency inquiries.
Warning for International Institutions
The case highlights the expanding reach of U.S. sanctions enforcement beyond traditional financial institutions and into sectors such as education and athletics.
OFAC officials stressed that organizations operating internationally—including schools that enroll foreign students—must account for sanctions risks.
“Academic institutions are not immune,” the agency said, noting that international tuition payments, third-party funding structures, and cross-border transactions can expose schools to sanctions violations if proper screening procedures are not in place.
OFAC recommends that institutions:
- Screen students, parents, sponsors, and payors against sanctions lists,
- Conduct risk assessments of international transactions,
- Implement internal controls and staff training, and
- Regularly audit compliance programs.
The settlement also reflects OFAC’s broader enforcement approach under its 2019 “Framework for OFAC Compliance Commitments,” which emphasizes risk-based compliance systems, voluntary disclosure, cooperation, and remediation when determining penalties.
Enforcement and Whistleblower Incentives
Federal authorities also encourage reporting of potential sanctions violations. The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) operates a whistleblower program under which individuals may receive awards if information they provide leads to enforcement actions resulting in penalties exceeding $1 million.
The IMG Academy settlement underscores the complexity of sanctions compliance for organizations engaged in international activities. It also signals continued scrutiny by federal regulators of institutions that may inadvertently provide sanctioned individuals access to U.S. services or financial systems.
Although the violations were deemed non-egregious, the financial penalty and public enforcement action highlight the legal and reputational risks of sanctions failures, particularly for organizations operating at the intersection of education, athletics, and global commerce.
