IMG Academy's $1.72M OFAC Settlement: Why Customer Sanctions Screening Matters

IMG Academy's $1.72M OFAC Settlement: Why Customer Sanctions Screening Matters

A Florida sports academy accepted tuition payments involving two sanctioned parents for years. The result? 89 apparent sanctions violations and a $1.72 million settlement with the U.S. Treasury.

On February 12, 2026, the Office of Foreign Assets Control (OFAC) announced the settlement with IMG Academy. Investigators found that the school had failed to screen individuals whose names already appeared in its enrollment records.

OFAC cited "reckless disregard" for U.S. sanctions requirements.

Eight months later, OFAC published new Sanctions Penalties Regulations on September 25, 2026. Although the update made no substantive changes to the covered penalty provisions, the IMG Academy case remains a warning for businesses accepting payments.

So, who screens your customers? Schools, property managers, lenders, dealers, and other payment-taking businesses should have a risk-based process for checking relevant customers, contractual parties, and payors before potentially prohibited transactions occur.

Why IMG Academy Paid $1.72 Million for Sanctions Violations

IMG Academy is a boarding school and athletic training facility in Bradenton, Florida.

According to the February 2026 OFAC enforcement release, the academy entered into annual tuition agreements with two individuals sanctioned for ties to a Mexico-based drug cartel.

Between 2019 and 2025, OFAC identified:

89 apparent violations involving tuition agreements and related transactions.

• Six annual tuition agreements with sanctioned individuals.
• 83 related transactions involving payments and other activity.
• $1,720,000 paid to settle potential civil liability.

The most concerning detail was that the academy already had identifying information about the sanctioned individuals.

Their full names appeared in enrollment and contractual records. Those names matched entries on OFAC's Specially Designated Nationals and Blocked Persons (SDN) List.

Yet the school failed to conduct appropriate sanctions screening.

OFAC classified the conduct as non-egregious and recognized the academy's cooperation and corrective actions. However, the apparent violations were not voluntarily self-disclosed.

The settlement shows how businesses can face penalties when available customer information is not properly reviewed.

What OFAC's September 2026 Regulations Mean for Businesses

The IMG Academy settlement was announced in February, but the September regulatory update provides another reason to review sanctions procedures.

On September 25, 2026, OFAC published its Sanctions Penalties Regulations under 31 CFR Part 505.

These regulations consolidate existing penalty provisions and enforcement procedures from several sanctions programs into one regulatory part.

OFAC explicitly stated that no substantive changes were made to the covered penalty provisions.

The update did not create a new screening requirement for every business. Instead, it reorganized existing rules covering penalties, notices, settlements, and enforcement procedures.

Why Not Knowing About Sanctions Is Not a Defense

OFAC generally applies a strict liability standard to civil sanctions enforcement.

That means businesses subject to U.S. jurisdiction can face civil penalties for prohibited transactions even if they did not know they were dealing with sanctioned individuals.

A missed screening check alone does not automatically establish a violation. Liability depends on the transaction and applicable sanctions restrictions.

Still, businesses cannot assume that accepting a payment without knowing the customer's sanctions status protects them from liability.

How Sanctions Risk Can Appear in Everyday Payments

The IMG Academy case involved tuition, but similar situations can arise across other industries.

Property Managers: Rent From Unfamiliar Payors

A tenant signs a lease, but monthly rent comes from a separate company.

The property manager may need to identify the company, review its relationship with the tenant, and assess whether a sanctioned person has an interest in the arrangement.

An unfamiliar payor does not prove wrongdoing, but it may justify further review.

Schools: International Tuition Payments

A parent signs an enrollment agreement while another individual or business pays the tuition.

The school may need to screen the contracting parent and review the actual payor, depending on the circumstances.

Lenders and Dealers: Payments From Third Parties

A dealership receives a large payment from a business not listed in the purchase agreement.

Before completing the sale, staff may need to establish who controls the paying entity and why it is funding the purchase.

These examples show why reviewing the customer alone may not provide enough information about a transaction.

5 Sanctions Screening Checks Before Accepting Payments

Businesses can use these checks to identify potential sanctions concerns and determine when further review is appropriate.

1. Identify Everyone Involved in the Transaction

Review who receives the service, signs the agreement, and provides payment.

For business customers, additional information about ownership and control may be needed.

Unexplained differences should prompt follow-up questions.

2. Screen Relevant Individuals and Entities

Check relevant parties against applicable sanctions lists, including OFAC's SDN List.

Compare identifying information such as names, aliases, birth dates, and addresses when available.

A possible name match should prompt further review rather than automatic rejection.

3. Review Unusual Payment Arrangements

Investigate payments from unrelated individuals, unfamiliar businesses, or unexpected international sources.

Confirm the relationship between the payor and customer.

Document the explanation and supporting records.

4. Repeat Screening When Information Changes

Customer risk can change after onboarding.

New payors, ownership changes, contract renewals, or sanctions list updates may justify another review.

Set screening procedures according to your business's activities and exposure.

5. Establish a Process for Potential Matches

Employees should know how to handle possible sanctions matches.

Document the results and refer unresolved cases to compliance or legal staff.

Depending on applicable rules, a confirmed match may require blocking or rejecting a transaction.

How Searchbug Helps Review Customers Before Payments

Businesses accepting payments from unfamiliar individuals may need to determine whether those people appear on government sanctions or other watchlists.

Searchbug offers screening tools that can help businesses identify potential matches and determine when additional verification is needed.

1. Searchbug OFAC Search

Businesses can use Searchbug OFAC Search to check individuals against OFAC sanctions records and other watchlists, including FBI and Interpol sources.

Users enter a person's first name, last name, and date of birth to search for potential matches. Depending on available records, results may include full names, aliases, birth details, nationality, passport information, and reasons for appearing on a watchlist.

For example, a school reviewing a parent's information before accepting tuition payments could use OFAC Search to identify a potential sanctions match and compare available details before proceeding.

2. Searchbug AML Screening

Searchbug AML Screening supports this review through its AML API, which checks individuals against 24 watchlists worldwide.

Depending on available records, results may include full names, aliases, birth dates, identifying details, and reasons for appearing on a list.

For example, a property manager reviewing an unfamiliar individual payor could use AML Screening to identify a potential watch list match. Staff can then compare available identifiers and determine whether further investigation is necessary.

A possible match does not automatically confirm identity or establish a sanctions violation.

Likewise, a clear screening result does not guarantee compliance. Entity ownership, applicable restrictions, and other relevant information may require separate review.
Businesses can also strengthen their KYC and AML screening process during customer onboarding to identify potential risks earlier and determine when additional verification is needed.

TL;DR

IMG Academy agreed to pay $1.72 million over 89 apparent OFAC sanctions violations after failing to screen two sanctioned parents. OFAC cited "reckless disregard." Its September 2026 penalty regulations made no substantive changes to the covered provisions.

Schools, property managers, lenders, dealers, and other payment-taking businesses should screen relevant customers and payors, review unusual transactions, and investigate potential matches. Searchbug OFAC Search and AML Screening can help identify potential watchlist matches, but results require further verification and do not guarantee compliance.

Create a free Searchbug API Test Account with $10 in credits to test AML Screening, or consider Bulk Processing for larger files.