The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) recently imposed a $1.72 million civil penalty on IMG Academy for violations of U.S. sanctions laws. This case draws renewed attention to the risk of sanctions noncompliance for independent schools, and particularly those with international enrollment or complex tuition payment arrangements. IMG enrolled the children of individuals subject to U.S. sanctions. While the students themselves were not sanctioned, tuition and lodging payments were made by or on behalf of designated parents through third parties, resulting in prohibited transactions under OFAC regulations.
While the students themselves were not sanctioned, tuition and lodging payments were made by or on behalf of designated parents through third parties, resulting in prohibited transactions.
OFAC sanctions laws apply broadly to U.S. nonprofit organizations, including independent schools, and expectations increasingly focus on whether an organization has taken reasonable, risk‑based steps to identify and manage exposure. While each school’s risk profile will differ, awareness of how sanctions laws apply in an educational setting is a critical first step for business officers and senior leadership teams.
To support schools in navigating this issue, NBOA encourages members to review detailed authored by Venable LLP, including NBOA Legal Council Grace. H. Lee, which outlines how OFAC sanctions laws apply to independent schools and highlights risk‑based considerations schools may wish to evaluate as part of their broader compliance efforts.
