US OFAC — IMG Academy LLC $1.72M civil penalty settlement (Foreign Narcotics Kingpin Sanctions Regulations)

Mechanism

IMG Academy LLC, a private school and elite athletic training facility for students in grades 6–12 located in Bradenton, Florida (owned by Endeavor Group Holdings), processed 83 tuition-related transactions between 2018 and 2023 that constituted 89 apparent violations of the Kingpin Act SDN prohibitions (31 CFR Part 598). The transactions involved payments from two individuals who had been designated as Specially Designated Nationals under the Foreign Narcotics Kingpin Designation Act — a US law (Pub. L. 106-120) that authorises blocking of assets of foreign persons involved in significant transnational narcotics trafficking — for providing financial support or services to a sanctioned Mexican drug trafficking organization or its leadership.

OFAC's Enforcement Release identifies the following General Factors:

• Harm: 89 transactions; payments of tuition/fees on behalf of or

for the benefit of SDN-designated individuals funnelled funds through the US education system.

• Egregious: NO — OFAC determined the violations were non-egregious.
• Voluntary self-disclosure: NO — not self-disclosed; became aware

through an external trigger.

• Cooperation: substantial cooperation after becoming aware; remedial

compliance measures implemented.

• Base penalty mitigation: the $1,720,000 settlement reflects the

non-egregious finding, substantial cooperation, and the post-discovery remediation programme.

Structural novelty

This is the first OFAC enforcement action in the MacroLens IPTM register targeting the education/academic-services sector. Prior Kingpin Act enforcement has concentrated on financial intermediaries, money-services businesses, and corporate commodity traders. The IMG Academy settlement extends the compliance-screening obligation unambiguously to: 1. Private K–12 schools and boarding academies accepting international student enrolment. 2. University-affiliated continuing-education programmes. 3. Athletic-training, language, and summer academies that charge tuition or fees to international-student populations.

The settlement underscores that schools are "financial institutions" for OFAC purposes when processing monetary transfers on behalf of students — the SDN List screening obligation applies whenever a payment is received from or for the benefit of an SDN, regardless of the commercial context (education vs. financial services).

Compliance implications for academic institutions

• All tuition, housing, activity-fee, and scholarship payments must be

screened against OFAC's SDN List at the time of receipt, not merely at enrolment.

• Periodic re-screening of enrolled students' payers (parents, sponsors,

guardians) is necessary because designations occur throughout the academic year.

• Family-member-of-SDN or sponsor-of-SDN payments are also covered even

when the student themselves is not designated (OFAC's "50% rule" and Kingpin Act's "provides financial support or services" extension).

• International sports-academies and elite training facilities are

operationally equivalent to schools for OFAC compliance purposes.

Watch items

• Whether this precedent triggers OFAC or congressional guidance on

SDN-screening standards specifically for the education sector.

• Impact on Endeavor Group Holdings' (EDR) compliance disclosures in

SEC filings given IMG Academy is a direct subsidiary.

• Whether the two unnamed SDN-designated individuals are linked to

publicly known Kingpin Act targets (e.g., Sinaloa Cartel-adjacent financial networks) — OFAC's enforcement release redacts individual names but the designation records are public.