Florida School Agrees to Pay $1.7M for Sanctions Violations Related to Payment of International Students’ Tuition
On February 12, 2026, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a settlement with IMG Academy, LLC, a school and athletic training academy headquartered in Florida, for apparent violations of counternarcotics sanctions. To settle 89 alleged violations of the Foreign Narcotics Kingpin Sanctions Regulations, 31 C.F.R. § 598.202, IMG Academy agreed to pay $1,720,000 in penalties. The facts underlying IMG Academy’s settlement are a cautionary tale for other academic institutions and highlight the importance of a robust compliance program for private grammar and secondary schools as well as colleges, universities, and other institutions of higher education.
IMG Academy Processes Tuition Payments from Specially Designated Nationals
IMG Academy offers elite academic and sports training programs to U.S. and international student-athletes through full-time boarding school programs, professional training programs, camps, online coaching services, and college sports recruiting resources. Its students include athletes from all over the world, and the school maintains recruiting offices in Mexico, China, Japan, and South Korea.
The sanctions violations involving IMG Academy relate to the school’s arrangements with two individuals listed on the Specifically Designated Nationals (SDN) list, which identifies persons subject to blocking sanctions under OFAC programs. These individuals, who had student-athlete children enrolled at IMG Academy, entered into tuition enrollment agreements and made payments — both tuition and related fees — through third-party wire transfers to IMG Academy’s U.S. bank accounts and via credit card payments through cards the SDNs placed on file. Additionally, when a student-athlete’s account had a positive year-end balance, IMG Academy would carry the balance forward to offset part of the next year’s tuition under the enrollment agreement.
The Trump Administration Prioritizes Elimination of Cartels and Transnational Criminal Organizations (TCOs)
The Trump administration, in various aspects of its foreign policy agenda, has prioritized enforcement activities relating to drug trafficking and has increased scrutiny of foreign students at educational institutions. The IMG Academy settlement agreement appears to align with these administration priorities. Specifically, the sanctions violations at issue in the IMG Academy enforcement centered around the Foreign Narcotics and Kingpin Sanctions Regulations, 31 C.F.R. § 598.101 et. seq., which are promulgated by OFAC and implement the similarly titled Foreign Narcotics Kingpin Designation Act, 21 U.S.C. § 1901 et. seq. The primary goal of that Act was to “to provide authority for the identification of, and application of sanctions on a worldwide basis to, significant foreign narcotics traffickers, their organizations, and the foreign persons who provide support to those significant foreign narcotics traffickers and their organizations, whose activities threaten the national security, foreign policy, and economy of the United States.” See 21 U.S.C. § 1902. According to OFAC, the two SDNs involved in the IMG Academy case were subject to sanctions because they had provided financial support and/or services to a sanctioned Mexican drug trafficking organization and/or its principal leader.
Under the Foreign Narcotics and Kingpin Sanctions Regulations, the consequences of a special narcotics trafficker’s designation on the SDN list includes that: “[a]ll property and interests in property that are in the United States, that come within the United States, or that are or come within the possession or control of any U.S. person … are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in.” See 31 C.F.R. § 598.202(a). Notably, specially designated narcotic traffickers include “[e]ntities owned in the aggregate, directly or indirectly, 50 percent or more by one or more by specially designated narcotics traffickers.” See 31 C.F.R. § 598.314(c). In addition, it is prohibited to make “any contribution or provision of funds, goods, or services by, to, or for the benefit of any person whose property and interests in property are blocked…” and to receive “any contribution or provision of funds, goods, or services from any person whose property and interests in property are blocked …” See 31 C.F.R. § 598.202(b)(1)-(2). And it is with regard to these prohibitions that IMG Academy allegedly violated sanctions laws when it entered into tuition enrollment agreements with two SDNs and accepted payment pursuant to the same.
Notable in the IMG Academy case are certain of the aggregating factors. Primarily, OFAC indicated that IMG Academy demonstrated “reckless disregard” for U.S. sanctions requirements in committing the apparent violations, including by failing to conduct sanctions screening checks on the two SDNs at any stage during the enrollment process. In this regard, OFAC emphasized that IMG Academy had knowledge of the annual tuition enrollment agreements directly with the SDNs, invoiced the SDNs by name, and routinely communicated with the SDNs and, under those circumstances, the fact that IMG Academy did not know that the two individuals were on the SDN list was not mitigating because IMG Academy had the information necessary to conduct minimal due diligence to discover that fact. One notable mitigating factor was that IMG Academy did take post-hoc remedial actions, including hiring a new Chief Legal Officer who conducted a comprehensive lookback and implemented a risk-based sanctions compliance program.
OFAC Compliance Guidance for Educational Institutions
In its press release announcing IMG Academy’s settlement, OFAC indicated that academic institutions should confront any sanctions risks as a result of their international touchpoints, including enrolling international students, collaborating with foreign institutions, hosting visiting foreign faculty, engaging in exchange programs, maintaining international research and commercial ties, investing in companies located abroad, or operating global campuses. Moreover, these risks may include accepting tuition payment from foreign parties to satisfy the financial obligations of a student, as was the case for IMG Academy. OFAC stated that individuals on the SDN list may wish their children to attend university in the United States, both to receive an elite education and to remove their children from association with their illicit activities. As a result, OFAC recommends routinely screening foreign students, counterparties to tuition agreements, and payors against OFAC’s SDN list. Special diligence should also be undertaken when dealing with individuals and organizations in comprehensively sanctioned jurisdictions, such as Russia and Iran.
International programs and students play an important role in the life of some private grammar schools and secondary level schools and at most colleges and universities across the United States. The IMG Academy case illustrates the need for a strong compliance infrastructure surrounding foreign student enrollment and the need for every academic institution to review its sanctions compliance and screening protocols to ensure that the resources devoted to compliance match the risk with regard to the school’s international touchpoints. In the current climate of enhanced government scrutiny, it is more important than ever for schools to maintain a robust sanctions compliance program.
Buchanan has a strong team of international trade and national security professionals who work hand in hand with the education team to offer a full range of sanctions and export controls services to educational institutions.