IMG Academy Agrees to $1.72 Million OFAC Settlement Over Counternarcotics Sanctions Violations

Key Takeaways

• 89 Apparent Violations Identified: OFAC concluded that IMG Academy dealt in the property or interests in property of two sanctioned individuals on 89 occasions, including six tuition enrollment agreements and 83 related transactions.
• Five-Year Relationship With SDNs: The academy entered into and renewed annual tuition agreements between 2018 and 2022 with two individuals designated under the Foreign Narcotics Kingpin Sanctions Regulations.
• $1.72 Million Settlement: The final settlement amount reflects OFAC’s schedule-based penalty for a non-egregious case that was not voluntarily self-disclosed.
• Third-Party Payments Still Create Risk: Wire transfers from non-designated third parties and credit card payments did not shield the transactions from sanctions exposure.

Deep Dive

The U.S. Department of the Treasury’s Office of Foreign Assets Control has reached a $1,720,000 settlement with IMG Academy, concluding a case that stretches across five academic years and nearly 90 transactions tied to individuals sanctioned under U.S. counternarcotics laws.

At the center of the matter are two individuals designated as Specially Designated Nationals for providing financial support and services to a sanctioned Mexican drug trafficking organization and/or its principal leader. According to OFAC, IMG Academy entered into yearly tuition enrollment agreements with the two SDNs and processed payments connected to their children’s attendance at the Bradenton, Florida-based school and athletic training facility.

In total, OFAC identified 89 apparent violations of the Foreign Narcotics Kingpin Sanctions Regulations, specifically 31 C.F.R. § 598.202. Those violations consisted of three tuition enrollment agreements with each SDN and 83 related transactions used to satisfy tuition and associated fees.

Tuition Agreements That Continued for Years

IMG Academy offers academic programs and elite athletic training to student-athletes from around the world. Its international footprint includes recruiting offices or representatives in Mexico, China, Japan, and South Korea.

In January 2018, the first SDN enrolled their child in one of IMG Academy’s boarding programs. The parties renewed the tuition enrollment agreement annually for five academic years, continuing through the student’s graduation in spring 2023. Payment obligations ranged from $47,026 for a half semester to $98,867 for a full academic year.

In July 2020, the second SDN enrolled their child in a student-athlete boarding program. The agreement was renewed for two additional academic years until the student withdrew in June 2022. Annual payment obligations ranged from $100,549 to $102,235.

Each agreement required the SDNs to be unconditionally responsible for tuition, lodging, and ancillary fees.

The payments were not always straightforward. OFAC said the SDNs primarily satisfied their obligations through third-party wire transfers and credit card payments placed on file. The academy received wire transfers from non-designated third-party individuals and entities, primarily located in Mexico, into its account at a U.S. financial institution for credit to the respective student-athlete accounts.

In some cases, when a student’s account carried a positive end-of-year balance, IMG Academy applied those funds toward the following year’s tuition under a renewed agreement.

Taken together, OFAC concluded that IMG Academy dealt in the property or interests in property of the two SDNs on 89 occasions between 2019 and 2025.

Non-Egregious Conduct, but Not Voluntarily Disclosed

OFAC determined the case to be non-egregious. However, it was not considered voluntarily self-disclosed. While IMG Academy informed OFAC of the apparent violations once it became aware of them, the agency had already initiated its investigation at that point.

Under OFAC’s Economic Sanctions Enforcement Guidelines, the base civil monetary penalty for a non-egregious case that is not voluntarily self-disclosed equals the applicable schedule amount. Here, that amount was $1,720,000, which became the final settlement figure after OFAC considered the General Factors outlined in its guidelines. The agency also noted IMG Academy’s substantial cooperation and remedial measures after it learned of the issue.

In this case, the transactions revolved around tuition and boarding agreements. But from a sanctions perspective, the legal principle is that U.S. persons are generally prohibited from dealing in the property or interests in property of blocked individuals, absent authorization.

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