While institutions of higher education are, understandably, focused on domestic issues – whether regulatory requirements or corporate compliance matters that shape campus operations – these concerns represent only part of a complex and evolving risk landscape. Sanctions compliance has become an increasingly important, and sometimes overlooked, area of exposure for colleges and universities.
In this REGucation post, we examine a recent OFAC settlement with an academic institution that illustrates why sanctions risks deserve a place alongside the many other priorities competing for institutional attention, particularly how an institution’s acceptance of tuition payments from sanctioned individuals resulted in civil liability under the Foreign Narcotics Kingpin Designation Act.
The IMG Academy Enforcement Action
A recent enforcement action by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) highlights the growing sanctions compliance risks facing educational institutions. On February 12, 2026, IMG Academy agreed to pay $1.7 million to resolve potential civil liability for apparent violations of the Foreign Narcotics Kingpin Designation Act. OFAC alleged that the Florida-based boarding school received and processed tuition payments from two parents who had been designated as Specially Designated Nationals (SDNs), making the transactions prohibited under U.S. sanctions laws.
According to OFAC, the school failed to conduct appropriate denied-party screening of students and payors, resulting in indirect dealings with blocked individuals. The SDN parents made tuition payments—ranging from roughly $47,000 to more than $100,000—primarily through third-party wire transfers and credit cards. OFAC characterized IMG’s lack of a screening program as “reckless” and did not provide mitigation for the school’s voluntary self-disclosure because the agency had already initiated its investigation into the payments.
Sanctions Compliance Lessons for Colleges and Universities
U.S.-based academic institutions (at any level) must comply with U.S. sanctions.
For higher education institutions, the settlement serves as a reminder that compliance obligations extend well beyond export controls or issues with overseas campuses. Routine domestic activities such as tuition collection, payment processing, international partnerships, research collaborations, and exchange programs can create exposure if institutions do not screen students, payors, and counterparties against OFAC’s blocked persons lists.
Institutions should consider implementing comprehensive denied party screening protocols, staff training about sanctions rules and red flags, and periodic compliance audits to mitigate risk. Consider the following risk factors in structuring compliance programs:
- Which payment arrangements may involve sanctioned persons, including for tuition and other fees;
- Do any collaborations risk the involvement of blocked foreign institutions or those located in sanctioned jurisdictions;
- Does engaging in international investment, research, and commercial ventures require sanctions due diligence; and
- Does my institution have international campuses or exchange programs?
Additional Resource & Upcoming Webinar
For more information on the settlement and its enforcement implications, read the analysis prepared by Thompson Coburn’s International Trade team.
In addition, Thompson Coburn’s Higher Education and International Trade practices will host a March 12 webinar examining the latest developments in trade and sanctions compliance affecting colleges and universities. The program will provide practical guidance on assessing and managing risk across key campus functions—including research, international programs, technology transfer, procurement, human resources, and finance.
Register today to learn how to strengthen your institution’s compliance framework.
