OFAC Enforcement Action Against IMG Academy, LLC: Implications For Schools, Universities, And Other Academic Institutions

On February 12, 2026, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) announced an enforcement action against IMG Academy, LLC, a school and athletic training facility headquartered in Bradenton, Florida. IMG Academy agreed to pay $1.72 million to settle its potential civil liability for apparent violations of OFAC counternarcotics sanctions. According to OFAC's press release, over a five-year period, IMG Academy entered into tuition enrollment agreements and processed payments with two individuals designated under the Foreign Narcotics Kingpin Designation Act due to their ties to a sanctioned Mexican drug cartel. The violations were deemed non-egregious. IMG Academy did not voluntarily self-disclose, but its substantial cooperation and remedial measures were taken into account in determining the settlement amount.

The Kingpin Act

Enacted in 1999, the Kingpin Act was designed to target international drug trafficking by imposing U.S. sanctions on foreign persons and entities involved in the international drug trade. The act enables the president and Treasury Department to designate persons as significant narcotics traffickers and freeze their assets. It further prohibits U.S. persons and entities from doing business with designated traffickers, subjecting those who do with potential civil and criminal penalties. The Kingpin Act is enforced by OFAC, which sits within the Department of Treasury.

Description of Violations

Between 2018 and 2022, IMG Academy contracted annually with two Specially Designated Nationals (SDNs) for the enrollment of their children in the school's boarding programs. Payments for tuition, lodging, and other expenses were made primarily through third-party wire transfers and credit card transactions, many originating from Mexico. These arrangements resulted in 89 apparent violations of the Foreign Narcotics Kingpin Sanctions Regulations (FNKSR), specifically 31 C.F.R. § 598.202, which broadly prohibits the transfer, payment, or withdrawal of funds from an SDN. IMG Academy failed to conduct sanctions screening checks on these counterparties, despite having full name details that matched entries on OFAC's SDN List. The lack of due diligence allowed sanctioned individuals to gain access to U.S. academic and athletic training services and the U.S. financial system.

Penalty and Factors Considered

OFAC assessed the penalty based on its Economic Sanctions Enforcement Guidelines, which is a multi-factor framework for how OFAC determines the penalties for violations of U.S. sanctions programs. Aggravating factors included IMG Academy recklessly disregarding U.S. sanctions requirements and facilitating commerce with designated individuals. Mitigating factors included IMG Academy's lack of prior violations, immediate remedial action, implementation of a sanctions-compliance program, and cooperation during OFAC's investigation. The enforcement action demonstrates OFAC's expectation that institutions, regardless of sector, must implement effective, risk-based controls to avoid sanctions violations.

Implications for Schools, Universities and Other Institutions

This enforcement action highlights that academic institutions — including schools, universities, and similar organizations — are subject to U.S. sanctions laws and regulations. Institutions with international touchpoints, such as foreign students, visiting faculty, exchange programs, and global research collaborations, face heightened sanctions risk. Even entities operating primarily within the United States must remain vigilant, as sanctioned persons may attempt to access U.S. educational opportunities for themselves or their families.

Key risks for academic institutions include:

• Enrollment of students or acceptance of payments from sanctioned individuals or entities
• Financial arrangements involving third-party payors, especially from abroad
• International collaborations, investments, or campus operations

Recommended Compliance Measures

Academic institutions should take the following steps to mitigate sanctions risk:

• Sanctions Screening – Screen students, counterparties to tuition agreements, and payors against OFAC's SDN List and other sanctions lists.
• Risk Assessment – Conduct comprehensive risk assessments to identify all sources of sanctions risk, including international activities and financial arrangements.
• Due Diligence – Use available information to determine whether associated parties are located in comprehensively sanctioned jurisdictions or have ties to sanctioned persons or entities.
• Licensing Determination – Assess whether activities are exempt, authorized, or require a specific license from OFAC.
• Training and Auditing – Provide regular training for relevant personnel and conduct independent testing and audits to ensure controls are effective.
• Management Commitment – Ensure strong management commitment to sanctions compliance, including the development and implementation of a robust compliance program.

Taking these steps will help academic institutions substantially reduce the risk of violating U.S. sanctions laws and avoid enforcement actions similar to the one taken against IMG Academy.

Conclusion

The OFAC enforcement action against IMG Academy underscores the importance of sanctions compliance across all sectors, including education. Schools, universities, and other institutions must be proactive in identifying and mitigating sanctions risks to protect their operations and reputations. Implementing effective controls and compliance programs is essential to ensure adherence to U.S. sanctions laws and prevent illicit actors from obtaining benefits in the United States.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.