OFAC’s Settlement with IMG Academy: Sanctions Enforcement Implications for Educational Institutions

Summary — On February 12, 2026, the U.S. Department of the Treasury’s Office of Foreign Assets Control announced a $1.72 million settlement with IMG Academy for accepting tuition payments from parents who were sanctioned under the Kingpin Act. The case shows how educational institutions can be held responsible for dealing with sanctioned parents or financial sponsors and that educational institutions, especially those with international students, are expected to have sanction screening and compliance programs in place.

On February 12, 2026, the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC) announced a $1.72 million civil settlement with elite private sports academy, IMG Academy, to resolve apparent violations of the Foreign Narcotics Kingpin Designation Act (Kingpin Act) and related sanctions regulations. 

The settlement serves as a clear warning to U.S. educational institutions and underscores OFAC’s expectation that schools—particularly those with international enrollment pipelines—maintain risk‑based sanctions controls comparable to other U.S. service providers, even when the services provided are academic in nature.

Factual Background

IMG Academy is a U.S. private school and athletic training facility in Florida for students grade 6-12. Between 2018 and 2023 IMG Academy processed 83 tuition-related transactions involving two individuals designated as Specially Designated Nationals (SDNs) under the Kingpin Act. The two individuals had been designated as SDNs because they had provided financial support or services to a sanctioned Mexican drug trafficking organization or its leadership. The SDNs were identified as the parents of two student-athletes enrolled at IMG Academy.

During the relevant enrollment periods, annual tuition at IMG Academy had ranged from approximately $47,000 for partial enrollment to more than $102,000 for a full academic year. Pursuant to the students’ enrollment contracts, the parents paid their children’s tuition. Notably, the students themselves were not designated as having violated any regulations under OFAC’s regulatory framework. Rather, liability arose from the institution’s transactions with the parents, who were sanctioned financial sponsors.

The violations came to light during OFAC’s investigation into transactions involving those SDN parents. OFAC noted that, although the institution disclosed the apparent violations once it became aware of them, the agency had already initiated an inquiry, indicating that the detection originated through OFAC’s own investigative or interagency monitoring processes rather than through the school’s internal screening.

Takeaways for Educational Institutions

The IMG Academy enforcement action illustrates that sanctions exposure for educational institutions extends beyond the identity of enrolled students and into the broader ecosystem of financial sponsors, payment mechanisms, and enrollment workflows. The following takeaways highlight how seemingly routine admissions and tuition practices can give rise to sanctions liability under OFAC’s strict‑liability framework.

1. A Sanctions Risk to Institutions Extends Beyond Enrolled Students

• Institutions that operate high-tuition programs, boarding environments, or internationally recruited specialty programs face elevated exposure where substantial cross-border tuition payments are involved and financial sponsors are located in higher-risk jurisdictions.
• OFAC sanctions risk does not arise solely from the status of the enrolled student.  Under applicable laws and regulations, liability may attach whenever the institution transacts with a sanctioned parent, guardian, guarantor, or other financial sponsor.
• An institution cannot avoid liability by claiming it lacked actual knowledge that its counterparties were sanctioned individuals. OFAC emphasized that IMG Academy still had actual knowledge of the underlying transactions, since it had entered into annual tuition enrollment agreements directly with the SDNs, invoiced them by name, and routinely communicated with them regarding payment obligations, overpayments, credits, and refunds associated with the students’ accounts.

2. Admissions and Enrollment as Regulatory Touchpoints

• Institutions should ensure that admissions workflows collect sufficient identifying information regarding parents, guarantors, and other tuition payors to permit effective sanctions screening prior to execution of enrollment agreements. Third-party wire transfers, credit card payments from non-student sources, and other indirect payment mechanisms should be treated as identifiable sanctions risk areas requiring documented review and escalation procedures.
• Educational institutions should consider conducting sanctions screenings during the application process. OFAC found that IMG Academy had demonstrated reckless disregard for U.S. sanctions requirements by failing to conduct even basic sanctions screening on its counterparties. The absence of minimal due diligence allowed the violations to continue over several years, and exposed IMG Academy to liability.
• International recruitment strategies and geographic enrollment concentrations should be incorporated into periodic institutional risk assessments, particularly where recruitment occurs in jurisdictions associated with heightened sanctions exposure.

3. Intersection with Immigration Compliance

• A student’s eligibility for admission or their visa status does not resolve sanctions permissibility. Institutions cannot assume that student or institutional immigration compliance equates to sanctions compliance.
• Schools authorized to enroll F-1 or M-1 students should establish coordination mechanisms between designated school officials, finance offices, and legal or compliance personnel to ensure that any financial sponsorship is reviewed consistently with sanctions screening protocols.
• Institutions should also implement procedures to rescreen or reassess sanctions exposure when sponsorship arrangements change during a student’s enrollment, as mid-cycle financial modifications may create new transactional exposure.

4. Regulatory Environment and Enforcement Posture

• The enforcement action aligns with broader federal priorities emphasizing the restriction of transnational criminal organizations’ access to the U.S. financial system, signaling that educational institutions are not viewed as peripheral actors when they engage in cross-border financial transactions.
• Institutions that market premium educational services (including education sports academies) globally should anticipate continued regulatory scrutiny where international tuition flows intersect with sanctions programs, particularly in an enforcement environment emphasizing financial system integrity.
• The settlement highlights the importance of timely voluntary self-disclosures. Although IMG disclosed the violations later, OFAC had already begun its investigation. Earlier disclosure by IMG could have mitigated exposure and reduced the settlement amount.

Our firm advises independent schools, boarding schools, and higher education institutions on sanctions risk assessments, cross-functional compliance integration, and regulatory response planning. Institutions seeking to evaluate their current exposure or strengthen compliance infrastructure should consult their counsel to assess how this enforcement action may affect their specific enrollment model and international footprint.

Please contact any of the authors for further assistance on the issues described in this article.