Sports & OFAC: Schools Cannot Accept Money from Drug Cartels. Who Knew?!

As a Sports Mom, I am familiar with IMG Academy in Bradenton Florida and was shocked to learn that it had violated the export regulations.  IMG is an elite sports academy with a state-of-the-art campus that any athlete would drool over, assuming you have over $100,000 per year for attendance. IMG has produced numerous professional athletes across various sports.  Football – J.J. McCarthy (Minnesota Vikings), Baseball – Logan Allen (Boston Red Sox), Basketball – Mark Williams (Charlotte Hornets), Golf – Leatitia Beck, Lacrosse – Tehoka Nanticoke (NLL, Buffalo Bandits and PLL, Carolina Chaos), Soccer – Charles Reiter (Richmond Kickers); just to name a few.  Most of us would not think that export compliance would ever have anything to do with “the world’s leading sports education brand” that is “a world-renowned boarding school” whose website goes on to say that they have the “world’s largest and most successful college recruiting platform.”  Yet here I am, blogging about IMG and the recent enforcement action resulting in a settlement of $1,720,000 to settle their civil liability of 89 violations of the OFAC counternarcotics sanctions.  So, let’s break all this down – what happened?

What is IMG Academy?

IMG Academy is a private school for students in grades 6-12 that offers elite academic and sports training opportunities to U.S. and international student-athletes through full-time boarding programs, professional training programs, camps, online coaching services, and college sports recruiting resources. IMG Academy’s student body includes athletes from all over the world, and it has recruiting offices or representatives in Mexico, China, Japan, and South Korea.

What did IMG do?

Between 2019-2025, IMG Academy received tuition funds from two Mexico-based drug cartel individuals.  IMG received tuition payments from those individuals and continued to process those payments for years.  Those payments were entered into as yearly contracts in the form of tuition enrollment agreements with 2 sanctioned individuals under the Foreign Narcotics Kingpin Designation Act.  IMG then took those payments and processed them throughout their relationship with those sanctioned individuals.  Those agreements and transactions were for enrollment and attendance of the sanctioned Specially Designated National (SDN) student-athlete children.

Who is OFAC?

The Office of Foreign Assets Control (OFAC) is a financial intelligence and enforcement agency of the United States Department of the Treasury. Its primary role is to administer and enforce economic and trade sanctions in support of U.S. national security and foreign policy objectives. OFAC targets countries and individuals involved in illegal activities, such as terrorism and narcotics trafficking.

In a nutshell, No, U.S. entities, including academic private institutions, cannot accept funds from the Mexican cartel, even if it’s for the education and athletic benefit of kids – that’s illegal.

What were the Aggravating Factors?

IMG demonstrated reckless disregard for U.S. Sanction requirements by failing to conduct sanctions screening checks.  During the application process, enrollment stage and upon entering tuition agreements, the SDNs provided their full legal names, which matched exactly with the entries on the SDN List.  Zero due diligence was performed and this failure allowed numerous violations to continue to occur for years.

Because of IMG’s lack of controls, individuals who provided financial support and services to the Mexican drug cartel were able to conduct commerce with U.S. persons and gain access to the U.S. financial system.  This allowed the children of two members of the Mexican drug cartel to obtain elite academic and athletic training services in the U.S.

Take-Aways for Industry

Export compliance does not only apply to those that ship items in boxes internationally or those in the defense industry, as demonstrated in this blog.  Even academic institutions in the U.S. that have an international presence (in this case, foreign students) create opportunities for illegal transactions (example – payments from the Mexican drug cartel to IMG).  Whether or not this was done inadvertently is irrelevant.  Academic institutions are not immune to sanctions risk and subsequent violations.  In this case, sanctioned individuals wanted to make available to their children the opportunities that IMG offered in the U.S., perhaps to distance their kids from their own illicit activities.  Consequently, this means that schools should be on the lookout for payments from sanctioned individuals.

Academic institutions engage in various international activities, including hosting visiting faculty, exchange programs, foreign collaborations, and global campus operations. While some activities may be exempt from sanctions or covered by a general license, others pose significant sanctions risks. It is essential for institutions to identify these risks and implement effective controls to ensure compliance with U.S. sanctions prohibitions.

Academic institutions, at a minimum, should implement the following:

• Ensure strong management commitment to export compliance regulations;
• Complete a comprehensive risk assessment;
• Perform Restricted Party Screening of students, counterparties to tuition agreements, payors;
• Research publicly available information to determine if any associated parties are in a comprehensively sanctioned jurisdiction or have ties to a sanctioned person or entity;
• Conduct independent testing and auditing to ensure that their compliance controls are effective;
• Providing training to relevant personnel to facilitate ongoing compliance.