Lessons Learned

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Correctional programs

Correctional programs serve several goals, include doling out punishment for acts / crimes committed. One important goal embodied in the very particular, corrections, is the reduction of the likelihood an offender will continue to engage in his (criminal) behavior. This goal may be pursued through punitive sanctions intended to deter future acts from a specific offender or through rehabilitative / improvement programs designed to facilitate positive change.

Especially the U.S. and OFAC is very open in what went wrong, below you will find some recent examples. All material is collected from open source over a period of time. Most of the remarks were made ​​in the publication of the Civil Penalties and Enforcement Information, sometimes we quote other (open) sources.

Financial institutions (and other companies outside the financial sector) are subject to extensive compliance requirements, including prevention of money laundering. Weaknesses in internal compliance structures are presented as a form of unintended money laundering.

Cases

May 17, 2013 - Fed tells Bank of Montreal to fight money laundering harder

The U.S. Federal Reserve Board said it has told Bank of Montreal to step up efforts to detect and prevent money laundering at the Canadian bank's Chicago branch. The warning puts Bank of Montreal in a growing category of financial institutions under pressure to do a better job of adhering to strict U.S. requirements for identifying potentially illegal activity by their customers.

The Fed entered into a written agreement requiring Bank of Montreal to strengthen its compliance after a recent inspection by the central bank's examiners found deficiencies in Bank of Montreal's anti-money laundering program. The Fed made the agreement public on Friday.

The agreement said the Fed found Bank of Montreal’s Chicago branch “lacked effective systems of governance and internal controls to adequately oversee the activities of Bank of Montreal’s U.S. operations with respect to legal, compliance, and reputational risks.”

Banks operating in the United States, whether they are American or foreign, must closely monitor customer activity for signs of money laundering or other illegal acts. They must report unusual behavior in the form of “suspicious activity reports” to the U.S. Treasury Department.

The Treasury uses the reports – sharing them with the Federal Bureau of Investigation and other law enforcement agencies – to help track down criminals and terrorists.

The U.S. Treasury is currently building a system to more broadly share the banks’ reports with U.S. spy agencies as well.

Source: Reuters News Item & FED Enforcement


December 17, 2012 - SEC Charges Germany-Based Allianz SE with FCPA Violations

The Securities and Exchange Commission today charged Germany-based insurance and asset management company Allianz SE with violating the books and records and internal controls provisions of the Foreign Corrupt Practices Act (FCPA) for improper payments to government officials in Indonesia during a seven-year period.

The SEC’s investigation uncovered 295 insurance contracts on large government projects that were obtained or retained by improper payments of $650,626 by Allianz’s subsidiary in Indonesia to employees of state-owned entities. Allianz made more than $5.3 million in profits as a result of the improper payments.

SEC Press Release


December 12, 2012 - Bank of Tokyo-Mitsubishi UFJ, Ltd. Settles Potential Civil Liability for Apparent Violations of Multiple Sanctions Programs

Bank of Tokyo-Mitsubishi UFJ, Ltd. Settles Potential Civil Liability for Apparent Violations of Multiple Sanctions Programs. The Bank of Tokyo-Mitsubishi UFJ, Ltd. (“BTMU”), Tokyo, Japan, has agreed to remit $8,571,634 to settle potential civil liability for apparent violations of: the Burmese Sanctions Regulations (“BSR”), 31 C.F.R part 537; the Iranian Transactions Regulations (“ITR”), 31 C.F.R. part 560; Executive Order 13382, Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters (“E.O. 13382”); the Sudanese Sanctions Regulations (“SSR”), 31 C.F.R. part 538; and the Cuban Assets Control Regulations (“CACR”), 31 C.F.R. part 515, that occurred between April 3, 2006, and March 16, 2007.

BTMU’s Tokyo operations engaged in practices designed to conceal the involvement of countries or persons subject to U.S. sanctions in transactions that BTMU processed through financial institutions in the United States. Pursuant to written operational instructions utilized in a Tokyo operations center, BTMU employees systematically deleted or omitted from payment messages any information referencing U.S. sanctions targets that would cause the funds to be blocked or rejected, prior to sending the transactions through the United States. As a result of these practices, BTMU processed at least 97 funds transfers, with an aggregate value of approximately $5,898,943, through BTMU’s New York branch or other banks in the United States, in apparent violation of the BSR, ITR, E.O. 13382, SSR, and CACR.

In 2007, BTMU’s senior management learned of these practices, commenced an internal review of historical transaction data, and initiated a voluntary self-disclosure to OFAC. OFAC found that the apparent violations constitute an egregious case. The settlement amount reflects OFAC’s consideration of the following facts and circumstances, pursuant to the General Factors under OFAC’s Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A: BTMU’s conduct concealed the involvement of U.S. sanctions targets and displayed reckless disregard for U.S. sanctions; the general manager of the Operations Center in Tokyo knew or had reason to know that procedures had been implemented instructing employees to manipulate payment instructions; BTMU’s conduct conferred a substantial economic benefit to targets of OFAC sanctions; BTMU is a large, commercially sophisticated financial institution; BTMU has undertaken significant remediation to improve its OFAC compliance policies and procedures; BTMU substantially cooperated with OFAC’s investigation, including providing detailed and organized information regarding the apparent violations, and entering into a tolling agreement with OFAC; and BTMU has no history of prior OFAC violations.

OFAC Enforcement Information


December 11, 2012 - DEA News: HSBC Holdings Plc. and HSBC Bank USA N.A. Admit to Anti-Money Laundering and Sanctions Violations, Forfeit $1.256 Billion in Deferred Prosecution Agreement - Bank Agrees to Enhanced Compliance Obligations, Oversight by Monitor in Connection with Five-Year Agreement

WASHINGTON – DEA and other federal officials announced today that HSBC Holdings plc (HSBC Group) – a United Kingdom corporation headquartered in London – and HSBC Bank USA N.A. (HSBC Bank USA) (together, HSBC) – a federally chartered banking corporation headquartered in McLean, Va. – have agreed to forfeit $1.256 billion and enter into a deferred prosecution agreement with the Justice Department for HSBC’s violations of the Bank Secrecy Act (BSA), the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA). According to court documents, HSBC Bank USA violated the BSA by failing to maintain an effective anti-money laundering program and to conduct appropriate due diligence on its foreign correspondent account holders. The HSBC Group violated IEEPA and TWEA by illegally conducting transactions on behalf of customers in Cuba, Iran, Libya, Sudan and Burma – all countries that were subject to sanctions enforced by the Office of Foreign Assets Control (OFAC) at the time of the transactions.

A four-count felony criminal information was filed today in federal court in the Eastern District of New York charging HSBC with

HSBC has waived federal indictment, agreed to the filing of the information, and has accepted responsibility for its criminal conduct and that of its employees.

“HSBC is being held accountable for stunning failures of oversight – and worse – that led the bank to permit narcotics traffickers and others to launder hundreds of millions of dollars through HSBC subsidiaries, and to facilitate hundreds of millions more in transactions with sanctioned countries,” said Assistant Attorney General Breuer. “The record of dysfunction that prevailed at HSBC for many years was astonishing. Today, HSBC is paying a heavy price for its conduct, and, under the terms of today’s agreement, if the bank fails to comply with the agreement in any way, we reserve the right to fully prosecute it.”

“Today we announce the filing of criminal charges against HSBC, one of the largest financial institutions in the world,” said U.S. Attorney Lynch. “HSBC’s blatant failure to implement proper anti-money laundering controls facilitated the laundering of at least $881 million in drug proceeds through the U.S. financial system. HSBC’s willful flouting of U.S. sanctions laws and regulations resulted in the processing of hundreds of millions of dollars in OFAC-prohibited transactions. Today’s historic agreement, which imposes the largest penalty in any BSA prosecution to date, makes it clear that all corporate citizens, no matter how large, must be held accountable for their actions.”

“Cartels and criminal organization are fueled by money and profits,” said ICE Director Morton. “Without their illicit proceeds used to fund criminal activities, the lifeblood of their operations is disrupted. Thanks to the work of Homeland Security Investigations and our El Dorado Task Force, this financial institution is being held accountable for turning a blind eye to money laundering that was occurring right before their very eyes. HSI will continue to aggressively target financial institutions whose inactions are contributing in no small way to the devastation wrought by the international drug trade. There will be also a high price to pay for enabling dangerous criminal enterprises.”

In addition to forfeiting $1.256 billion as part of its deferred prosecution agreement (DPA) with the Department of Justice, HSBC has also agreed to pay $665 million in civil penalties – $500 million to the Office of the Comptroller of the Currency (OCC) and $165 million to the Federal Reserve – for its AML program violations. The OCC penalty also satisfies a $500 million civil penalty of the Financial Crimes Enforcement Network (FinCEN). The bank’s $375 million settlement agreement with OFAC is satisfied by the forfeiture to the Department of Justice. The United Kingdom’s Financial Services Authority (FSA) is pursuing a separate action.

As required by the DPA, HSBC also has committed to undertake enhanced AML and other compliance obligations and structural changes within its entire global operations to prevent a repeat of the conduct that led to this prosecution. HSBC has replaced almost all of its senior management, “clawed back” deferred compensation bonuses given to its most senior AML and compliance officers, and has agreed to partially defer bonus compensation for its most senior executives – its group general managers and group managing directors – during the period of the five-year DPA. In addition to these measures, HSBC has made significant changes in its management structure and AML compliance functions that increase the accountability of its most senior executives for AML compliance failures.

The AML Investigation According to court documents, from 2006 to 2010, HSBC Bank USA severely understaffed its AML compliance function and failed to implement an anti-money laundering program capable of adequately monitoring suspicious transactions and activities from HSBC Group Affilliates, particularly HSBC Mexico, one of HSBC Bank USA’s largest Mexican customers. This included a failure to monitor billions of dollars in purchases of physical U.S. dollars, or “banknotes,” from these affiliates. Despite evidence of serious money laundering risks associated with doing business in Mexico, from at least 2006 to 2009, HSBC Bank USA rated Mexico as “standard” risk, its lowest AML risk category. As a result, HSBC Bank USA failed to monitor over $670 billion in wire transfers and over $9.4 billion in purchases of physical U.S. dollars from HSBC Mexico during this period, when HSBC Mexico’s own lax AML controls caused it to be the preferred financial institution for drug cartels and money launderers.

A significant portion of the laundered drug trafficking proceeds were involved in the Black Market Peso Exchange (BMPE), a complex money laundering system that is designed to move the proceeds from the sale of illegal drugs in the United States to drug cartels outside of the United States, often in Colombia. According to court documents, beginning in 2008, an investigation conducted by ICE Homeland Security Investigation’s (HSI’s) El Dorado Task Force, in conjunction with the U.S. Attorney’s Office for the Eastern District of New York, identified multiple HSBC Mexico accounts associated with BMPE activity and revealed that drug traffickers were depositing hundreds of thousands of dollars in bulk U.S. currency each day into HSBC Mexico accounts. Since 2009, the investigation has resulted in the arrest, extradition, and conviction of numerous individuals illegally using HSBC Mexico accounts in furtherance of BMPE activity.

As a result of HSBC Bank USA’s AML failures, at least $881 million in drug trafficking proceeds – including proceeds of drug trafficking by the Sinaloa Cartel in Mexico and the Norte del Valle Cartel in Colombia – were laundered through HSBC Bank USA. HSBC Group admitted it did not inform HSBC Bank USA of significant AML deficiencies at HSBC Mexico, despite knowing of these problems and their effect on the potential flow of illicit funds through HSBC Bank USA.

The Sanctions Investigation According to court documents, from the mid-1990s through September 2006, HSBC Group allowed approximately $660 million in OFAC-prohibited transactions to be processed through U.S. financial institutions, including HSBC Bank USA. HSBC Group followed instructions from sanctioned entities such as Iran, Cuba, Sudan, Libya and Burma, to omit their names from U.S. dollar payment messages sent to HSBC Bank USA and other financial institutions located in the United States. The bank also removed information identifying the countries from U.S. dollar payment messages; deliberately used less-transparent payment messages, known as cover payments; and worked with at least one sanctioned entity to format payment messages, which prevented the bank’s filters from blocking prohibited payments.

Specifically, beginning in the 1990s, HSBC Group affiliates worked with sanctioned entities to insert cautionary notes in payment messages including “care sanctioned country,” “do not mention our name in NY,” or “do not mention Iran.” HSBC Group became aware of this improper practice in 2000. In 2003, HSBC Group’s head of compliance acknowledged that amending payment messages “could provide the basis for an action against [HSBC] Group for breach of sanctions.” Notwithstanding instructions from HSBC Group Compliance to terminate this practice, HSBC Group affiliates were permitted to engage in the practice for an additional three years through the granting of dispensations to HSBC Group policy.

Court documents show that as early as July 2001, HSBC Bank USA’s chief compliance officer confronted HSBC Group’s Head of Compliance on the issue of amending payments and was assured that “Group Compliance would not support blatant attempts to avoid sanctions, or actions which would place [HSBC Bank USA] in a potentially compromising position.” As early as July 2001, HSBC Bank USA told HSBC Group’s head of compliance that it was concerned that the use of cover payments prevented HSBC Bank USA from confirming whether the underlying transactions met OFAC requirements. From 2001 through 2006, HSBC Bank USA repeatedly told senior compliance officers at HSBC Group that it would not be able to properly screen sanctioned entity payments if payments were being sent using the cover method. These protests were ignored.

“Today HSBC is being held accountable for illegal transactions made through the U.S. financial system on behalf of entities subject to U.S. economic sanctions,” said Debra Smith, Acting Assistant Director in Charge of the FBI’s Washington Field Office. “The FBI works closely with partner law enforcement agencies and federal regulators to ensure compliance with federal banking laws to promote integrity across financial institutions worldwide.”

“Banks are the first layer of defense against money launderers and other criminal enterprises who choose to utilize our nation’s financial institutions to further their criminal activity,” said Richard Weber, Chief, Internal Revenue Service-Criminal Investigation (IRS-CI). “When a bank disregards the Bank Secrecy Act’s reporting requirements, it compromises that layer of defense, making it more difficult to identify, detect and deter criminal activity. In this case, HSBC became a conduit to money laundering. The IRS is proud to partner with the other law enforcement agencies and share its world-renowned financial investigative expertise in this and other complex financial investigations.”

Manhattan District Attorney Cyrus R. Vance Jr., said, “New York is a center of international finance, and those who use our banks as a vehicle for international crime will not be tolerated. My office has entered into Deferred Prosecution Agreements with two different banks in just the past two days, and with six banks over the past four years. Sanctions enforcement is of vital importance to our national security and the integrity of our financial system. The fight against money laundering and terror financing requires global cooperation, and our joint investigations in this and other related cases highlight the importance of coordination in the enforcement of U.S. sanctions. I thank our federal counterparts for their ongoing partnership.”

Queens County District Attorney Richard A. Brown said, “No corporate entity should ever think itself too large to escape the consequences of assisting international drug cartels. In particular, banks have a special responsibility to use appropriate due diligence in monitoring the cash transactions flowing through their financial system and identifying the sources of that money in order not to assist in criminal activity. By allowing such illicit transactions to occur, HSBC failed in its global responsibility to us all. Hopefully, as a result of this historical settlement, we have gained the attention of not only HSBC but that of every other major financial institution so that they cannot turn a blind eye to the crime of money laundering.”

This case was prosecuted by Money Laundering and Bank Integrity Unit Trial Attorneys Joseph Markel and Craig Timm of the Criminal Division’s Asset Forfeiture and Money Laundering Section, and Assistant U.S. Attorneys Alex Solomon and Daniel Silver of the U.S. Attorney’s Office for the Eastern District of New York.

The AML investigation was conducted by HSI’s El Dorado Task Force, a joint task force composed of members from more than 55 law enforcement agencies in New York and New Jersey, including special agents and investigators from IRS-CI and the Queens County District Attorney’s Office, other federal agents, state and local police investigators and intelligence analysts, with the assistance of DEA’s New York Division. The sanctions investigation was conducted by the FBI’s Washington Field Office.

The Money Laundering and Bank Integrity Unit is a corps of prosecutors with a boutique practice aimed at hardening the financial system against criminal money laundering vulnerabilities by investigating and prosecuting financial institutions and professional money launderers for violations of the anti-money laundering statutes, the Bank Secrecy Act and other related statutes.

The Department of Justice expressed gratitude to William Ihlenfeld II, U.S. Attorney for the Northern District of West Virginia; Assistant District Attorney Garrett Lynch of the New York County District Attorney’s Office, Major Economic Crimes Bureau; the Treasury Department’s Office of Foreign Assets Control; the Board of Governors of the Federal Reserve System; and the Office of the Comptroller of the Currency for their significant and valuable assistance.

DEA HQ News


December 11, 2012 - Federal Reserve Board issues consent cease and desist order, and assesses civil money penalty against HSBC

The Federal Reserve Board on Tuesday issued a consent cease and desist order against HSBC Holdings plc, London, United Kingdom, (Holdings) and assessed a $165 million civil money penalty against Holdings and its subsidiary in the United States, HSBC North America Holdings, Inc., New York, New York (HNAH). The civil money penalty is the largest the Federal Reserve has assessed as a result of unsafe and unsound practices related to insufficient compliance with Bank Secrecy Act and anti-money laundering requirements, and U.S. economic sanctions.

Holdings conducts its banking operations in the United States through HNAH, which owns and controls HSBC Bank USA, N.A., (HBUS) and various other bank and non-bank subsidiaries.

The orders address inadequate oversight by Holdings and HNAH of anti-money laundering controls and U.S. dollar clearing practices used by the firm's banking subsidiaries in the United States and abroad. A government investigation found that due to these oversight deficiencies, Holdings' banking subsidiary in Mexico engaged in a substantial number of high-risk transactions with the firm's subsidiary bank in the United States. Investigations also found compliance gaps at the firm's subsidiaries in Europe and the Middle East that enabled sanctioned entities to illegally route dollar payments through the U.S. financial system.

When combined with separate, coordinated actions by the Department of Justice, the District Attorney for the County of New York, and the Office of the Comptroller of the Currency, the payments made by Holdings, HNAH, and HBUS in forfeitures and penalties in connection with the money-laundering and sanctions violations total approximately $1.9 billion. Separate assessments by the Treasury Department's Office of Foreign Assets Control and Financial Crimes Enforcement Network will be deemed satisfied by payments made to other federal agencies.

The Federal Reserve's order requires Holdings to improve its programs and practices to ensure full compliance with the Bank Secrecy Act, anti-money laundering requirements, and U.S. economic sanctions. The United Kingdom's Financial Services Authority, the home country supervisor of Holdings, has agreed to assist the Federal Reserve in the supervision of the order.


December 11, 2012 - FinCen - HSBC failed to provide for an adequate system of internal controls to ensure ongoing compliance

The U.S. Department of the Treasury today announced settlements amounting to $875 million – the largest collective settlement in the department’s history – with HSBC Holdings plc (together with its affiliates, HSBC). The Treasury Department’s collective settlement, reached by the Financial Crimes Enforcement Network (FinCEN), the Office of the Comptroller of the Currency (OCC), and the Office of Foreign Assets Control (OFAC) is part of the combined federal, local, and international government action that amounted to the largest bank settlement in U.S. history. In total, more than $1.9 billion were assessed in penalties for HSBC’s conduct in violation of the Bank Secrecy Act (BSA) and U.S. sanctions.

FinCen Enforcement Actions


December 11, 2012 - Treasury Department (OFAC) Reaches Landmark Settlement with HSBC - Combined Federal, Local, International Action Marks Largest Bank Settlement in U.S. History

The U.S. Department of the Treasury today announced settlements amounting to $875 million – the largest collective settlement in the department’s history – with HSBC Holdings plc (together with its affiliates, HSBC). The Treasury Department’s collective settlement, reached by the Financial Crimes Enforcement Network (FinCEN), the Office of the Comptroller of the Currency (OCC), and the Office of Foreign Assets Control (OFAC) is part of the combined federal, local, and international government action that amounted to the largest bank settlement in U.S. history. In total, more than $1.9 billion were assessed in penalties for HSBC’s conduct in violation of the Bank Secrecy Act (BSA) and U.S. sanctions.

The bank’s breakdowns in anti-money laundering (AML) compliance were particularly egregious because these failures allowed hundreds of millions of dollars from Mexican drug trafficking organizations to flow through accounts in the United States. Despite HSBC’s extensive global operations and the substantial resources it had available to manage transnational risk, it failed to help secure the United States financial borders and left dangerous gaps that international drug dealers and other criminals readily abused. The penalties reflect the damage to the integrity of the U.S. financial system inflicted by HSBC, and the federal government’s intolerance of behavior and business practices that disregard BSA requirements and U.S. sanctions regimes.

“These settlements implicate willful and dangerous practices by one of the world’s biggest banks,” said Under Secretary for Terrorism and Financial Intelligence David S. Cohen. “HSBC absolutely knew the risks of the business it pursued, yet it ignored specific, obvious warnings. Its failures allowed hundreds of millions of dollars in drug money to pass through its unattended gates.”

The OCC and FinCEN announced separate assessments of $500 million civil money penalties (CMP) against HSBC Bank USA N.A. (HBUS), McLean, Virginia for BSA violations. The OCC CMP is being levied for failure to comply fully with a remedial order addressing these violations, issued by the OCC in 2010. Both of these penalties will be deemed satisfied by a single payment of $500 million to the Treasury Department. OFAC also reached an additional $375 million agreement with HSBC to settle potential liability for apparent violations of U.S. sanctions that will be deemed satisfied by payment of an equal amount to the Department of Justice for the same pattern of conduct.

Since at least mid-2006, the bank lacked an effective risk-based AML program reasonably designed to manage risks of money laundering or other illicit activity, given the bank’s products, services, transaction volume, scope of business activities, geographic reach, and customers. The bank’s prolonged systemic failures to comply with BSA suspicious activity reporting requirements resulted in the failure to detect and adequately report evidence of money laundering and other illicit activity.

HBUS’s ineffective AML program exposed the U.S. financial system to severe criminal abuse. From 2002 until 2009, despite obvious information to the contrary, the bank rated Mexico as having “standard” money laundering risk, the lowest of the bank’s four possible country risk ratings. As a result of ratings like this, hundreds of billions of dollars in wire transactions from Mexico were excluded from the bank’s internal AML reviews. Additionally, from 2006 through 2009, the bank did not monitor bulk cash transactions conducted with its Mexican and other foreign affiliates and took delivery of more than $15 billion in cash. In 2006, FinCEN alerted all U.S. financial institutions about money laundering risks associated with United States/Mexico cross-border cash and warned that cash from illegal drug trafficking was being smuggled into Mexico, placed into financial institutions, and then returned to the United States.

Similarly, the bank maintained correspondent accounts for affiliates around the world and did not collect or maintain, as the BSA requires, any customer due diligence information regarding these relationships. As a consequence, many foreign financial institutions and their customers effectively gained unmonitored access to the U.S. financial system without appropriate safeguards against illicit financial activity.

These AML compliance failures meant that the bank did not and could not reliably detect and report suspicious activity and therefore deprived law enforcement and regulators of critical information used to combat money laundering, terrorist finance, transnational organized crime, and other domestic and global financial threats.

OFAC’s settlement resolves an investigation into HSBC’s apparent violations of the Iranian Transactions Regulations (ITR), 31 C.F.R. part 560; the Burmese Sanctions Regulations (BSR), 31 C.F.R. part 537; the Sudanese Sanctions Regulations (SSR), 31 C.F.R. part 538; the Cuban Assets Control Regulations (CACR), 31 C.F.R. part 515; and the Libyan Sanctions Regulations (LSR), 31 C.F.R. part 550 (which were in effect until 2004).

For a number of years, up to and including 2007, HSBC affiliates in Europe, the Middle East, and Asia processed transactions through U.S. financial institutions that involved countries, entities, or individuals subject to U.S. sanctions. HSBC Group’s London head office and Dubai branch engaged in payment practices that interfered with the implementation of U.S. economic sanctions by financial institutions in the United States, including HBUS. Payment practices included the use of Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment messages in a manner that obscured references implicating U.S. sanctions, removal of information from SWIFT messages, and forwarding of payment messages to U.S. financial institutions that falsely referenced an HSBC affiliate as the ordering institution. As a result, payments totaling approximately $430 million were routed through U.S. banks for or on behalf of sanctioned parties in apparent violation of U.S. sanctions.

HSBC has assured OFAC that it has terminated the conduct leading to today’s settlement. Under the settlement agreement, HSBC is required to put in place and maintain policies and procedures to minimize the risk of the recurrence of such conduct in the future. HSBC is also required to provide OFAC with copies of submissions to the Federal Reserve relating to the OFAC compliance review that it will be conducting as part of its settlement with the Federal Reserve.

As with past investigations, OFAC, FinCEN, and the OCC worked closely with their counterparts at other government agencies investigating this matter, including the Department of Justice, the Board of Governors of the Federal Reserve System (“Federal Reserve”), and the District Attorney’s Office of New York, to bring this case to closure in a responsible and coordinated fashion.

HSBC’s settlement with OFAC, FinCEN, and the OCC are simultaneous with settlements with the Department of Justice’s Asset Forfeiture and Money Laundering Section and the New York County District Attorney’s Office, as well as orders involving the Federal Reserve with the cooperation of the UK’s Financial Services Authority.

OFAC Recent Actions


December 11, 2012 - Standard Chartered Bank OFAC Violations Scorecard While certainly not the largest OFAC settlement in history, the SCB penalty is still quite significant, particularly, given the fact that SCB had already settled banking violations with the State of New York a few months ago for $340 million dollars. So what exactly were the OFAC violations leading to this penalty? See the breakdown at Ferrari Legal Blog Item


December 10, 2012 - Treasury Settlement ($132 Million) Part of Combined $340 Million Settlement for Bank’s Apparent Violations of Sanctions Programs

As part of a combined $327 million settlement with federal and local government partners, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) today announced a $132 million agreement with Standard Chartered Bank (SCB) to settle its potential liability for apparent violations of U.S. sanctions. Today’s settlement resolves the OFAC’s investigation into apparent violations by the London and Dubai offices of SCB of a number of U.S sanctions programs, including those relating to Iran, Burma, Libya and Sudan. Matters were also settled relating to a case involving transactions related to the Foreign Narcotics Kingpin Sanctions Regulations.

“Today’s settlement is the result of an exhaustive interagency investigation into Standard Chartered Bank’s attempts to violate U.S. sanctions programs through the ‘stripping’ from payment messages of critical information,” said OFAC Director Adam J. Szubin. “We remain committed to working with our partners in the regulatory and law enforcement community to ensure that the U.S. financial system is protected from the risks associated with this type of illicit financial behavior.”

From 2001 to 2007, SCB’s London head office and its Dubai branch engaged in payment practices that interfered with the implementation of U.S. economic sanctions by financial institutions in the United States, including SCB’s New York branch. In London, those practices included omitting or removing material references to U.S.-sanctioned locations or entities from payment messages sent to U.S. financial institutions. SCB accomplished this by replacing the names of ordering customers on payment messages with special characters, effectively obscuring the true originator and sanctioned party in the transaction; and forwarding payment messages to U.S. financial institutions that falsely referenced SCB as the ordering institution. In Dubai, the practices included sending payment messages to or through the United States without references to locations or entities implicating U.S. sanctions. As a result, millions of dollars of payments were routed through U.S. banks for or on behalf of sanctioned parties in apparent violation of U.S. sanctions.

These actions were apparent violations of the Iranian Transactions Regulations (ITR), 31 C.F.R. part 560; the Burmese Sanctions Regulations (BSR), 31 C.F.R. part 537; the Sudanese Sanctions Regulations (SSR), 31 C.F.R. part 538; and the now-repealed version of the Libyan Sanctions Regulations (LSR), 31 C.F.R. part 550, which was in effect until 2004. Eight apparent violations of the Foreign Narcotics Kingpin Sanctions Regulations (FNKSR) by SCB’s New York branch, which occurred later and apart from the above conduct, were also settled.

Under the settlement agreement, SCB is required to put in place and maintain policies and procedures to minimize the risk of the recurrence of such conduct in the future. SCB is also required to provide OFAC with copies of submissions to the Board of Governors of the Federal Reserve System (Board of Governors) relating to the OFAC compliance review that it will be conducting as part of its settlement with the Board of Governors.

As is standard practice, OFAC worked closely and collaboratively with its counterparts at other government agencies in the investigation of this matter. ​Today’s OFAC settlement is simultaneous with the bank’s settlements with the U.S. Attorney's Office for the District of Columbia, the Department of Justice's National Security Division, the Department of Justice's Asset Forfeiture and Money Laundering Section and the New York County District Attorney’s Office; as well as orders involving the Board of Governors with the cooperation of the UK’s Financial Services Authority.

SCB’s $132 million settlement with OFAC will be deemed satisfied by the bank’s payment of a forfeiture to the Department of Justice for the same pattern of conduct.

Treasury Press Release - Settlement Statement - WEB Notice

The Long List

Company / Entity Date (yyyymm) Fine Enforcement (main) Synopsis Regulation (main violation against)
Fokker Services 201406 $21 Million OFAC, DoJ, BIS Fokker Services B.V. Agrees to Settle Potential Civil Liability for Alleged Violations ofthe Iranian Transactions and Sanctions Regulations and the Sudanese Sanctions Regulations:

Fokker Services B.V. ("FSBV"), Hoofddorp, The Netherlands, has agreed to a settlement of its potential civil liability of $50,922,208 for 1,112 alleged violations of the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (the "ITSR"),' and 41 alleged violations of the Sudanese Sanctions Regulations, 31 C.F.R. part 538 (the "SSR"), occurring from approximately November 16, 2005, through approximately September 1, 2010. FSBV's settlement with OFAC is part ofa global settlement that also includes the Department of Commerce's Bureau of Industry and Security ("BIS"), and the Department of Justice's U.S. Attomey's Office for the District of Columbia ("USAO"). As part of the settlement, FSBV will satisfy its liability with the payment of a $10.5 million civil monetary penalty to OFAC and BIS, a forfeiture of an additional $10.5 million pursuant to a deferred prosecution agreement ("DFA") reached with the USAO, and the acceptance of responsibility for its egregious conduct involving over 1,150 alleged violations of U.S. sanctions. OFAC recent actions - DoJ Press Release

Violation of Iran, Sudan & Myanmar sanctions
AIG 201405 $279,038.- OFAC American International Group, Inc. Settles Potential Civil Liability for Apparent Violations of the Cuban Assets Control Regulations, 31 C.F.R. part 515: American International Group, Inc. (“AIG”), an international insurance and financial services organization headquartered in New York, New York has agreed to remit $279,038 to settle potential civil liability for 3,560 apparent violations of the Cuban Assets Control Regulations, 31 C.F.R. part 515, that occurred between January 1, 2006, and March 29, 2009.

The Office of Foreign Assets Control (“OFAC”) has determined that AIG voluntarily self-disclosed the apparent violations and that the apparent violations constitute a non-egregious case. The total base penalty amount for the apparent violations was $413,390. Between January 2006 and March 2009, two AIG subsidiaries in Canada issued or renewed three types of property and casualty insurance policies that insured Cuban risks of a Canadian corporate entity for an estimated aggregate premium of $486,137.71. The polices involved Comprehensive General Liability, Director’s and Officer’s (“D&O”) Excess Liability, and Pollution Legal Liability coverages. One of the AIG subsidiaries in Canada also maintained a D&O Liability insurance policy that insured certain directors and officers of three Cuban joint venture partners of a Canadian corporation between January 1, 2006, and October 4, 2006. The estimated total premium for D&O coverage during this time period was $55,578.08. Separately, from March 17, 2006, through September 30, 2008, Travel Guard Canada—an AIG subsidiary in Canada—sold, renewed, or maintained in force 3,446 individual or annual multi-trip travel insurance policies in which the insured identified Cuba as the travel destination. The total premium collected for these policies was $337,973.25. During the coverage period of these 3,446 policies, and extending to December 31, 2008, Travel Guard Canada paid 103 claims for a total value of $96,910.47. OFAC recent actions

Violation of Cuba sanctions
Individual 201405 $29,340.- OFAC Individual Settles Potential Civil Liability for Alleged Violations of the Iranian Transactions and Sanctions Regulations. An individual from Washington state has agreed to pay $29,340 to settle potential civil liability for alleged violations ofthe Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (the "iTSR").' Specifically, OFAC alleged that from on or about May 21, 2007, to on or about November 12, 2009, the individual exported, sold, and/or supplied unlicensed medical goods and/or related financial services from the United States to Iran, in violation ofthe ITSR. The alleged violations involved 19 separate transactions, valued at $49,341, in which the individual acted as a third-party recipient for goods destined for Iran and/or provided banking services to a person in Iran. OFAC determined that the individual did not voluntarily self-disclose the matter to OFAC and that the alleged violations constituted a non-egregious case. The base penalty amount for the alleged violations totaled $163,000. OFAC recent actions Iran sanctions violation
Decolar.com, Inc. 201405 $2,809,800.- OFAC Settles Potential Civil Liability for Apparent Violations of the Cuban Assets Control Regulations: Decolar.com, Inc. (previously known as Despegar.com, Inc.), together with its subsidiaries and affiliates (collectively "Decolar"), a Delaware company with headquarters in Buenos Aires, Argentina, has agreed to pay $2,809,800 to settle potential civil liability for apparent violations of the Cuban Assets Control Regulations. 31 C.F.R. part 515 (the "CACR"). From March 2, 2009, through March 31, 2012, Decolar appears to have dealt in property in which Cuba or Cuban nationals had an interest when its foreign subsidiaries assisted 17,836 persons with flight reservations for travel between Cuba and countries other than the United States and/or hotel reservations for stays in Cuba, without authorization from OFAC. OFAC recent actions Cuba sanctions violation
CWT BV The Netherlands 201404 $5,990,490.- OFAC CWT B.V. Settles Potential Civil Liability for Apparent Violations of the Cuban Assets Control Regulations. CWT B.V. (“CWT”), of the Netherlands, has agreed to pay $5,990,490 to settle potential civil liability for apparent violations of the Cuban Assets Control Regulations (the “CACR”), 31 C.F.R. part 515. From on or about August 8, 2006, through on or about November 28, 2012, CWT dealt in property in which Cuba or its nationals had an interest when its business units mostly outside the United States provided services related to travel to or from Cuba, assisting 44,430 persons. In 2006, CWT, a travel services provider incorporated in the Netherlands, became majority-owned by U.S. persons and thus subject to U.S. jurisdiction pursuant to the Trading With the Enemy Act, 50 U.S.C. App. §§ 1-44 and the CACR.

OFAC determined that CWT voluntarily self-disclosed the apparent violations to OFAC, that the vast majority of the apparent violations occurred “prior to agency notice,” and that a small portion of the apparent violations occurred “subsequent to agency notice,” as they occurred after CWT filed its self-disclosure with OFAC. Pursuant to OFAC’s Cuba Penalty Schedule, 68 Fed. Reg. 4,429 (Jan. 29, 2003), the base penalty for the apparent violations is $11,093,500. The settlement amount reflects OFAC’s consideration of the following facts and circumstances, pursuant to the General Factors under OFAC’s Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A: CWT failed to exercise a minimal degree of caution or care regarding its obligations to comply with OFAC sanctions against Cuba by processing unauthorized travel related transactions for more than four years before recognizing that it was subject to U.S. jurisdiction; CWT is a commercially sophisticated international corporation and travel services provider; CWT processed a high volume of transactions and assisted a large number of travelers, which caused significant harm to the objectives of the CACR; CWT had no compliance program or an inadequate compliance program at the time of the apparent violations; the transactions were CWT’s “first violation,” as no Finding of Violation or penalty notice had been issued to CWT in the five years preceding these transactions; CWT provided substantial cooperation during OFAC’s investigation of the apparent violations, including by agreeing to toll the statute of limitations and by providing to OFAC detailed and well-organized documents and information; and CWT has taken significant remedial action in response to the apparent violations. OFAC Recent Actions

Cuba
Sea Tel Inc. 201404 $ 85,113.- OFAC Sea Tel Inc. Settles Potential Civil Liability for Apparent Violations of the Iranian Transactions and Sanctions Regulations: Sea Tel Inc. (“Sea Tel”), of Concord, CA, has agreed to pay $85,113 to settle potential civil liability for apparent violations of the Iranian Transactions and Sanctions Regulations.1 The apparent violations by Sea Tel occurred between November 20, 2007, and February 26, 2009, when Sea Tel invoiced its distributor, Shindong Digitech Co. Ltd., in South Korea for 16 orders of marine antenna systems, with a total value of $378,281, and exported the antenna systems to its distributor, with knowledge or reason to know that they were

intended specifically for reexportation, directly or indirectly, to Iran. This matter was voluntarily disclosed to OFAC by Sea Tel and the apparent violations constitute a non-egregious case. The base penalty amount for the apparent violations was $189,141. OFAC Recent Actions

Violation of Iran sanctions
GAC Bunker Fuels (USA) 201403 $ 157,000.- OFAC GAC Bunker Fuels (USA) LLC., Settles Potential Civil Liability for an Alleged Violation of the Iranian Transactions and Sanctions Regulations: GAC Shipping (USA), Inc., of Philadelphia, Pennsylvania, on behalf of GAC Bunker Fuels (USA) LLC (“GAC”), of Houston, Texas, has agreed to pay $157,500 to settle potential civil liability for an alleged violation of the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (the “ITSR”).1 GAC supplied bunker fuel in Paranagua, Brazil for an Iranian vessel carrying an agricultural commodity, which OFAC alleged was a violation of § 560.206 of the ITSR. The transaction occurred in November 2008, and was valued at $513,141. OFAC Recent Actions Violation of Iran sanctions
Ubiquiti Networks, Inc. 201403 $ 504,225.- OFAC Ubiquiti Networks, Inc. (“Ubiquiti”), San Jose, CA, has agreed to pay $504,225 to settle potential civil liability for apparent violations of the Iranian Transactions and Sanctions Regulations (the “ITSR”). From on or about March 24, 2008, to in or around February 2010, Ubiquiti appears to have violated §§ 560.206 and 560.208 of the ITSR by engaging in transactions related to the exportation, reexportation, sale or supply, directly or indirectly, of goods for broadband wireless connectivity1 to Iran, and facilitating the reexportation, sale or supply of such goods to Iran, when it entered into an agreement granting a distributor in the United Arab Emirates (“U.A.E.”) exclusive rights to distribute Ubiquiti’s goods in Iran, then subsequently sold to the U.A.E. distributor and exported or shipped to the U.A.E. goods that were reexported to Iran. Additionally, from on or about December 1, 2009, to on or about February 25, 2011, Ubiquiti appears to have violated § 560.204 of the ITSR by engaging in 13 exports of goods for broadband wireless connectivity to a distributor located in Greece, with knowledge or reason to know that the goods were intended specifically for supply, transshipment, or reexportation, directly or indirectly, to Iran. OFAC Recent Actions Violation of Iran sanctions
Bank of Moscow 201401 $ 9,492,525.- OFAC Joint-Stock Commercial Bank “Bank of Moscow” Settles Potential Civil Liability for Alleged Violations of Executive Order 13382 of June 28, 2005, and the Weapons of Mass Destruction Proliferators Sanctions Regulations: Joint-Stock Commercial Bank “Bank of Moscow” (“Bank of Moscow”), of Moscow, Russian Federation, has agreed to remit $9,492,525 to settle potential civil liability for 69 alleged violations of Executive Order 13382 of June 28, 2005 (“E.O. 13382”), and the Weapons of Mass Destruction Proliferators Sanctions Regulations, 31 C.F.R. part 544. Bank of Moscow did not voluntarily self-disclose the alleged violations and the alleged violations constitute a non-egregious case. The total base penalty amount for the alleged violations was $14,063,000.

On October 25, 2007, OFAC designated Bank Melli Iran ZAO, Moscow, Russia (“BMI Russia”) pursuant to E.O. 13382. From January 9, 2008, to July 13, 2009, Bank of Moscow sent 69 funds transfers totaling $41,306,113 for or on behalf of BMI Russia that were processed to or through the United States. None of the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) payment messages sent by Bank of Moscow in connection with these funds transfers included specific references to “Melli,” “Iran,” or BMI Russia’s SWIFT Business Identifier Code, but instead identified the bank through abbreviations such as “BMICJSCMOSCOWRUSSIA” (a reference to Bank Melli Iran Closed Joint Stock Company Moscow Russia) or “BMI CJSC.” U.S. financial institutions processed all 69 of the funds transfers straight through without manual intervention. The settlement

US Department of the Treasury Latest Actions

Violation of sanctions
Clearstream Banking, S.A. 201401 $ 152 Mio OFAC The U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) today announced a $152 million agreement with Clearstream Banking, S.A. (“Clearstream”) to settle the institution’s potential civil liability for apparent violations of U.S. sanctions against Iran. Today’s settlement resolves OFAC’s investigation surrounding Clearstream’s use of its omnibus account with a U.S. financial institution to hold securities on behalf of the Central Bank of Iran, in apparent violation of the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560.

For more information on this action, please visit the following web notice or visit the following link for Treasury's press release on this topic. OFAC has also issued a Frequently Asked Question related to OFAC compliance for securities intermediaries and custodians.

Violation of sanctions
HSBC 201312 $ 32,400.- OFAC HSBC Bank USA, N.A. (“HBUS”) has agreed to remit $32,400 to settle potential civil liability for three apparent violations of the Global Terrorism Sanctions Regulations, 31 C.F.R. part 594.

The Office of Foreign Assets Control (“OFAC”) determined that HBUS voluntarily self-disclosed the apparent violations to OFAC and that the apparent violations constituted a non-egregious case. OFAC concluded that the apparent violations described below were not the result of willful or reckless conduct. The total base penalty amount for the apparent violations was $20,083. On December 9, 2010, OFAC designated Husayn Tajideen (also known as Hussein Tajideen) and Tajco as Specially Designated Global Terrorists (“SDGTs”) and added them to the Specially Designated Nationals and Blocked Persons List (“SDN List”). That same day, HBUS updated its interdiction software to reflect these designations. On December 10, 2010, HBUS received an $11,492.86 funds transfer originated by a third-country financial institution on behalf of that institution’s customer, Tajco, destined for the HSBC Bank Middle East Limited (“HBME”) account of a food production and distribution company. HBUS’ interdiction software identified the payment’s originator as a potential match to the SDGT Tajco and routed the payment into a suspense queue for manual review. OFAC Recent Actions

The Office of Foreign Assets Control (“OFAC”) determined that HBUS voluntarily self-disclosed the apparent violations to OFAC and that the apparent violations constituted a non-egregious case. OFAC concluded that the apparent violations described below were not the result of willful or reckless conduct.
RBS 201312 $100 Million + C&D OFAC, FED, NY State As part of a combined $100 million settlement with federal and state government agencies, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) today announced a $33 million agreement with the Royal Bank of Scotland plc (RBS) to settle its potential liability for apparent violations of U.S. sanctions regulations. Today’s settlement resolves OFAC’s investigation into apparent violations by RBS of U.S sanctions programs relating to Iran, Sudan, Burma, and Cuba. C&D Order - US Dept of Treasury Press Release Iran, Sudan, Burma and Cuban sanction violations

Payment practices used by RBS that interfered with the implementation of U.S. economic sanctions by financial institutions in the United States and resulted in apparent violations of the Iranian Transactions Regulations, 31 C.F.R. part 560; the Sudanese Sanctions Regulations, 31 C.F.R. part 538; the Burmese Sanctions Regulations, 31 C.F.R. part 537; and the Cuban Assets Control Regulations, 31 C.F.R. part 515. RBS' settlement with OFAC is simultaneous with the bank's settlements with the Board of Governors of the Federal Reserve System and the New York State Department of Financial Services.

Compass Bank 201312 $19,125.- OFAC Compass Bank (“Compass”), Birmingham, Alabama has agreed to remit $19,125 to settle potential civil liability for one apparent violation of §§ 538.205 and 538.206 of the Sudanese Sanctions Regulations (“SSR”), 31 C.F.R. part 538. The Office of Foreign Assets Control (“OFAC”) has determined that Compass did not voluntarily self-disclose the apparent violation and that the apparent violation constituted a non-egregious case. OFAC concluded that the apparent violation described below was not the result of willful or reckless conduct. OFAC Recent Actions Sudan Sanctions

Willful reckless conduct

Former Honeywell employee 201311 Debarring State Department’s Office of Defense Trade Controls Compliance in the Bureau of Political-Military Affairs Honeywell voluntarily disclosed to the Department numerous ITAR violations carried out by Ms. Lesmeister, its senior export compliance officer in Clearwater, Florida, between 2008 and 2012. Ms. Lesmeister, who had worked in export compliance at Honeywell for twenty-seven years, used her position to circumvent Honeywell’s export compliance program in the fabrication of various export control documents that Ms. Lesmeister presented as Department of State authorizations. Relying on these falsified authorizations, Honeywell exported defense articles, including technical data, and provided defense services to various foreign persons without Department approval in violation of the AECA and ITAR. US Department of State Violations of AECA and ITAR
Weatherford International Ltd. 201311 $ 91,026,450 OFAC Weatherford International Ltd. and its subsidiaries and affiliates Weatherford Oil Tool Middle East Ltd., Weatherford Production Optimisation (UK) Ltd., formerly known as eProduction Solutions U.K. Ltd., eProduction Solutions, LLC, formerly known as eProduction Solutions, Inc., Precision Energy Services ULC, formerly known as Precision Energy Services Ltd., and Precision Energy Services Colombia Ltd. (collectively, “Weatherford”), have agreed to settle potential civil liability for apparent violations of the Cuban Assets Control Regulations (“CACR”), 31 C.F.R. part 515; the Iranian Transactions and Sanctions Regulations (“ITSR”),1 31 C.F.R. part 560; and the Sudanese Sanctions Regulations (“SSR”), 31 C.F.R. part 538, for $91,026,450. OFAC Recent Actions Multiple programs

Cuba, Iran, Sudan

Precision Image Corporation (PIC) 201310 $ 300,000 DoJ The U.S. Department of Justice announced this week that a Seattle area printed circuit board (PCB) company and its owner were sentenced for violating the Arms Export Control Act and for wire fraud for exporting ITAR-controlled technical data to Taiwan without the required State Department license.

Precision Image Corporation (PIC) was fined $300,000 for violating the Arms Export Control Act and the company's owner, Mr. Chi-Kwan Hwa was sentenced for wire fraud to four months in prison and six months of home detention as part of his two years of supervised release.

According to the Justice Department, PIC obtained contracts worth $180,034 to supply PCBs to the U.S. Navy. The contract required the PCBs to be produced in the U.S. In addition, the Navy supplied PIC with ITAR-controlled technical data that contained the technical specifications for the PCBs. The Justice Department claimed that Mr. Hwa was aware that the ITAR-controlled technical data could not be exported without a license issued by the State Department's Directorate of Defense Trade Controls (DDTC) but sent the controlled technical data to a manufacturer in Taiwan without the required license. The Taiwan-produced PCBs were later supplied to the Navy and Mr. Hwa claimed that the PCBs were made in the U.S. DoJ Press Release

Violating ITAR Export controls
KMT Group AB 201310 $ 125,000 OFAC KMT Group AB Settles Potential Civil Liability for Apparent Violations of the Iranian Transactions and Sanctions Regulations. KMT Group AB (“KMT Group”), of Stockholm, Sweden, has agreed to pay $125,000 on behalf of its subsidiaries, KMT Aqua-Dyne, Inc. (“KMT AD”) and KMT GmbH, to settle potential civil liability for apparent violations of the Iranian Transactions and Sanctions Regulations (the “ITSR”).1 KMT AD is a U.S.-based manufacturer of high pressure water jetting pump units (“pumps”) used for industrial pipe cleaning, surface preparation, hydrostatic testing, and hydro demolition. KMT GmbH, a German affiliate of KMT AD, acts as a sales agent for the pumps.

On February 24, 2009, and March 6, 2009, KMT GmbH appears to have violated §§ 560.203 and 560.204 of the ITSR when it attempted to export nine pumps from the United States to Iran, and exported, reexported, sold, or supplied the pumps from the United States to Hamburg, Germany, with knowledge or reason to know that the goods were intended specifically for reexportation to South Pars Industrial Gas Complex in Tehran, Iran. The U.S. Department of Homeland Security’s Customs and Border Protection (“CBP”) seized the nine pumps (and partial payment for the pumps) upon redelivery from Europe to the United States. This matter was not voluntarily self-disclosed to OFAC and the apparent violations do not constitute an egregious case. The base penalty amount for the apparent violations was $500,000. OFAC Recent Actions

Sanction violations, Iran
Ameron International Corporation 201310 $ 434,700 OFAC Ameron International Corporation Settles Potential Civil Liability for Apparent Violations of the Iranian Transactions and Sanctions Regulations and Cuban Assets Control Regulations: Ameron International Corporation (“Ameron”), Pasadena, CA, has agreed to pay $434,700 to settle potential civil liability for apparent violations of the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (the “ITSR”),1 and the Cuban Assets Control Regulations, 31 C.F.R. part 515 (the “CACR”), occurring on or about March 14, 2005, through on or about October 5, 2006. In apparent violation of the ITSR, Ameron: (1) approved, on two occasions, capital expenditure requests made by Ameron B.V., a Dutch subsidiary of Ameron, and Ameron (Pte) Ltd. (“PTE”), a Singaporean subsidiary of Ameron, to purchase toolings and other equipment needed to fulfill orders for a South Pars project, located in Iran; (2) referred to its foreign subsidiaries three business opportunities involving the sale of goods to Iran that Ameron itself could not have directly performed as a result of the prohibitions set forth in the ITSR; and (3) provided testing services from its Burkburnett, Texas facility to PTE with reason to know that they would be provided to Arvand Petrochemical, an entity located in Iran. Furthermore, in apparent violation of the CACR, the Colombian branch office of Ameron’s U.S. subsidiary, American Pipe & Construction International, on two occasions sold concrete pipe to a consortium in which a Cuban company was a partner. OFAC Recent Actions Sanction violations, Cuba & Iran
Rabo 201310 $ 1 Billion CFTC, DoJ, FCA, DNB (Dutch Regulator) Rabobank Groep, the Netherlands’, will pay about $1 billion to resolve regulators’ claims that it tried to manipulate benchmark interest rates, two people with knowledge of the matter said. The settlement, which could be announced as soon as next week, will resolve complaints from the U.S. Commodity Futures Trading Commission and Justice Department, the U.K.’s Financial Conduct Authority, and Dutch regulators. Bloomberg News Item Libor rigging
Diebold 201310 $ 48 Million SEC & DoJ The SEC alleges that subsidiaries of Diebold Inc. in China and Indonesia spent approximately $1.8 million on travel, entertainment, and other improper gifts for senior officials with the ability to influence the banks’ purchasing decisions. Government-owned bank officials in China and Indonesia were rewarded with free trips to popular tourist destinations in the U.S. and Europe, and Diebold’s expenditures were falsely recorded in the company’s books and records as legitimate training expenses. Diebold’s subsidiary in China also provided dozens of government bank officials with annual cash gifts ranging from less than $100 to more than $600. The SEC further alleges that Diebold falsified books and records to hide approximately $1.2 million of bribes paid to employees at privately owned banks in Russia.

Diebold has agreed to pay more than $48 million to settle the SEC’s charges and resolve a parallel criminal matter announced today by the U.S. Department of Justice. SEC Press Release

FCPA Violations
Alma Investment LLC (UAE) 201310 $ 1.5 Million OFAC OFAC has assessed a penalty of $1,500,000 against Alma Investment LLC (“Alma”), a UAE-based investment and advising company that also appears to serve as a general trading company, for violating the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (the “Regulations”). From on or about September 30, 2009, to on or about February 9, 2010, Alma originated at least six electronic funds transfers, totaling $103,283, processed through financial institutions located in the United States for the benefit of persons in Iran. OFAC determined that Alma violated the prohibition against the exportation of services, directly or indirectly, from the United States to Iran or the Government of Iran set forth in § 560.204 of the Regulations. OFAC determined that Alma did not voluntarily self-disclose the violations to OFAC and that the violations constituted an egregious case.

The assessed penalty amount reflects OFAC’s consideration of the following facts and circumstances, pursuant to the General Factors under OFAC’s Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A: Alma acted at least recklessly, and apparently willfully, by concealing and/or omitting material information in funds transfers originated by Alma for processing through the United States; Alma’s management, likely including senior management, had actual knowledge and/or reason to know of the conduct that led to the violations, as Alma appears to be associated with multiple Iranian entities and facilitated Iranian-related payments through the United States; Alma’s conduct resulted in harm, and potentially significant harm, to U.S. sanctions program objectives with respect to Iran, and prevented U.S. financial institutions from assessing the permissibility of transactions by omitting references to OFAC-sanctioned countries or persons in transactions processed through the United States; Alma does not appear to have an OFAC compliance program; Alma did not cooperate with OFAC during the course of its investigation; and assessing a civil monetary penalty against Alma will have a compliance/deterrence effect by encouraging greater due diligence by foreign financial institutions that maintain accounts for third-country trading companies and/or money transmitters. Alma has not received a penalty notice or Finding of Violation from OFAC in the five years preceding the date of the transactions giving rise to the apparent violations. OFAC Enforcement Actions

Sanction violations, Iran
Finans Kiymetli Madenler Turizm Otomotiv Gida Tekstil San. Ve Tic 201309 $ 750,000​ OFAC Finans Kiymetli Madenler Turizm Otomotiv Gida Tekstil San. Ve Tic (“Finans”), a Turkey-based trading company, for violating the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (the “Regulations”). From on or about February 21, 2012, to on or about May 29, 2012, Finans originated at least three electronic funds transfers, totaling $257,808, processed through financial institutions located in the United States for the benefit of the Government of Iran and/or persons in Iran. Two of those transactions were blocked by the U.S. financial institution. OFAC determined that Finans violated the prohibition against the exportation of services, directly or indirectly, from the United States to Iran or the Government of Iran set forth in § 560.204 of the Regulations.

OFAC determined that Finans did not voluntarily self-disclose the violations to OFAC and that the violations constituted an egregious case. OFAC Enforcement Actions

Sanction busting, Iran
Saddle River Valley Bank 201309 $ 8.2 Million FinCen (OCC) “It’s pretty remarkable that a small community bank in suburban New Jersey was attracting more than a billion dollars in transactions with customers in Mexico and the Dominican Republic, and nobody thought it was too good to be true,” FinCEN Director Jennifer Shasky Calvery said. “Banks of all sizes, in any part of the country, may be tempted by such lucrative ventures. However, banks must use common sense in evaluating customer risk or seemingly lucrative business could become quite the opposite.” - SRVB willfully violated the Bank Secrecy Act, which requires adequate steps to prevent money laundering, according to the Treasury Department’s Financial Crimes Enforcement Network. The $8.2 million penalty represents most of the bank’s assets, which are valued at $9.2 million - The two-branch bank, closed last year, failed to properly monitor transactions for three currency exchange businesses in Mexico and one in the Dominican Republican from 2009 to 2011, U.S. Attorney Paul Fishman said today in a statement. The U.S. has warned that such businesses, known as casas de cambio, often launder the proceeds of narcotics sales Press Release & Assessment Willful blindness & money laundering
TD Bank 201309 $ 37.5 million

& $ 15 million

FinCen (OCC)

& SEC

From April 2008 through September 2009, the Bank willfully violated the Bank Secrecy Act’s reporting requirements by failing to detect and adequately report suspicious activities in a timely manner. During that period, Rothstein orchestrated a major Ponzi scheme by fraudently inducing victims to invest in purported settlements involving whistleblower and sexual harassment lawsuits. Thousands of transactions flowed through his multiple law firm accounts at TD Bank which included transactions related to Rothstein’s Ponzi scheme. While the Rothstein law firm’s accounts alerted in TD Bank’s anti-money laundering surveillance software for suspicious activity, TD Bank employees failed to recognize the suspicious activity and file SARs in a timely manner. On January 27, 2010, Rothstein pleaded guilty to a racketeering conspiracy in the United States District Court for the Southern District of Florida and is currently serving a 50-year prison sentence. FinCen Notice & Assessment Willful blindness concerning money laundering
World Fuel Services Corporation 201309 $ 39,501 OFAC World Fuel Services Corporation (“World Fuel”), Miami, FL, has agreed to pay $39,501 to settle potential civil liability for alleged violations of the Iranian Transactions Regulations (“ITR”),1 the Sudanese Sanctions Regulations (“SSR”), and the Cuban Assets Control Regulations (“CACR”). The alleged violations involve World Fuel’s facilitation of a sale by one of its non-U.S. affiliates of fuel for a vessel at port in Bandar Abbas, Iran, on or about June 23, 2008; the facilitation by a U.S. subsidiary of World Fuel of services and fuel purchases for an aircraft that stopped in Khartoum, Sudan, on or about January 29, 2009; and coordination services provided by two U.S. subsidiaries of World Fuel for 30 unlicensed flights to Cuba, between on or about March 18, 2007, and on or about April 13, 2009.

OFAC determined that World Fuel voluntarily self-disclosed the alleged violations of the ITR and SSR, but did not voluntarily self-disclose the alleged violations of the CACR, and that all of the alleged violations constitute a non-egregious case. The total transaction value for the alleged violations was $79,219, and the base penalty was $73,151. The settlement amount reflects OFAC’s consideration of the following facts and circumstances, pursuant to the General Factors under OFAC’s Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A: World Fuel has no history of prior OFAC violations; World Fuel cooperated with OFAC’s investigation, including signing a statute of limitations tolling agreement; and World Fuel has enhanced its OFAC compliance plan. OFAC Recent Settlements

Settles Potential Civil Liability for Alleged Violations of Iranian Transactions Regulations, Sudanese Sanctions Regulations, and Cuban Assets Control Regulations
Communications and Power Industries LLC 201309 $346,530 OFAC Communications and Power Industries LLC Settles Potential Civil Liability for Apparent Violations of Iranian Transactions and Sanctions Regulations: Communications and Power Industries LLC (“CPI”), Palo Alto, CA, has agreed to pay $346,530 to settle potential civil liability for apparent violations of the Iranian Transactions and Sanctions Regulations, 31 C.F.R. part 560 (the “Regulations”),1 occurring on or about March 31, 2006, to on or about October 22, 2010. The Switzerland branch office of CPI’s U.S. subsidiary, Communications and Power Industries International Inc., sold, on 30 occasions, x-ray generators to an entity in Tehran, Iran; attempted to sell, on two occasions, x-ray generators and a medical digital imaging workstation to an entity in Tehran, Iran; at the request of an entity in Tehran, Iran, directed its affiliate in Canada, Communications & Power Industries Canada Inc. (“CPI Canada”), to make three shipments of x-ray generators and one shipment of automatic exposure control field kits to an entity in Istanbul, Turkey; and referred to CPI Canada an order that it had received from an entity in Tehran, Iran for a medical digital imaging workstation and one x-ray generator.

The base penalty amount for the apparent violations was $1,100,096. OFAC determined that CPI voluntarily self-disclosed this matter to OFAC and that the apparent violations constitute a non-egregious case. US Department of the Treasury Penalty Release

Settles Potential Civil Liability for Apparent Violations of Iranian Transactions and Sanctions Regulations
Deutsche Bank Trust Company Americas 201309 $18,900 OFAC Deutsche Bank Trust Company Americas (“DBTCA”) has agreed to remit $18,900 to settle potential civil liability for two apparent violations of Executive Order 13382 of June 28, 2005, “Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters” (“E.O. 13382”). The Office of Foreign Assets Control (“OFAC”) has determined that DBTCA did not voluntarily self-disclose the apparent violations and that the apparent violations constituted a non-egregious case. OFAC concluded that the apparent violations described below were not the result of willful or reckless conduct. The total base penalty amount for the apparent violations was $35,000.

On October 24, 2008, DBTCA processed a $3,177 funds transfer originated by Hansabanka’s customer, Air Baltic Corporation, destined for the account of “I.A.C.” at Commerzbank AG, Frankfurt, Germany. The originator to beneficiary information field of the payment instructions contained the reference “MELIGB2L,” the Business Identifier Code (“BIC”) for the London branch of Bank Melli. OFAC designated Bank Melli, including all its offices worldwide, on October 25, 2007, pursuant to E.O. 13382. DBTCA processed the payment straight through and without manual intervention. DBTCA later determined that the beneficiary “I.A.C.” referred to the “Iran Airport Company.”

On March 11, 2009, DBTCA rejected rather than blocked a $10,000 funds transfer originated by Intercontinental Bank Plc, Lagos, Nigeria, on behalf of Amsergs Nigeria Ltd., destined for the account of Chahar Mahal va Bakhtiary Yeast Co., Isfahan, Iran, at the Export Development Bank of Iran (“EDBI”). OFAC designated EDBI on October 22, 2008, pursuant to E.O 13382. DBTCA stated that its automated interdiction software stopped the transaction for review due to a number of potential matches, including to Iran and to EDBI. A total of seven DBTCA employees, including a senior member of the review team who was the final reviewer for escalated OFAC matters, reviewed this transaction and failed to notice the reference to EDBI in the payment. Based on their review, DBTCA rejected the transaction based on the beneficiary’s location in Iran, rather than blocking the transaction due to the involvement of EDBI. US Department of Treasury Press Release

Apparent Violations of Executive Order 13382 of June 28, 2005

Iran regulations

Meggitt-USA, Inc. 201308 Civil penalty of $25 million, of which $3 million will be paid in installments and the remainder suspended Department of State Directorate of Defense & Trade Controls The settlement was reached after an extensive compliance review by the Department of State’s Office of Defense Trade Controls Compliance in the Bureau of Political-Military Affairs of multiple disclosures submitted by Meggitt group subsidiaries involving hundreds of potential civil violations of the AECA and ITAR, of which sixty-seven are alleged as charges. This settlement highlights the Department’s responsibility to protect U.S. defense hardware and technology from unauthorized use and ensure compliance with the AECA and ITAR.

Over the course of several years, Meggitt subsidiaries and business units disclosed to the Department hundreds of ITAR violations beginning in the mid-1990s, largely involving the unauthorized export of defense articles, including technical data, the unauthorized provision of defense services, violation of the terms of provisos or other limitations of license authorizations, and the failure to maintain specific records involving ITAR-controlled transactions.

Under the terms of the 30-month consent agreement with the Department, Meggit is assessed a civil penalty of $25 million, of which $3 million will be paid in installments and the remainder suspended on the condition the Department approves expenditures for self-initiated, pre-consent agreement remedial compliance measures and consent agreement-authorized remedial compliance costs. In addition, an Internal Special Compliance Official will be engaged by Meggitt to oversee the consent agreement, which will also require the company to implement additional compliance measures, including enhanced policies and procedures, to review external audit programs and conduct audit measures pursuant to the agreement, to review jurisdictional determinations of commodities, and report on system upgrades and improvements.

Meggitt disclosed nearly all of the ITAR violations resolved in this settlement voluntarily to the Department, many of which were the result of post-acquisition review by Meggitt, acknowledged their serious nature, cooperated with Department reviews, and implemented or has planned extensive remedial measures throughout its subsidiaries. For these reasons, the Department determined that an administrative debarment or suspension of Meggitt was not appropriate at this time. US Department of State Press Release

Export Violations of the Arms Export Controls Act ("AECA")(22 U.S.C. § 2778) and the International Traffic in Arms Regulations ("ITAR")(22 C.F.R. parts 120-130). The settlement was resolved pursuant to ITAR Section 128.11 wherein Meggitt agreed to enter into a consent agreement with the Department
VISA International Service Association 201308 Finding of Violation OFAC The U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) has issued a Finding of Violation to VISA International Service Association (“VISA”) for violations of the Reporting, Procedures and Penalties Regulations (the “RPPR”), 31 C.F.R. part 501.

On November 9, 2007, VISA violated § 501.603(b)(1) of the RPPR when it failed to file two initial reports of blocked property with OFAC within 10 business days of blocking two accounts in which Bank Melli had an interest. Bank Melli is an entity whose assets are blocked pursuant to Executive Order 13382 of June 28, 2005, “Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters.” On October 1, 2008, VISA violated § 501.603(b)(2) of the RPPR when it failed to file its 2008 annual report of blocked property in connection with the Bank Melli accounts.1 While VISA appears to have had written procedures with respect to filing reports of blocked property, it only disclosed these blockings in 2009 and stated that the violations were due to an inadvertent oversight. Separately, on September 6, 2011, VISA violated § 501.603(b)(1) of the RPPR when it failed to file an initial report of blocked property with OFAC within 10 business days of blocking funds in which Real Estate Bank, a blocked Government of Syria-owned bank, had an interest. VISA stated that it failed to meet the reporting deadline with respect to the Real Estate Bank funds because it was attempting to determine whether fees should be deducted from the funds owed to Real Estate Bank before filing a report with OFAC. OFAC Recent Actions

The determination to issue a Finding of Violation to VISA reflects OFAC’s consideration of the following facts and circumstances, pursuant to the General Factors under OFAC’s Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A. A Finding of Violation is appropriate given that VISA is a large and commercially sophisticated financial institution whose failure to submit the above-referenced Bank Melli reports to OFAC denied the U.S. government the benefit of accurate information in making its policy decisions, but did not result in an economic benefit being conferred to a sanctioned party. VISA also has not received a penalty notice or Finding of Violation from OFAC in the five years preceding the date of the failure to report the blocked property that gave rise to the violations. A Finding of Violation is also likely to promote compliance with OFAC reporting obligations.
Guaranty Trust Bank (UK) Ltd 201308 £525,000 FCA AML failings are particularly serious as they affected customers based in countries associated with a higher risk of money laundering, bribery or corruption, including accounts held by politically exposed persons (PEPs).

GT Bank, a subsidiary of Nigerian Guaranty Trust Bank PLC, opened an office in London in May 2008 offering retail and wholesale banking products and services to private, corporate and institutional clients.

The FCA’s predecessor, the Financial Services Authority (FSA), reviewed GT Bank’s controls as part of a thematic review into banks’ management of money-laundering risks in 2010. The review of GT Bank raised significant concerns and after further investigation, the FCA found that GT Bank failed to establish effective AML policies and procedures when they established their UK operations. This included failures to:

  • Assess or document potential money-laundering risks posed by higher risk customers
  • Screen prospective customers against sanction lists or databases of PEPs
  • Obtain and/or document senior management approval to establish a business relationship with PEPs
  • Establish the purpose and intended nature of prospective customers’ accounts or the sources of higher risk customers’ wealth or funds
  • Review the activity of higher risk customers’ accounts and check that the information they held on these customers was up to date.

As a result, GT Bank was not able to fully understand or assess their higher risk customers' activities. This breached FCA Principle 3, which requires firms to take reasonable care to organise and control their affairs responsibly and effectively, and a number of our rules on systems and controls. FCA Press Release

Failures in its anti-money laundering controls for high risk customers between May 2008 and June 2010.
JP Morgan Chase 201307 $410 Mio FERC JPMorgan Chase has agreed to pay $410 million to the US energy regulator (FERC), a move that will allow the bank to settle accusations that traders in its Houston offices manipulated electricity markets in California and Michigan. The agreement announced on Tuesday is a record settlement for the regulator, the Federal Energy Regulatory Commission, which has ramped up its policing of Wall Street trading in recent months. NYT News Item & FERC Settlement Market manipulation
American Express Travel Related Services Company, Inc. 201307 $5,226,120 OFAC Settles Potential Civil Liability for Apparent Violations of the Cuban Assets Control Regulations: American Express Travel Related Services Company, Inc. (“TRS”), New York, NY, has agreed to pay $5,226,120 to settle potential civil liability for apparent violations of the Cuban Assets Control Regulations, 31 C.F.R. part 515 (the “CACR”). From on or about December 15, 2005, through on or about November 1, 2011, TRS dealt in property in which Cuba or its nationals had an interest when its foreign branch offices and subsidiaries issued 14,487 tickets for travel between Cuba and countries other than the United States, many of which had adopted “antidote” measures (blocking statutes) prohibiting compliance with the CACR, without authorization from OFAC.

OFAC determined that TRS voluntarily self-disclosed this matter to OFAC and that the apparent violations occurred “subsequent to agency notice” in 1995. TRS was investigated by OFAC in 1995 and 1996 for similar apparent violations of the CACR arising from the provision of travel services to and from Cuba by a recently acquired subsidiary at the time. OFAC provided written notice to TRS that such conduct constituted apparent violations of the CACR. OFAC Penalty Release

Sanction Busting

TRS demonstrated reckless disregard for the CACR, as evidenced by the apparent violations occurring subsequent to notice by the agency in 1995, the lack of oversight by U.S. management of TRS’ foreign offices, and the continuing failure to implement effective mechanisms for detecting Cuba travel bookings until late 2010, after having informed OFAC in OFAC’s investigation of TRS in 1995 and 1996 that it would do so; TRS’ U.S. management should have known that the conduct resulting in the apparent violations would or might take place; the apparent violations caused significant harm to U.S. sanctions program objectives regarding Cuba; etc

Stanley Drilling Equipment & Supply, Inc. 201307 $84,240 OFAC Settles Potential Civil Liability for Alleged Violations of the Iranian Transactions Regulations: Stanley Drilling Equipment & Supply, Inc. ("Stanley Drilling"), Houston, TX, has agreed to pay $84,240 to settle potential civil liability for alleged violations of the Iranian Transactions Regulations, 31 C.F.R. part 560, which were renamed, amended, and reissued as the Iranian Transactions and Sanctions Regulations on October 22, 2012. The alleged violations by Stanley Drilling occurred between June 16, 2008, and October 17, 2008, when Stanley Drilling attempted to export four shipments and successfully exported two shipments of goods, valued at $93,329, from the United States to the United Arab Emirates, with reason to know that the shipments were intended specifically for supply, transshipment, or reexportation to an oil drilling rig located in Iranian waters.

The settlement amount reflects OFAC’s consideration of the following facts and circumstances, pursuant to the General Factors under OFAC’s Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A: Stanley Drilling did not have an OFAC compliance program in place at the time of the violations; the transactions were particularly harmful to U.S. sanctions program objectives because they aided the development of Iranian petroleum resources; the harm to OFAC sanctions program objectives was lessened because four of the six shipments were detained prior to leaving the United States; Stanley Drilling did not appear to have actual knowledge that the drilling rig was destined for or located in Iranian waters at the time of the subject transactions (although Stanley Drilling had reason to know these facts, because they were publicly and readily available before and at the time of the subject transactions); Stanley Drilling is a small company; and Stanley Drilling has no history of prior OFAC violations.

Sanction busting

Iranian Transactions Regulations, 31 C.F.R. part 560, which were renamed, amended, and reissued as the Iranian Transactions and Sanctions Regulations on October 22, 2012 OFAC Penalty Release

Intesa Sanpaolo S.p.A. 201306 $2,949,030 OFAC As early as the late 1990s, Intesa maintained a customer relationship with Irasco S.r.l. (“Irasco”), an Italian company headquartered in Genoa, Italy that is owned or controlled by the Government of Iran (“GOI”). Despite Irasco’s ownership and line of business as an exporter of goods to Iran, and its financial and commercial associations with Iranian state-owned financial institutions, companies, and projects, Intesa failed to identify Irasco as meeting the definition of the GOI in the ITR and, at the time of the apparent violations, did not take appropriate measures to prevent the bank from processing transactions for or on behalf of Irasco that terminated in the United States and/or with U.S. persons. Intesa’s payment instructions for these transactions all identified Irasco as the ordering customer.

Separately, Intesa processed approximately 120 transactions to or through the United States that involved Cuba or Sudan. Intesa does not appear to have implemented or utilized special procedures or payment practices in order to process these payments to or through the United States. Intesa processed 53 wire transfers totaling approximately $1,643,326 between October 29, 2004, and March 12, 2008, involving Cuba in apparent violation of the CACR. The base penalty amount for this set of apparent violations was $1,867,000. Intesa processed 31 wire transfers for Irasco totaling $3,142,565 between November 1, 2004, and December 8, 2006, in apparent violation of the ITR. The total base penalty for this set of apparent violations was $3,371,000. Intesa processed 67 funds transfers involving Sudan totaling $2,858,065 between November 4, 2004, and October 29, 2007, in apparent violation of the SSR. The total base penalty for this set of apparent violations was $4,124,000.

Sanction busting

Civil liability for apparent violations of the Cuban Assets Control Regulations (“CACR”), 31 C.F.R. part 515; the Sudanese Sanctions Regulations (“SSR”), 31 C.F.R. part 538; and the Iranian Transactions Regulations (“ITR”), 31 C.F.R. part 560.1 The Office of Foreign Assets Control (“OFAC”) has determined that Intesa did not voluntarily self-disclose the apparent violations and that the apparent violations constituted a non-egregious case. OFAC Penalty Release

Wells Fargo Bank, N.A. 201306 $23,937 OFAC Between December 12, 2007, and March 11, 2010, Wells Fargo maintained accounts for, and processed 58 transactions totaling $22,211.94 on behalf of, Claudia Aguirre Sanchez (“Aguirre Sanchez”). On December 12, 2007, OFAC designated Aguirre Sanchez pursuant to the Foreign Narcotics Kingpin Designation Act, 21 U.S.C. 1901 et seq. (the “Kingpin Act”). Wells Fargo opened the accounts prior to the December 2007 designation under the name “Claudia Aguirre.” When opening the accounts, the customer provided Wells Fargo with a U.S. address, a U.S. Social Security Number, and a date of birth. The date of birth provided in connection with opening the accounts matched the date of birth for Aguirre Sanchez on OFAC’s list of Specially Designated Nationals and Blocked Persons (“SDN List”). Separately, between November 14, 2008, and May 6, 2010, Wells Fargo maintained accounts for, and processed 746 transactions totaling $53,780.39 on behalf of, Carlos Antonio Ruelas Topete (“Ruelas Topete”). OFAC designated Ruelas Topete pursuant to the Kingpin Act on January 12, 2005. Wells Fargo opened the accounts subsequent to that designation under the name “Carlos A. Ruelas.” When opening the accounts, the customer provided Wells Fargo with a U.S. address, a U.S. Social Security Number, and a date of birth. The date of birth provided in connection with opening the accounts matched the date of birth for Ruelas Topete on the SDN List. Settles Potential Liability for Apparent Violations of the Foreign Narcotics Kingpin Sanctions Regulations OFAC Penalty Release
UBS France 201306 €10 Million ACP, Bank of France's regulatory arm French unit of UBS has been fined 10m euros (£8.5m; $13m) by regulators for failing to tighten proper controls on money-laundering and tax evasion. UBS and its French branch are being formally investigated for allegedly helping wealthy clients open undeclared bank accounts in Switzerland. Source: BBC News & ACP Press Release (in French) Lax controls on money laundering and tax evasion
Lebanese Canadian Bank (LCB) 201306 $102 Million DoJ, DEA, US Treasury, FinCen From approximately January 2007 to early 2011, at least $329 million was transferred by wire from LCB and other financial institutions, primarily two Lebanese money exchange houses, to the United States for the purchase of used cars that were then shipped to West Africa. Cash from the sale of the cars, along with the proceeds of narcotics trafficking, were funneled to Lebanon through Hizballah-controlled money laundering channels. LCB played a key role in these money laundering channels and conducted business with a number of Hizballah-related entities. Hizballah is a U.S. Department of State designated Foreign Terrorist Organization, a Specially Designated Terrorist, and a Specially Designated Global Terrorist.

On February 10, 2011, the U.S. Department of the Treasury, Financial Crimes Enforcement Network ("FinCEN") issued a finding and proposed rule, pursuant to the USA Patriot Act, that LCB is a financial institution of primary money laundering concern, based on, among other things, FinCEN’s determination that there was reason to believe that LCB had been routinely used by drug traffickers and money launderers operating in various countries in Central and South America, Europe, Africa, and the Middle East. FinCEN also determined that there was reason to believe that LCB managers were complicit in the network’s money laundering activities.

Following the FinCEN action, another Lebanese financial institution, Société Générale de Banque au Liban ("SGBL"), acquired most of the assets of LCB. In connection with the purchase, $150 million was placed in an escrow account at Banque Libano Française SAL ("BLF") in Lebanon. In August 2012, the Government seized $150 million from a BLF correspondent account in the United States based on a provision of U.S. law allowing seizure of such funds as a substitute for the funds held in escrow in Lebanon (the "Seized Funds").

The settlement order requires LCB to forfeit $102 million of the Seized Funds to the United States. The settlement order also provides that, to settle claims brought by SGBL for $90 million of the Seized Funds, LCB will be required to pay SGBL an additional $12 million, and make provisions for additional payments based on separate agreements between LCB and SGBL. SGBL will also receive the remaining $48 million of the Seized Funds.

Money laundering with management involvement

Lax money laundering checks

US Patriot Act violation

Bank of Tokyo-Mitsubishi UFJ 201306 $250 Million State of New York New York State has imposed a $250 million fine on the Bank of Tokyo-Mitsubishi UFJ over claims that the bank, Japan’s largest by assets, transferred illicit funds on behalf of Iran and other countries blacklisted from doing business in the United States, officials announced on Thursday.

The bank, which settled the case with New York’s financial regulator, Benjamin M. Lawsky, was accused of routing 28,000 payments worth about $100 billion through its New York branches. To avoid detection, the bank stripped information from wire transfers that could have exposed the identity of the Iranian entities. Source: NYT News Item

Iran sanction busting
Deloitte 201306 $10 Million & One Year-Ban New York Department of Financial Services (DFS) and the Federal Reserve Bank of New York Consulting firm Deloitte LLP agreed to pay a $10 million fine and accept a ban from working for New York state financial institutions for a year after an investigation into money-laundering schemes at a U.K. bank, according to state regulators. The New York-based firm was hired by Standard Chartered PLC in 2004 to launch an investigation into problems over its money-laundering protections. Assisted in Money Laundering
ATP Tour, Inc. 201306 $48,600 OFAC ATP Tour, Inc. (“ATP”), Ponte Vedra Beach, FL, has agreed to pay $48,600 to settle potential civil liability for alleged violations of the Iranian Transactions Regulations (the “Regulations”).1 OFAC alleged that between on or about May 8, 2007, and on or about July 15, 2010, ATP violated §§ 560.206 and 560.208 of the Regulations by approving, facilitating, and in some instances making, 18 salary payments to an individual who is ordinarily resident in Iran (the “individual”), for services rendered and expenses incurred in connection with ATP tournaments the individual officiated. OFAC Enforcement Iran sanctions busting

ATP violated §§ 560.206 and 560.208 of the Regulations by approving, facilitating, and in some instances making, 18 salary payments to an individual who is ordinarily resident in Iran

Archer Daniels Midland’s (ADM) 201305 $25 million (reserved) Unknown Potential FCPA settlement related to grain and feed exports. ADM opened an internal investigation into the issue in 2008, and announced in November 2012 that it had entered into related negotiations with U.S. authorities. FCPA
Total SA 201305 $398 million Department of Justice (DOJ) and Securities and Exchange Commission (SEC) Total Agrees to Pay $398 Million to Settle U.S. Bribe Probe (May 29, 2013)- Total SA has set aside 308 million Euros ($398 million) to pay an expected settlement with U.S. regulators over alleged bribes made to Iranian officials in violation of the Foreign Corrupt Practices Act (FCPA) - Total announced that the company and its former Middle East CEO are under investigation in France for the same allegations (May 27, 2013) FCPA - From 1995 to 2004, Total made about $60 million in bribe payments to an Iranian official in order to obtain oil rights in three oil and gas fields, according to the deferred prosecution agreement.
IBM 201305 Unknown Department of Justice (DOJ) DOJ has opened an FCPA investigation into transactions in Poland, Argentina, Bangladesh and Ukraine. According to the filing, “the DOJ is also seeking information regarding the company’s global FCPA compliance program and its public sector business.” FCPA
The American Steamship Owners Mutual Protection and Indemnity Association, Inc. 201305 $348,000 to settle potential liability for 55 apparent violations OFAC The American Club processed three Protection and Indemnity (“P&I”) insurance claims totaling approximately $40,584 between January 19, 2004, and June 28, 2006, involving Cuba in apparent violation of the CACR. The base penalty amount for this set of apparent violations was $61,000. The American Club processed 18 P&I insurance claims, issued six Letters of Undertaking/Guarantee (“LOU”), and issued one letter of indemnity as security or countersecurity for an LOU totaling approximately $685,774.26 between November 15, 2003, and March 13, 2007, involving Sudan in apparent violation of the SSR. The base penalty amount for this set of apparent violations was $844,000. The American Club processed 21 P&I insurance claims, one LOU, and issued five letters of indemnity as security or countersecurity for an LOU totaling $488,453.65 between January 27, 2004, and August 8, 2006, involving Iran in apparent violation of the ITR. The base penalty amount for this set of apparent violations was $824,000. The total base penalty amount for the apparent violations was $1,729,000. OFAC Settlement Cuban Assets Control Regulations (“CACR”), 31 C.F.R. part 515; the Sudanese Sanctions Regulations (“SSR”), 31 C.F.R. part 538; and the Iranian Transactions Regulations (“ITR”), 31 C.F.R. part 560.1 The Office of Foreign Assets Control (“OFAC”) has determined that the American Club did not voluntarily self-disclose the apparent violations. OFAC has also determined that the apparent violations constituted a non-egregious case.
Swiss bank EFGI's UK arm 201304 4.2 million UK pounds ($6.4 million) UK - FCA (Financial Conduct Authority) Britain's financial regulator has fined the UK subsidiary of Swiss private banking group EFG International 4.2 million pounds ($6.4 million) for failing to establish effective anti-money laundering controls for its wealthy customers. The Financial Conduct Authority (FCA) said UK regulators first became seriously concerned about procedures at EFG Private Bank Ltd during a spot check on how UK banks were managing money laundering risks in January 2011. Source: Reuters News Item & FCA Press Release Fined for lax money laundering checks
Computerlinks FZCO - Dubai 201304 $2.8 Million Department of Commerce Computerlinks FZCO (Dubai) sold $1.4 million worth of devices made by Blue Coat Systems Inc, of Sunnyvale, California, to the Syrian government in three separate transactions between about October 2010 and May 2011, the documents state. Reuters News Item Syria sanctions-busting
Toyota Motor Credit Corporation 201304 Agreed to remit $23,400 to settle potential civil liability OFAC Between April 6, 2008, and June 30, 2010, TMCC maintained a loan account for, and processed instead of blocked 26 loan payments totaling $14,449 on behalf of, Claudia Aguirre Sanchez, whom OFAC designated as a Specially Designated Narcotics Trafficker pursuant to the Foreign Narcotics Kingpin Designation Act, 21 U.S.C. 1901 et seq. and added to the Specially Designated Nationals and Blocked Persons List on December 12, 2007. OFAC Enforcement For 26 apparent violations of the Foreign Narcotics Kingpin Sanctions Regulations
SAN Corporation (“SAN”), Oxnard, CA, USA 201304 Settles Potential Civil Liability for an Alleged Violation of the Iranian Transactions and Sanctions Regulations

$ 22,500

OFAC SAN acted with reckless disregard for U.S. sanctions requirements when it sold goods to an entity in Kuwait with the knowledge that the goods were destined for Iran, and having been informed by the Iranian end user that shipping to Iran required an OFAC license; SAN did not fully cooperate with OFAC’s investigation, having provided incomplete and/or inaccurate statements to OFAC OFAC Settlement Violation of the Iranian Transactions and Sanctions Regulations
UPS 201303 DPA of UPS

$40 Million

DEA, Justice United Parcel Service Inc. (UPS) agreed to forfeit $40 million to settle a federal probe into shipments for illegal online pharmacies, admitting the company had information it was helping distribute controlled substances. From 2003 through 2010, UPS knew from employees that Internet pharmacies were using its services to distribute controlled substances and medicines without valid prescriptions in violation of the law, according to the agreement. UPS didn’t implement procedures to close the shipping accounts of these pharmacies, the Justice Department said. “Appropriate due diligence was not conducted on all accounts UPS employees knew or should have known were being used to ship pharmaceuticals ordered online to determine whether the businesses were operating legally,” according to the statement of facts. Source Bloomberg Willful Blindnes regarding distribution of controlled substances
Maritech Commercial Inc. 201303 Settles Potential Civil Liability for Alleged Violations of the Weapons of Mass Destruction Proliferators Sanctions Regulations

$ 20,900

OFAC Maritech provided fuel inspection services, valued at $9,868, on board five vessels affiliated with the Islamic Republic of Iran Shipping Lines (“IRISL”) that had been identified by OFAC as blocked property and placed on OFAC’s list of Specially Designated Nationals and Blocked Persons (“SDN List”). At the time of the transactions at issue in this case, Maritech was not screening the names or IMO numbers of any of the vessels to which it provided services against the SDN List. OFAC Settlements Violations of the Weapons of Mass Destruction Proliferators Sanctions Regulations
EGL 201303 Settles Potential Civil Liability for Alleged Violations of the CACR and the ITR

$ 139,650

OFAC The alleged violations of the CACR occurred from on or about April 19, 2005, to on or about December 15, 2008, when EGL’s foreign affiliates engaged in 280 transactions in which they provided freight forwarding services with respect to shipments to and from Cuba. The alleged violations of the ITR occurred from on or about August 15, 2008, to on or about October 27, 2008, when affiliates of EGL (then part of the CEVA Logistics group) acted as the freight forwarder of ten shipments containing oil rig supplies to Aban VIII, an oil drilling rig located in Iranian coastal waters and operated by Petropars, an affiliated company of the National Iranian Oil Company. OFAC Civil Penalties Violations of the Cuban Assets Control Regulations and the Iranian Transactions and Sanctions Regulations
Bank of Guam 201302 Settles Potential Civil Liability for Apparent Violations of the ITR

$27,000

OFAC On May 18, 2010, Bank of Guam originated a $2,265 wire transfer on behalf of a customer, destined for a trading company in the United Arab Emirates. The payment was for delivery charges related to the shipment of furniture and other items to Iran. Another U.S. financial institution rejected the transaction due to a reference to Iran in the originator to beneficiary section of the payment message. The same customer resubmitted the payment on June 4, 2010, after consulting with a Bank of Guam employee who advised the customer to amend the payment message in a manner that removed the reference to Iran. The second payment was successfully processed. In both instances, it appears that Bank of Guam may have violated the prohibition against engaging “in any transaction…related to…goods, technology, or services for exportation, reexportation, sale or supply, directly or indirectly, to Iran or the Government of Iran,” 31 C.F.R. § 560.206 by originating the wire transfers. - OFAC Settlement Violations of the Iranian Transactions Regulations
JP Morgan Chase 201301 Cease and Desist Orders FED The Federal Reserve Board issued two consent Cease and Desist Orders against JPMorgan Chase & Co., New York, New York (JPMC), a registered bank holding company.
  • The first order requires JPMC to take corrective action to continue ongoing enhancements to its risk-management program and its finance and internal audit functions, particularly in regard to JPMC's Chief Investment Office (CIO). The Board's order follows the disclosure of significant losses in a large synthetic credit portfolio that was managed by the CIO.
  • The second order requires JPMC to take corrective action to enhance its program for compliance with the Bank Secrecy Act and other anti-money laundering requirements at JPMC's various subsidiaries.

The Office of the Comptroller of the Currency on Monday issued two similar Consent Orders against JPMorgan Chase Bank, N.A., Columbus, Ohio.

Willful Blindnes regarding Money Laundering - Including Systemic Failures in these areas
Ellman International 201301 $191,700 OFAC Under its prior ownership and management, Ellman sold and exported medical equipment to Iran, in apparent violation of § 560.204 of the ITR, and engaged the services of a physician in Iran, in apparent violation of § 560.201 and § 560.206 of the ITR. The value of the relevant transactions totaled $317,211. The transactions occurred over a period of approximately three years, from early 2005 to and ending in February 2008 when Ellman was then acquired by a private equity investment group. Upon discovering Ellman’s violations after the acqusition, Ellman’s new owners and management self-reported the matter to OFAC. However, the submission was determined not to be a voluntary disclosure as defined by OFAC’s Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, App. A (“the Enforcement Guidelines”). OFAC had previously been notified of a rejected transaction between Ellman and a customer located in Iran but did not at that time learn the full scope of the activity because Ellman’s prior owners failed to properly respond to OFAC’s inquiry. The apparent violations do not constitute an egregious case. The base penalty amount for the apparent violations was $426,000. Source: OFAC Enforcement Information Iranian Transactions Regulations, 31 C.F.R. part 560 (the “ITR”)
UBS 201212 $ 1.5 billion FSA, US Department of Justice, US Commodity Futures Trading Commission, Swiss Finma UBS to Pay $1.5 Billion to Settle Libor Charges

As part of the deal, UBS acknowledged that dozens of its employees were involved in widespread efforts to manipulate the London interbank offered rate, or Libor, as well as other benchmark rates, which together serve as the basis for interest rates on hundreds of trillions of dollars of financial contracts around the world. UBS's unit in Japan, where much of the attempted manipulation took place, pleaded guilty to one U.S. count of fraud.

Authorities painted a picture of "routine and widespread" attempts by UBS employees to rig Libor and the euro interbank offered rate, or Euribor. The U.K. Financial Services Authority said it had identified more than 2,000 such attempts between 2005 and 2010 with the participation or awareness of at least 45 UBS traders and executives. - Source WSJ

Libor manipulation

Fraud

Allianz 201212 $ 12.4 million

C&D Order

SEC SEC Charges Germany-Based Allianz SE with FCPA Violations - Allianz in $12.4 million FCPA settlement with SEC SEC Press Release FCPA
RBS 201212 $ 400 million expected FSA (SFO) An announcement from RBS is expected in the coming weeks, as it settles with UK and overseas regulators on the manipulation of the key benchmark interest rate. Estimates for the RBS fine are wide, ranging from £150m to £350m and even higher Libor manipulation
Bank of Tokyo-Mitsubishi UFJ 201212 $ 8,571,634 OFAC BTMU’s Tokyo operations engaged in practices designed to conceal the involvement of countries or persons subject to U.S. sanctions in transactions that BTMU processed through financial institutions in the United States. Pursuant to written operational instructions utilized in a Tokyo operations center, BTMU employees systematically deleted or omitted from payment messages any information referencing U.S. sanctions targets that would cause the funds to be blocked or rejected, prior to sending the transactions through the United States. As a result of these practices, BTMU processed at least 97 funds transfers, with an aggregate value of approximately $5,898,943, through BTMU’s New York branch or other banks in the United States, in apparent violation of the BSR, ITR, E.O. 13382, SSR, and CACR. Burmese Sanctions Regulations (“BSR”), 31 C.F.R part 537; the Iranian Transactions Regulations (“ITR”), 31 C.F.R. part 560; Executive Order 13382, Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters (“E.O. 13382”); the Sudanese Sanctions Regulations (“SSR”), 31 C.F.R. part 538; and the Cuban Assets Control Regulations (“CACR”), 31 C.F.R. part 515, that occurred between April 3, 2006, and March 16, 2007.
Standard Chartered Bank (SCB) 201212 $ 327 million DoJ

Treas-OFAC

Standard Chartered will pay $327 million to settle a case with U.S. regulators who accused the Asia-focused bank of failing to comply with sanctions against Iran, further denting profit growth this year. The settlement will be on top of the $340 million it paid to New York's Department of Financial Services in the third quarter. Source: Reuters News Item Willful Blindnes regarding Money Laundering & Sanction Busting - Including Systemic Failures in these areas
HSBC 201212 Setup of a financial crime compliance unit US Senate

DoJ Treas-OFAC

HSBC has promoted a former U.S. official who headed sanctions action against drugs traffickers and money launderers to be its head of financial crime compliance, a new role. Source: Reuters Willful Blindnes regarding Money Laundering & Sanction Busting - Including Systemic Failures in these areas
HSBC 201212 $ 1.92 billion US Senate

DoJ Treas-OFAC

Typically deferred prosecution agreements call for the company to fix their compliance systems and pay a fine in exchange for no indictments being brought for the time being. HSBC to Pay $1.92 Billion Fine to Settle Charges Over Laundering. State and federal authorities decided against indicting HSBC in a money-laundering case over concerns that criminal charges could jeopardize one of the world’s largest banks and ultimately destabilize the global financial system. Instead, authorities on Tuesday announced a record $1.92 billion settlement with HSBC. The bank, which is based in Britain, faces accusations that it transferred billions of dollars for nations like Iran and enabled Mexican drug cartels to move money illegally through its American subsidiaries. Source: NYT News Item Willful Blindnes regarding Money Laundering & Sanction Busting - Including Systemic Failures in these areas
First Bank of Delaware 201211 $ 15 million FDIC, FinCen FDIC and FinCEN determined that the bank failed to implement an effective BSA/AML Compliance Program with internal controls reasonably designed to detect and report evidence of money laundering and other suspicious activity. Specifically, the bank failed to adequately oversee third-party payment processor relationships and related products and services in a manner commensurate with associated risks. The civil money penalty is the result of the bank’s history of noncompliance with laws and regulations and its numerous violations of the BSA. FinCen Press Release BSA, Money Laundering
Sogda 201211 $ 128,250 OFAC Sogda Limited, Inc. Settles Potential Civil Liability for Alleged Violations of the Iranian Transactions Regulations: Sogda Limited, Inc. (“Sogda”), of Kirkland, WA, has agreed to pay $128,250 to settle potential civil liability for alleged violations of the Iranian Transactions Regulations. The alleged violations by Sogda occurred between March 25, 2009 and August 26, 2010, when it engaged in seven export transactions that involved the transshipment of goods through Bandar Abbas, Iran. This matter was not voluntarily disclosed to OFAC and the alleged violations constitute a non-egregious case. Iran Sanctions
Barclays 201211 Under investigation DoJ US prosecutors are probing whether Barclays made any improper payment to win a banking licence in Saudi Arabia. The US authorities are investigating whether its relationships with third parties who assist Barclays to win or retain business comply with the United States Foreign Corrupt Practices Act,” the bank said. Source: FT News Item Bribery

FCPA

Barclays 201211 Under investigation

Facing $ 435 million

US FERC (EU??) Barclays faces US fine of $470m over alleged energy market manipulation - The US Federal Energy Regulatory Commission (FERC) on Wednesday proposed a fine of $435m and $34.9m disgorgement from Barclays for violating the anti-manipulation rule in the power trading market from late 2006 to 2008. Source: FT News Item

EU regulators may take US fine against Barclays as precedent - Europe's energy market regulator said it may take a recent US FERC case against Barclays as a precedent to move against the practice of loss-leading trading in its own rules against market abuse. Source: Reuters News Item

Market Manipulation

Price Manipulation

HSBC 201211 Under investigation HMRC (SFO??) HSBC accused of helping customers launder money by opening thousands of accounts in Jersey - List of thousands of accounts leaked to HMRC who are now probing individuals for tax evasion and money laundering

Customers include criminals. Britons must declare what they hold offshore while banks must vet who its customers are and where their cash comes from. HM Revenue & Customs launched an investigation after a whistleblower leaked details of £700million allegedly held in more than 4,000 accounts hidden in the island tax haven. Daily Mail News Item & Guardian News Item

Money Laundering

Tax Evasion

HSBC 201211 Settled, see 201212 US Senate

DoJ Treas-OFAC

Provision of another $ 800 million - HSBC is set to face a final bill for fines as high as $1.5bn (£937m) for the “shameful and embarrassing” US money-laundering scandal that has engulfed Britain’s biggest bank Telegraph News Item Willful Blindnes regarding Money Laundering & Sanction Busting - Including Systemic Failures in these areas
Brasseler USA 201210 $ 18,900 OFAC Brasseler’s (medical supply company) conduct involved a pattern of concealment whereby the company masked the identities of its Iranian customers; management level staff at Brasseler were involved with, and/or were aware of, both the reckless conduct and the fact that the goods or services were destined for Iran; Brasseler did not have a compliance program in place at the time of these alleged violations; the exports at issue likely would have been licensed by OFAC under existing licensing policy. OFAC Press Release Civil Liability for Alleged Violations of the Iranian Transactions Regulations
TeliaSonera 201209 Under investigation Anti-corruption unit of the Swedish prosecutor’s office
  • TeliaSonera had been involved in money laundering in relation to the acquisition of an Uzbekistan wireless data license, spectrum frequencies and number series from Gibraltar-based Takilant Ltd. in 2007, according a Dow Jones Newswires story.
  • December 05, 2012 - TeliaSonera chairman (forced) to step down FT News Item
Bribery & Money Laundering
Tyco International Ltd. 201209 $ 26 million DoJ & SEC Tyco subsidiary in the Middle East pleaded guilty in federal court in Virginia to conspiring to violate the Foreign Corrupt Practices Act, which prohibits companies listed on U.S. stock exchanges from bribing foreign officials to win business and requires them keep accurate books and records - source WSJ Blog Item Bribery - FCPA
Mizrahi Tefahot Bank Ltd. 201209 $ 974,000 Bank of Israel Mizrahi Tefahot confirmed in a statement that it would pay the 3.8 million shekel fine ($974,000), and said it has taken measures to correct deficiencies in its anti-money laundering mechanisms.

The central bank didn't disclose details, but said it imposed the fine after finding that Mizrahi Tefahot failed to report unusual transactions, managed accounts for lawyers without obtaining the appropriate declarations from beneficiaries and didn't submit reports on time to the central bank. Source: FOX News Item

Money Laundering
UBS 201209 Under investigation France DoJ
  • The Paris offices of UBS have been searched as part of a probe into allegedly aiding tax evasion in a sign that a months-long investigation into the Swiss bank's French wealth management activities may be gathering steam - Source: Reuters News Item
  • November 19, 2012 - The former head of UBS's French arm has been placed under investigation as part of a months-long probe into allegations the Swiss bank aided clients evade taxes, a judicial source said. Reuters News Item
Bank of America 201209 Under investigation OCC (Treas) The Office of the Comptroller of the Currency, an independent branch within the Treasury Department, is examining Bank of America's systems that are designed to monitor and filter transactions, said the source, who is familiar with the situation - Source: Reuters News Item
JP Morgan 201209 Under investigation OCC (Treas) The Office of the Comptroller of the Currency, an independent branch within the Treasury Department, is examining JPMorgan's systems that are designed to monitor and filter transactions, said the source, who is familiar with the situation - Source: Reuters News Item
Intesa San Paolo 201209 Under investigation US Treas / OFAC

US DoJ

Italy's Intesa San Paolo is among big names that may soon join the still short list of foreign banks that have so far paid more than $2.3 billion in fines; some still protest their innocence but have regarded the cash as the price of keeping access to the U.S. market - and keeping executives out of court, or even jail. Reuters News Item
UBS 201209 Under investigation Swiss attorney general’s office
  • The case has been opened in response to complaints by the rainforest advocacy group Bruno Manser Fund (BMF), which accuses UBS of having breached its due diligence duties in managing its relationship with Sabah’s chief minister, Musa Aman, who controls logging in the region. Aman has been chief minister of Sabah since 2003 and is the brother of Malaysia's foreign minister, Anifah Aman. He is accused of having laundered over $90 million (SFr86 million) of corruptly obtained funds through a number of bank accounts held with UBS in Hong Kong and Zurich. Source Swiss Info News Item
  • December 4, 2012 - Swiss bank UBS is closing four branches in Germany that serve wealthy clients and cutting up to 35 jobs as it seeks to improve profitability. German state prosecutors said last month they had launched a country-wide search of premises of UBS clients on suspicion of tax evasion. UBS denies it helped clients evade tax. Reuters News Item
UniCredit & HypoVereinsbank 201208 Under Investigation US Treas / OFAC

US DoJ

Unicredit has confirmed it is co-operating with a US investigation into a possible breach of sanctions. The bank is thought to have broken sanctions against Iran, according to reports by the Financial Times and Reuters, although this has not been confirmed by Unicredit. The probe centres on a German subsidiary, HypoVereinsbank, which the major Italian bank bought in 2005.
Grand Resources USA, Inc. (GR-Duratech) 201208 $ 402,000.- US Treas / OFAC In 2005, GR-Duratech negotiated a sale of graphitized petroleum coke to a company in the United Arab Emirates, with knowledge that the goods were for delivery to Bandar Abbas, Iran. After negotiating the terms of the sale and the related letter of credit, GR-Duratech referred the sale to its parent company, Grand Resources Co., Ltd., in Beijing, China, and later received a commission payment from Grand Resources for the sale. From July 2009 to August 2009, GR-Duratech dealt in property in which the Islamic Republic of Iran Shipping Lines (IRISL) had an interest, and engaged in transactions or dealings in or related to services of Iranian origin, when GR-Duratech was involved in the shipment of cargo aboard the blocked vessel “Sabalan,” a vessel in which IRISL had an interest, and presented trade documents related to the shipment to its bank for payment pursuant to a letter of credit referencing the blocked vessel. GR-Duratech also engaged in transactions that resulted in the removal of references to Iran and an Iranian entity from the trade documents associated with the shipment. In September 2009, GR-Duratech dealt in property in which IRISL had an interest by transferring the trade documents related to the shipment to its customer in Turkey without OFAC’s authorization.

GR-Duratech did not voluntarily self-disclose the violations to OFAC. OFAC concluded that the 2005 ITR violation was a non-egregious case, but that the 2009 violations of the ITR and WMDPSR were an egregious case, in light of the company’s willful concealment and evasion involving GR-Duratech’s senior-level management. The base penalty amount for the violations totaled $670,000.

OFAC enforcement information & Additional information about this action can be found here

Violation of the Iranian Transactions Regulations (ITR), 31 C.F.R. part 560, in 2005 and 2009, and for violating the Weapons of Mass Destruction Proliferators Sanctions Regulations (WMDPSR), 31 C.F.R. part 544, in 2009
BNP Parisbas 201208 Under investigation BNP Paribas SA (BNP), France’s largest bank said as recently as March (2012) that they were cooperating with U.S. authorities regarding payments involving countries, individuals or entities subject to U.S. economic sanctions. Bloomberg News Item
Credit Agricole 201208 Under investigation Credit Agricole SA (ACA), said as recently as March (2012) that they were cooperating with U.S. authorities regarding payments involving countries, individuals or entities subject to U.S. economic sanctions.Bloomberg News Item
Commerzbank 201208 Under investigation Commerzbank: US Probe Could Result in Costs Exceeding Provisions Fox News Item
Royal Bank of Scotland (RBS) 201208 Under investigation RBS investigated over possible Iran sanctions violations Guardian News Item
Deutsche Bank 201208 Under investigation Deutsche Bank’s Business With Sanctioned Nations Under Scrutiny NYT News Item
Blackwater, Xe, Academi LLC 201208 $ 7.5 million DoJ, Treas OFAC, State Department The agreement, filed in United States District Court in New Bern, N.C., covers unauthorized sales of satellite phones in Sudan; unauthorized military training provided to foreign governments, including Canada’s; illegal possession of automatic weapons; and other violations, the Justice Department said. Source: NYT News Item Sudan OFAC program

Unauthorized sales and training during 2005 to 2008 Authorization was required by Treasury and State Departments

Standard Chartered Bank (SCB) 201208 Settled, see 201212 Disciplinary actions by SCB
  • SCB stated - "Rather, it’s about lax compliance standards that fell short of regulators’ expectations and our expectations, and we are absolutely committed to remedying what went wrong and learning from it.”
  • Details are Pending
Willful Blindnes regarding Money Laundering & Sanction Busting - Including Systemic / Organized Failures in these areas
Standard Chartered Bank (SCB) 201208 $ 340 million (DFS Only) NY Bank Authority (DFS), Manhattan district attorneys office, DoJ, FED, US-Treas (OFAC) N.Y. Regulator Accuses Standard Chartered Unit of Illegal Transfers - Order Pursuant to Banking Law § 39

For almost ten years, SCB schemed with the Government of Iran and hid from regulators roughly 60,000 secret transactions, involving at least $250 billion, and reaping SCB hundreds of millions of dollars in fees. SCB’s actions left the U.S. financial system vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes, and deprived law enforcement investigators of crucial information used to track all manner of criminal activity WSJ News Item & N.Y. Regulator Order

  • Note-1: SCB NY was already fined for weak controls concerning BSA & AML in 2004.
  • Note-2: Four other U.S. regulators that have been probing the bank's actions weren't part of the settlement. The U.S. Treasury Department, the Federal Reserve, the U.S. Department of Justice and the Manhattan district attorney's office have been negotiating with Standard Chartered since 2011 to reach a settlement over its Iran-related transactions. Their investigation(s) continues.
  • The stock has dropped 7% on the London Stock Exchange since the allegations came to light Aug. 6, wiping out $2.4 billion in market value.
  • As part of the settlement, Standard Chartered shall install a monitor for a term of at least two years who will report directly to DFS and who will evaluate the money-laundering risk controls in the New York branch and implementation of appropriate corrective measures. In addition, DFS examiners shall be placed on site at the Bank.
  • And Standard Chartered shall permanently install personnel within its New York branch to oversee and audit any offshore money-laundering due diligence and monitoring undertaken by the Bank.
  • Statement From Benjamin M. Lawsky, Superintendent Of Financial Services, Regarding Standard Chartered Bank
Willful Blindnes regarding Money Laundering & Sanction Busting - Including Systemic / Organized Failures in these areas
HSBC 201207 Disciplinary actions including resignation Head of Compliance Disciplinary actions by HSBC HSBC’s head of compliance quits after money laundering allegations - HSBC executives admit past mistakes and commit to deal with money-laundering allegations by a US Senate panel. Telegraph News Item Willful Blindnes regarding Money Laundering & Sanction Busting - Including Systemic Failures in these areas
HSBC 201207 Settled, see 201212 US Senate

US DoJ Treas-OFAC

HSBC made a $700 million provision for U.S. fines after a Senate committee found the bank gave terrorists, drug cartels and criminals access to the U.S. financial system. That sum may increase, Chief Executive Officer Stuart Gulliver said. The Senate report found that the bank worked with firms linked to terrorism and hid transactions that bypassed sanctions against Iran. (Source: Bloomberg News Item)
  • There is rumor that HSBC might face a $ 1 billion fine.
  • August 24, 2012 - S&P downgrades outlook to negative for HSBC, it fears US money laundering investigations could lose the bank business in the long-term
Money-Laundering, Sanction-Busting
TOTAL France 201207 $ 389 million (charge to its accounts) US DoJ

SEC

To cover the likely cost of settlement with U.S. authorities over an investigation into corruption in Iran. The investigation by the Securities and Exchange Commission and the Department of Justice dates back to 2003, and is in connection with gas contracts awarded in the oil and gas producing Gulf country in the 1990s. (Source: Reuters) FCPA - Bribery
HSBC Mexico 201207 $ 27.5 million CNBV - Mexican Regulator The infringements relate to the late reporting of 1,729 unusual transactions and the failure to report 39 others, the London-based bank said in a statement today. The fine is the largest levied by Mexico’s banking regulator, Guillermo Babatz, president of the National Banking and Securities Commission, or CNBV, said in an interview broadcast in Mexico by Radio Red. Other banks operating in Mexico are being fined for similar reasons, though for lesser amounts, he said, without providing details. (Source: Bloomberg) Money Laundering
Great Western Malting Co. - ("Great Western"), of Vancouver, Washington 201207 $ 1,347,750 US Treas OFAC The apparent violations by Great Westem occurred between August 2006 and March 2009, when it performed various back-office functions for the sales by a foreign affiliate of non-U.S. origin barley malt to Cuba. OFAC Enforcement Information Cuba Regulation - A number of the violations involved transactions with Specially Designated Nationals (SDNs) in Cuba; some of the violations involved transactions which involved an SDN vessel.
United Technologies Corporation (UTC) 201206 $ 75 million+ US State Department & US Justice Department United Technologies Corporation (UTC) has agreed to pay more than $75 million as part of a “global settlement” with the State Department and Justice Department to address arms export violations to China, false and belated disclosures to the U.S. Government about these illegal exports, and many other compliance failures. The Department determined that UTC’s numerous violations demonstrated a systemic, corporate-wide failure to maintain effective ITAR controls. Since 2006, UTC operating units and subsidiaries (including Pratt & Whitney, Hamilton Sundstrand Corporation and Sikorsky Aircraft Corporation) have disclosed to the Department hundreds of ITAR violations. A number of the violations may have caused harm to U.S. national security and foreign policy interests. US Department of State Press Release An extensive enforcement review by the Department of State’s Office of Defense Trade Controls Compliance has addressed several hundred civil violations of the Arms Export Control Act (AECA) and the International Traffic in Arms Regulations (ITAR). The State Department has reached administrative agreement with United Technologies Corporation to terminate and resolve these violations. This settlement highlights the role of the Department in protecting sensitive American technologies from being illegally transferred to, or received by, unapproved foreign actors.
National Bank Abu Dhabi 201206 $ 855,000 US Treas OFAC National Bank of Abu Dhabi Settles Potential Liability for Apparent Violations of the Sudanese Sanctions Regulations: National Bank of Abu Dhabi (“NBAD”) has agreed to remit $855,000 to settle potential civil liability for 45 transactions that appear to have violated sanctions. NBAD provided information to OFAC revealing that certain of its clerical staff removed or omitted Sudan-related references in payment instructions processed on behalf of its Sudan branch for payments routed through financial institutions located in the United States in apparent violation of the prohibition against the “exportation or re-exportation, directly or indirectly, to Sudan… of services from the United States,” 31 C.F.R. § 538.205. The combined value of the 45 electronic funds transfers was $4,389,235.42. - OFAC Enforcement Information The apparent violations occurred from on or about November 11, 2004, to on or about December 27, 2005. In response to inquiries made by OFAC related to certain transactions, which violated the Sudanese Sanctions Regulations, 31 C.F.R. part 538.
ING Bank NV 201206 Disciplinary actions including terminations and forced early retirement against more than 60 employees Disciplinary actions by ING ING Bank’s expensive settlement was largely a result of “stripping,” the practice of removing or substituting information contained in payment or trade finance instructions in order to prevent association of the transaction with a sanctioned entity – person or corporation – or country. Reuters News Item Willful Blindnes regarding Money Laundering & Sanction Busting - Including Systemic Failures in these areas
ING Bank NV 201206 $ 619 million US Treas OFAC,

U.S. Attorney's Office for the District of Columbia, Department of Justice's National Security Division, Department of Justice's Asset Forfeiture and Money Laundering Section, New York County District Attorney's Office.

​The U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC") today (June 06, 2012) announced a $619 million settlement with ING Bank N.V. ("ING Bank") to settle potential liability for apparent violations of U.S. sanctions. Today's settlement is the largest OFAC settlement of any kind to date. The settlement resolves OFAC's investigation into ING Bank's intentional manipulation and deletion of information about U.S.-sanctioned parties in more than 20,000 financial and trade transactions routed through third-party banks located in the United States between 2002 and 2007 OFAC Press Release & WEB Notice & Settlement Agreement & ING Press Release & DoJ Press Release Primarily in apparent violation of the Cuban Assets Control Regulations, 31 C.F.R. part 515, but also of the Iranian Transactions Regulations, 31 C.F.R. part 560; the Burmese Sanctions Regulations, 31 C.F.R. part 537; the Sudanese Sanctions Regulations, 31 C.F.R. part 538; and the now-repealed version of the Libyan Sanctions Regulations, 31 C.F.R. part 550, which was in effect until 2004.
Habib Bank AG Zurich (“Habib”) 201205 £525,000 UK - FSA For the reasons given in this Notice, the FSA hereby imposes a financial penalty of £525,000 on Habib Bank AG Zurich (“Habib”) for breach of Principle 3 (management and control) of the FSA’s Principles for Businesses. Habib breached Principle 3 because it failed to take reasonable care to establish and maintain adequate antimoney laundering (“AML”) systems and controls between 15 December 2007 and 15 November 2010 (“the Relevant Period”).

The laundering of money through UK financial institutions undermines the UK financial services sector. It is the responsibility of UK financial institutions to ensure that they are not used for criminal purposes and, in particular, that they do not handle the proceeds of crime. Unless firms have in place robust systems and controls in relation to AML, particularly with regard to high risk customers, they risk leaving themselves open to abuse by money launderers. FSA Final Notice

Habib breached Principle 3 because it failed to take reasonable care to establish and maintain adequate antimoney laundering (“AML”) systems and controls
Ericsson de Panama S.A. of Panama City, Panama 201205 $ 1,753,000 BIS Ericsson de Panama has agreed to pay a civil penalty of $1,753,000 to settle 262 violations of the Export Administration Regulations (EAR) - to Settle Charges of Unlicensed Transshipments to Cuba. This settlement reflects the serious consequences that result when companies knowingly violate the EAR and take steps to conceal that activity. BIS alleged that the violations occurred between 2004 and 2007, and that Ericsson de Panama knowingly implemented a scheme to route items from Cuba through Panama, repackaged the items to conceal their Cuban markings, forwarded the items to the U.S. for repair and replacement and then returned the items to Cuba. (source: BIS & The Ericsson Order) BIS-EAR - Classified under Export Control Classification Numbers 5A002, 4A994, 5A991, 5B991 or designated EAR99, the items’ distribution to Cuba were controlled for national security, antiterrorism, encryption, and sanctions reasons.
Coutts (Coutts & Company) 201203 £8.75 million UK - FSA The Financial Services Authority (FSA) has fined Coutts & Company (Coutts) £8.75 million for failing to take reasonable care to establish and maintain effective anti-money laundering (AML) systems and controls relating to high risk customers, including Politically Exposed Persons (PEPs).

The failings at Coutts were serious, systemic and were allowed to persist for almost three years. They resulted in an unacceptable risk of Coutts handling the proceeds of crime. In October 2010, the FSA visited Coutts as part of its thematic review into banks’ management of high money-laundering risk situations. Following that visit, the FSA’s investigation identified that Coutts did not apply robust controls when starting relationships with high risk customers and did not consistently apply appropriate monitoring of those high risk relationships. In addition, the FSA determined that the AML team at Coutts failed to provide an appropriate level of scrutiny and challenge. FSA Press Release

Coutts fined £8.75 million for anti-money laundering control failings
Lanier Marine Liquidators 201112 $ 13,500 US Treas OFAC Lanier Marine Liquidators Settles Sudanese Sanctions Regulations Allegations: Lanier Marine Liquidators (“LML”), Dawsonville, GA, has agreed to remit $13,500 to settle allegations of violations of the Sudanese Sanctions Regulations, 31 C.F.R. part 538, occurring between March 2005 and March 2006. OFAC alleged that LML entered into contracts to sell boats and boat parts to an individual in Sudan, and attempted to export a boat and boat parts to Sudan valued at $30,460. The base penalty amount for the alleged violations was $50,000.

OFAC determined that LML did not voluntarily disclose this matter to OFAC and that the alleged violations constituted a non-egregious case. The settlement amount reflects OFAC’s consideration of the following General Factors under OFAC’s Economic Sanctions Enforcement Guidelines: LML has no history of prior OFAC violations; LML substantially cooperated with OFAC’s investigation of the alleged violations and entered into tolling agreements with OFAC; and LML took appropriate remedial action upon learning of the potential OFAC violations.

Sudan
Commerzbank AG 201111 $ 175,500 US Treas OFAC Commerzbank AG,, New York Branch Settles Cuban Assets Control Regulations Allegations: Commerzbank AG, New York Branch (“Commerzbank”), New York, NY, has agreed to remit $175,500 to settle apparent violations of the Cuban Assets Control Regulations, 31 C.F.R. part 515, that occurred from on or about September 7, 2005, through on or about September 30, 2005. The agreement covers allegations that Commerzbank, acting as an advising and confirming bank in connection with a letter of credit, presented four sets of trade documents, in which a Cuban Specially Designated National (“SDN”) had an interest, to the Miami branch of the foreign bank that issued the letter of credit, for payment in favor of a Canadian company. The aggregate value of the trade documents was $884,157.

Commerzbank did not voluntarily self-disclose the matter, and the alleged violations constituted a non-egregious case. The base penalty amount for the alleged violations totaled $260,000. The settlement amount reflects OFAC’s consideration of the following facts and circumstances, pursuant to the General Factors under OFAC’s Economic Sanctions Enforcement Guidelines: Commerzbank should have been aware of the prohibited Cuban interest, given that the trade documents contained repeated references to the SDN and its vessels; Commerzbank has undertaken remedial measures to strengthen its OFAC compliance program to ensure that such apparent violations do not recur in the future; and Commerzbank cooperated with OFAC’s investigation, including by agreeing to toll the statute of limitations.

Cuba
Sunrise Technologies and Trading Corporation 201110 $ 1,661,672 US Treas OFAC / BIS Sunrise Technologies and Trading Corporation (“Sunrise”), Flushing, NY, and its principal owner have agreed to settle administrative charges made by the Office of Foreign Assets Control (“OFAC”) arising from apparent violations of the Iranian Transactions Regulations, 31 C.F.R. part 560 (the “ITR”), which were promulgated pursuant to, inter alia, the International Emergency Economic Powers Act (“IEEPA”), and are administered by OFAC. The apparent violations relate to Sunrise and its principal owner’s unlicensed exports, between 2007 and 2011, of computer-related goods indirectly from the United States through Dubai, United Arab Emirates, to Iran in apparent violation of § 560.204 of the ITR. OFAC initiated the inquiry into these matters and referred the case to criminal law enforcement authorities for further investigation. Sunrise, its principal owner, and OFAC agreed to a settlement in the amount of $1,661,672 with respect to apparent violations of the ITR by Sunrise and its principal owner. This settlement with OFAC is related to criminal plea agreements reached by Sunrise, its principal owner, and the Office of the United States Attorney for the District of Columbia, as well as settlement agreements between Sunrise, its principal owner, and the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”). OFAC’s settlement with Sunrise and its principal owner has been deemed satisfied by their acceptance of criminal responsibility, the criminal forfeiture of assets, and the restrictions imposed by BIS against Sunrise and its principal owner.

Sunrise and its principal owner each pleaded guilty in the U.S. District Court for the District of Columbia to one count of criminal conspiracy to violate IEEPA and the ITR after an indictment arising from the same conduct was filed by the U.S. Department of Justice. In addition to the forfeiture of a money judgment in the amount of $1,250,000 by Sunrise and its principal owner, Sunrise and its principal owner also accepted BIS Export Denial Orders which prohibit them from exporting any goods from the United States for a ten-year period. The BIS Export Denial Orders were suspended in their entirety provided Sunrise and its principal owner remain in compliance with the terms of their Settlement Agreements with BIS and with the Export Administration Regulations.

Sunrise and its principal owner did not voluntary disclose these matters to OFAC. OFAC considers the apparent violations to be egregious.

Iran / IEEPA
Flowserve Corporation 201110 $ 502.408 US Treas OFAC / BIS Flowserve Corporation Settles Apparent Violations of the Iranian Transactions Regulations, the Sudanese Sanctions Regulations, and the Cuban Assets Control Regulations: Flowserve Corporation (“Flowserve”) of Irving, TX, has agreed to remit $502,408 to settle apparent violations of the Iranian Transactions Regulations, 31 C.F.R. part 560, the Sudanese Sanctions Regulations, 31 C.F.R. part 538, and the Cuban Assets Control Regulations, 31 C.F.R. part 515, occurring from on or about January 7, 2005 through on or about December 18, 2006.

Flowserve made a disclosure to OFAC and the Department of Commerce’s Bureau of Industry and Security (“BIS”). Flowserve disclosed that:

  1. its domestic and foreign affiliates engaged in unlicensed exports of pumps, valves, and related component parts and supplies from the United States indirectly to Iran;
  2. its foreign affiliates engaged in unlicensed exports of pump components from the United States indirectly to Sudan; and
  3. its foreign affiliates engaged in transactions involving property in which Cuba or a Cuban national had an interest. The relevant transactions involved a total value of $2,148,328.

OFAC determined that Flowserve voluntarily self-disclosed the apparent violations and that the apparent violations constituted a non-egregious case.

The base penalty amount for the apparent violations totaled $661,053. The settlement amount reflects OFAC’s consideration of the following General Factors under its Economic Sanctions Enforcement Guidelines: Several of the apparent violations reflected a reckless disregard for U.S. sanctions requirements and involved awareness by facility supervisors of the conduct giving rise to the apparent violations; and the apparent violations resulted in harm to U.S. sanctions program objectives. Additionally relevant, OFAC has not taken enforcement action against Flowserve in the five years preceding the transactions at issue; Flowserve substantially cooperated with OFAC’s investigation both by gathering relevant data from its foreign affiliates and by agreeing to toll the statute of limitations; and Flowserve instituted significant remedial measures, including implementing a “Market Withdrawal Program,” that will result in a company-wide cessation of business with sanctioned countries. Simultaneous with OFAC’s settlement, Flowserve has agreed to remit $2.5 million to BIS to settle apparent violations of the Export Administration Regulations arising from the same course of conduct.

Cuba / Sudan
JP Morgan Chase 201108 $ 88.3 million US Treas OFAC Several sanctions orders related to transactions with Cuba, Iran, Sudan and Liberia as well as broader restrictions against supporting terrorism and the proliferation of weapons of mass destruction. Violation of thousands of transactions, including wire transfers and loans, which were made in apparent violation of a handful of economic sanctions rules against Cuba, Iran, the Sudan and Liberia. The wire transfers to Cuba were discovered by another U.S. financial institution, Treasury said, without naming it.

That institution tipped J.P. Morgan Chase in November 2005, saying it might be processing wire transfers for a Cuban national through a correspondent account. After conducting an investigation, which confirmed the findings, the results were reported to management, yet the bank still “failed to take adequate steps to prevent further transfers,” Treasury said. J.P. Morgan Chase didn’t voluntarily disclose the Cuban sanctions violations, and didn’t volunteer information related to the Khartoum-referenced wire transfer. It did volunteer the Iran shipping line letter of credit but didn’t respond promptly or completely to a subpoena related to it, Treasury said.

“OFAC determined that J.P. Morgan Chase is a very large, commercially sophisticated financial institution, and that managers and supervisors acted with knowledge of the conduct constituting the apparent violations and recklessly failed to exercise a minimal degree of caution or care with respect to its U.S. sanctions obligations,” Treasury said in the civil penalty announcement, explaining why the actions were deemed egregious. J.P. Morgan Chase said none of the transactions were conducted by their clients; they were done by clients of correspondent bank for which it processed payments.

Under the settlement, Treasury also said there were several actions taken by J.P. Morgan Chase that were “not egregious,” and those included failing to block nine wire transfers worth $609,000 that were in violation of several sanctions orders, advising and confirming a $2.7 million letter of credit involving a vessel designated by OFAC as a member of the Iranian state shipping line, a $79,308 letter of credit on involving goods destined for Sudan, and a May 24, 2006 transfer of 32,000 ounces of gold bullion valued at approximately $20.6 million that benefited a bank in Iran.

Cuba, Iran, Liberia, Sudan, Terrorism, NPWMD, etc.
CMA CGM (America) LLC 201108 $374,400 US Treas OFAC Facilitated the exportation of goods from foreign ports to Sudan on at least two occasions and, in 28 separate transactions, accepted payments for shipping services provided by its foreign parent company, CMA CGM, or its foreign affiliates, in connection with shipments between third countries and Cuba, Iran, or Sudan.

Settles Multiple Sanctions Program Allegations

Cuba, Iran, Sudan
Société Générale, New York 201108 $111,359 US Treas OFAC Violations of the Iranian Transactions Regulations - SGNY dealt in Iranian-origin services and/or facilitated transactions by a foreign person where the transactions by the foreign person would have been prohibited by the Regulations if performed by a United States person. Specifically, OFAC alleged that SGNY, as the issuing bank of two letters of credit between two non-sanctioned parties, processed two payments under those letters of credit involving the shipment of cargo transported aboard vessels owned and/or managed by the Islamic Republic of Iran Shipping Lines of Tehran, Iran, an Iranian entity. Iran
Ocean Bank 201108 $ 10.9 million FinCEN / FDIC / OFR Failed to implement an effective BSA/AML Compliance Program with internal controls reasonably designed to detect and report money laundering and other suspicious activity in a timely manner. The bank failed to conduct adequate independent testing, particularly with respect to suspicious activity reporting requirements. In addition, the bank failed to sufficiently staff the BSA compliance function with appropriately trained staff to ensure compliance with BSA requirements. BSA / AML
General Reinsurance Corporation (“Gen Re”) 201106 $ 59,130 US Treas OFAC Violations consist of two reinsurance claim payments to the Steamship Mutual Underwriting Association Limited (“Steamship Mutual”) for losses arising from vessel operations of the National Iranian Tanker Company. Gen Re made the excess of loss claim payments pursuant to its facultative reinsurance obligation to Steamship Mutual for the coverage period June 16, 1998, to February 20, 2002. The combined amount of the two reinsurance claim payments was $309,740.65. Iran
Trans Pacific National Bank 201101 $12,500 US Treas OFAC Trans Pacific engaged in transactions or dealings in or related to goods of Iranian origin and services for exportation to Iran, and facilitated transactions by a foreign person where the transactions by the foreign person would be prohibited by the Regulations if performed by a United States person, by initiating two separate wire transfers on behalf of an account holder for an underlying commercial transaction prohibited by the Regulations. In one instance, the wire transfer instructions referenced “Iranian material” and in the other instance the instructions referenced “Iran material.” The value of the transactions totaled $35,600. Trans Pacific did not voluntarily disclose this matter to OFAC. Iran
Wachovia 201012 $110M + $50M + C&D OCC / FinCEN / DoJ
  • failed to implement adequate policies, procedures, or monitoring controls governing the repatriation of nearly $14 billion of USD bulk cash for high risk casa de cambrio ("CDC") and other foreign correspondent customers (over $10 billion coming from Mexico into the U.S.);
  • failed to conduct monitoring of high volumes of monetary instruments flowing through the CDCs and other foreign correspondent accounts in the form of Remote Deposit Capture ("RDC") products, consisting of nearly six million checks worth approximately $41 billion;
  • failed to appropriately monitor traveler's checks in a manner that was consistent with the Bank's policy limits over sequentially number traveler's checks for high risk CDC customers;
  • failed to appropriately institute risk-based monitoring of the Bank's foreign correspondent customers, primarily as a result oif placing too much emphasis on staffing considerations when setting alert parameters;
  • failed to file timely SARs involving suspicious transactions conducted through certain foreign correspondent accounts at the Bank;
  • after conducting a voluntary lookback, the Bank filed over 4,300 SARs involving suspicious transactions conducted through the Bank by CDCs and high risk foreign correspondent customers. A significant number of these SARs were not timely filed; and
  • failed to adequately report cash structuring activity from review of alerts generated in the Bank's Financial Intelligence Unit.
BSA / AML
HSBC 201010 C&D FED The Federal Reserve Board announced that it had, on October 4, issued a consent C&D Order between HSBC North America Holdings, Inc. (HNAH), New York, New York, a registered bank holding company, and the Federal Reserve Board. The order requires HNAH to take corrective action to improve its firm wide compliance risk-management program, including its anti-money laundering compliance risk management. BSA / AML
Barclays Bank PLC 201008 $176 million US Treas OFAC / FED / DoJ / FSA Violations of Multiple Sanctions Programs - violations arose out of practices designed to circumvent filters at U.S. banks installed to detect transactions in violation of OFAC regulations. This was done using cover-payments to avoid referencing parties targeted by U.S. sanctions and omitting or removing information in payment messages in order to conceal the identities of U.S. sanctions targets – most notably Sudan – in electronic funds transfer instructions executed through the United States. In addition, Barclays sometimes processed payments involving sanctioned persons through a Barclays sundry account, making it appear as though Barclays was the remitting bank. Violations of the several sanctions, Sudan, Iran, Burma, Cuba, IEEPA, TWEA
Maersk Line Limited 201007 $ 3,088,400 US Treas OFAC MLL violated the SSR and the ITR by providing unlicensed shipping services for 4,714 shipments of cargo originating in or bound for Sudan and Iran. These alleged services involved the transportation of such cargo on vessels owned, operated and/or chartered by MLL, but time-chartered or sub-time-chartered by MLL's parent, A.P. Moller-Maersk A/S, on at least one leg of the cargo's journey to or from Sudan and Iran. Iran, Sudan
United Nations Federal Credit Union 201007 $ 500,000 US Treas OFAC Dealt in property in which Cuba or a Cuban national had an interest in violation of the CACR by engaging in certain unauthorized financial transactions on behalf of its members/accountholders who were blocked Cuban nationals pursuant to the CACR. The transactions involved financial services that were routinely provided by UNFCU to its members. The alleged violations were not voluntarily self-disclosed by UNFCU and were non-egregious in nature. Cuba
Former ABN AMRO now RBS 201005 $ 500 million US Treas OFAC / FED / DoJ Stripped information from funds transfer instructions and other transactions to disguise involvement of OFAC-sanctioned parties or to facilitate OFAC-prohibited transactions, and deliberately ignored its OFAC and BSA compliance obligations. Iran and other sanctions, TWEA, IEEPA
Innospec Inc. 201003 $ 2.2 million US Treas OFAC OFAC alleged that, after its acquisition of a foreign corporation that maintained a local sales office in Cuba, Innospec conducted business in Cuba through its acquired subsidiary, including conducting transactions in which the government of Cuba and/or Cuban nationals had an interest in apparent violation of § 515.201(b) of the CACR. Specifically, OFAC alleged that: Innospec maintained a local sales office in Cuba and incurred general operating expenses for such routine items as real property, business personal property, automobiles and travel; employed Cuban nationals who were paid a salary through a Cuban government agency; entered into contracts with Cuban power companies; and held bank accounts with financial institutions located in Cuba. Cuba
Aviation Services International BV and Delta Logistics BV, Heerhugowaard, The Netherlands 201003 $ 750,000 US Treas OFAC / BIS Unlicensed export of aircraft parts and other goods to Iran during the period 2005 – 2007. The violations alleged by OFAC involve ASI’s unlicensed export and attempted export of goods indirectly from the United States through a third country to Iran in violation of the Iranian Transactions Regulations (the “ITR”), which are promulgated pursuant to IEEPA and administered by OFAC. Iran
Balli Group PLC and Balli Aviation, Ltd. 201001 $15 million + $ 2 million US Treas OFAC / BIS / DoJ Balli Aviation, Ltd. pleaded guilty to a two-count criminal information brought by the U.S. Department of Justice (“DOJ”) relating to its involvement in the illegal exportation of commercial aircraft from the United States to Iran. Iran
Credit Suisse Group 200912 $ 536 million + C&D US Treas OFAC / SEC / DoJ Removed or revised (“stripped”) information from more than $700 million in USD payment instructions processed through unaffiliated US banks and branches that would have revealed sanctioned country origin Iran, Cuba, Libya, Sudan, TWEA, IEEPA
Gold & Silver Reserve, Inc 200910 $ 2,950,000 US Treas OFAC / DoJ Exported financial services without authorization by activating 56,808 “e-currency” accounts through its website for persons in Iran and Cuba; 183,367 accounts opened

Penalty: $2,950,000

  • Did not voluntarily disclose
  • Reduced from $5 million because of $2.05 million criminal penalty in another case
Cuba, Iran
Australia New Zealand Banking Group (ANZ) 200908 $ 5.75 million US Treas OFAC / SEC / DoJ Deception involving 16 export letters of credit and reimbursement claims relating to trade with Sudan (value $28m) and 15 financial transactions involving Cuba (value $78m) with U.S. financial inst. Cuba, Sudan
DHL 200908 $ 9.4 million BIS & US Treas OFAC Unauthorized shipments to Iran, Syria, and Sudan; failure to maintain 32,000 records
  • OFAC mitigated by $300 million because many record violations related to informational materials
  • No voluntary disclosure, but cooperated, remediated, and agreed to waiver of statute of limitations
Iran, Syria, Sudan
Oxbow Carbon and Minerals LLC 200906 $ 276,250 US Treas OFAC Engaged in transactions in or related to services of Iranian origin and facilitated trade-related transactions by non-U.S. persons which involved the use of vessels owned and/or managed by the Islamic Republic of Iran Shipping Lines in Tehran, Iran, without an OFAC license. Oxbow did not voluntarily disclose the alleged violations to OFAC. Iran
Stena Bulk LLC 200901 $ 426,486 US Treas OFAC OFAC alleged that Stena Bulk appeared to have facilitated trade-related transactions with Sudan on behalf of foreign entities by providing transportation related services for the transportation of oil to Sudan and the exportation of Sudanese-origin oil without an OFAC license. Stena Bulk voluntarily disclosed the matter to OFAC. - U.S. subsidiary reportedly managed foreign parent company’s fleet. Sudan
Lloyd’s TSB 200901 & 200912 $ 350 million + $ 217 million US Treas OFAC / SEC / DoJ Removed or revised (“stripped”) information from more than $700 million in USD payment instructions processed through unaffiliated US banks and branches that would have revealed sanctioned country origin.
  • Cooperation; extensive review; partial voluntary disclosure; prompt and thorough remediation
  • Post-ABN AMRO conduct
Iran, Sudan
Minxia Non-Ferrous Metals, Inc. 200807 $1,198,000 US Treas OFAC Violations of the Cuban Assets Control Regulations occurring between approximately May 2003 and October 2006. OFAC alleged that Minxia acted without an OFAC license or outside the scope of its license by purchasing or otherwise dealing in Cuban metals. Minxia did not voluntarily disclose this matter to OFAC. Cuba
Dresdner Bank AG 200807 C&D FED / NY State Banking Department Review of the effectiveness of the NY Branch's corporate governance, control infrastructure and business line accountability with respect to BSA/AML compliance, to enhance the bank's oversight of the NY Branch's compliance program and ensure adequate staffing for an effective control environment. The review is to cover the duties and responsibilities of each officer and staff member regarding BSA/AML compliance; a plan to train, recruit, hire or appoint any needed additional officers and staff. The Bank must also retain an independent consultant to conduct an independent review of the NY Branch's BSA/AML compliance program, such review to be completed within 60 days of retaining the consultant. The bank is ordered to submit a revised and updated compliance program within 60 days of receiving the independent review report. – Dresdner Bank agreed to increase its anti-money laundering efforts at its New York branch in a consent order, the U.S. Federal Reserve BSA / AML
Wachovia Bank, N.A 200711 $ 11,000 US Treas OFAC A payment directed at a Specially Designated Global Terrorist, or SDGT, was rejected, when it should have been blocked, in accordance with the requirements of the regulations. The OFAC press release does, however, state that Wachovia voluntarily disclosed this matter to the agency SDGT
Chevron Corporation 200710 $ 2 million US Treas OFAC Iraqi Sanctions Regulations - Oil-for-Food Program Iraq
National Australia Bank Ltd. 200709 $ 100,000 US Treas OFAC Burmese, Sudanese & Cuban violations occurring between November 2003 and December 2005 involving the processing of several transactions through the United States. The transactions were voluntarily disclosed to OFAC following an extensive review by NAB of all of its transactions that were processed through the United States during this time period. Some of the transactions were processed through NAB’s branch in New York City, but the majority were processed through correspondent accounts held by it at other U.S. banks. Due to the significant remediation taken by the bank, including major upgrades to its worldwide compliance policies, as well as the fact that the violations were voluntarily disclosed, OFAC mitigated the potential penalties for these transactions by nearly 90%. Burma, Cuba, Sudan
Logica CMG 200707 $220,000 US Treas OFAC CMG procured, assembled, and exported a computer system, as well as provided technical support for the system after export, with knowledge that the goods and services were ultimately destined for Cuba and that such exports to Cuba were prohibited. CMG did not have an OFAC license to engage in these transactions, and CMG did not voluntarily disclose this matter to OFAC. LogicaCMG, Inc. did not perform the acts itself; it is a successor company to CMG as a result of merger and related transactions effective in January 2003. Cuba
Datex-Ohmeda, Inc. and Spacelabs Medical Inc. 200704 $ 66,547 US Treas OFAC OFAC alleged that Datex-Ohmeda’s former division, Spacelabs Medical, disregarding licensing requirements, exported medical devices from the United States through an entity in Dubai, U.A.E. to Iran or the Government of Iran without authorization. Both Datex-Ohmeda and Spacelabs have reported to OFAC corrective measures and improvements to their OFAC compliance programs. The Spacelabs Medical division of Datex-Ohmeda voluntarily disclosed this matter to OFAC. Iran (via Dubai)
Guidant Corporation 200703 $ 277,017 US Treas OFAC Violations of the Iranian Transactions Regulations and Iraqi Sanctions Regulations occurring between July 2000 and July 2004, involving its vascular intervention and cardiac surgery business units. OFAC alleged that Guidant acted without an OFAC license or outside the scope of its license by exporting goods for the ultimate resale to Iran and Iraq. Guidant also provided training. Guidant voluntarily disclosed this matter to OFAC. Iran, Iraq
Varian, Inc. 200703 $ 114,958 US Treas OFAC Varian, Inc. Palo Alto, California, on behalf of subsidiaries Varian A.G. Switzerland and Varian Deutschland GMBH, (“Varian”) - Violations of the Iranian Transaction Regulations and Iraqi Sanctions Regulations occurring between March 2001 and October 2003. OFAC alleged that Varian acted without an OFAC license or outside the scope of its license by exporting U.S. origin software without a license. Varian voluntarily disclosed this matter to OFAC. Iran, Iraq
Tyco Valves & Controls 200702 $ 450,905 US Treas OFAC Allegations of violations of the Iranian Transactions Regulations occurring between April 2001 and November 2005. OFAC alleged that Tyco acted without an OFAC license or outside the scope of its license by exporting goods from outside the United States to Iran. Tyco voluntarily disclosed this matter to OFAC and enhanced its compliance program. Iran (via Dubai)
Chevy Chase Bank 200605 $ 3,352 US Treas OFAC OFAC alleged that Chevy Chase processed an unauthorized funds transfer with payment information referencing services of Iranian origin. Chevy Chase did not voluntarily disclose this matter to OFAC. Iran
Downey Savings and Loan 200605 $ 44,898 US Treas OFAC Allegations of violations of the Iran program occurring between 1996 and 2000. OFAC alleged that Downey operated 23 accounts for 20 account holders who informed Downey of their permanent residence in Iran. Downey has reported to OFAC corrective measures and improvements to its OFAC compliance program. Downey voluntarily disclosed this matter to OFAC. Iran
Exel Global Logistics 200605 $ 6,226 US Treas OFAC Allegations of violations of the Iran program occurring between February and September 2001. Exel voluntarily disclosed to OFAC that it had coordinated shipments to Iran. Exel has also represented to OFAC that it has made upgrades to its OFAC compliance program. Iran
ABN AMRO Bank NV 200512 $ 80 million + C&D Order FinCEN / FED / US Treas OFAC / NY State Banking Department / Illinois Department of Financial and Professional Regulation / DNB (Dutch Bank regulator) The North American Regional Clearing Center (the "Center"), a unit within the New York branch of ABN AMRO, operated as a clearing institution for funds transfers in U.S. dollars. Beginning in 1998, ABN AMRO added more than 100 Russian financial institutions as clients. The Center processed about 30,000 funds transfers per day. ABN AMRO's New York branch failed to apply an adequate system of internal controls for compliance with the BSA and management of the risk of money laundering at the Center. Specific problems listed included:
  • Lack of adequate documentation to assess the potential for money laundering and risk rate financial institutions with correspondent relationships with the Center.
  • Failure to document that ABN AMRO ever conducted adequate due diligence on correspondent financial institution clients of the Center.
  • Failure to adequately monitor funds transfers processed by the Center for potential suspicious activity. Relied on one employees and manual monitoring under 2002. An automated system installed in 2002 was inadequate because it lacked data needed to evaluate the activity it was reviewing.
  • Failure to incorporate available information on "shell companies" into the monitoring system. Some of these shell companies disguised the identity of Russian criminals.
  • Failure to add to the monitoring system information on institutions included in SARs filed, or information on correspondent accounts closed, by ABN AMRO.

One institution in a former Soviet Union Republic was reported in a SAR in January 2002, and ABN AMRO closed all correspondent accounts of that institution in July 2002. The barred institution opened accounts with institutions holding correspondent accounts through the Center, and the Center processed more than $100 million in transfers involving the institution via those correspondents without detecting the suspicious activity.

  • Failure to investigate alerts from its automated monitoring system concerning transactions appearing to be suspicious.
  • Failure to adequately staff the compliance function at the New York ABN AMRO branch to coordinate and monitor BSA compliance.
  • Failure to adequately train staff in BSA compliance and in detection and reporting of suspicious activity.
  • Failure to file, and delinquent filing of, SARs; filing of incomplete or inaccurate SARs.

Wall Street Journal December 30, 2005 reports on ABN Amro - How Top Dutch Bank Plunged Into World of Shadowy Money ABN Amro Conveyed Billions To U.S. Shell Companies, Amid Slow Fed Response - Trip to 'Last Chance Saloon'

ABN Amro missed or underestimated the following GAO report Possible Money Laundering by U.S. Corporations Formed for Russian Entities - GAO October 31, 2000

BSA / AML + OFAC
Standard Chartered (SCB) 200410 C&D Order FED, NY State Banking Department In 2003, New York banking regulators were concerned that Standard Chartered wasn’t reviewing its customers or monitoring transactions properly. In 2004, the U.S. unit entered into an agreement with New York’s Banking Department and the Federal Reserve Bank of New York to “address deficiencies” in its compliance with anti-money laundering laws and rules, particularly those related to fund transfers. - Standard Chartered plc, London, United Kingdom, the holding company of Standard Chartered Bank, London, United Kingdom (the "Bank"), a foreign bank as defined in section 1(b)(7) of the International Banking Act (12 U.S.C. 3 101(7)), and the New York, New York branch of the Bank (the "New York Branch") are taking steps to address deficiencies relating to compliance with applicable federal and state laws, rules, and regulations relating to anti-money laundering ("AML") policies and procedures, including the Currency and Foreign Transactions Reporting Act, 31 U.S.C. 5311 (the Bank Secrecy Act or "BSA"), as amended by the USA PATRIOT Act. SCB New York branch failed to apply an adequate system of internal controls for compliance with the BSA and management of the risk of money laundering at the NY SCB Branch. Specific problems listed included:
  • Anti-Money Laundering Compliance
  • Independent Testing and Audit
  • Training
  • Suspicious Activity Reporting and Customer Due Diligence
  • Transaction Review
  • Approval and Progress Reports (concerning improvements)

Follow the link concerning more detailed information on the Written Agreement

BSA / AML

Section 8 of the Federal Deposit Insurance Act and by the Department pursuant to Section 39 of the New York State Banking Law

UBS 200406 $ 100 million FED UBS illegally transferred funds to parties in countries subject to U.S. economic sanctions.

Measures - Improvements

  1. Establish a system of internal controls to ensure compliance with all OFAC regulations. Internal controls should be specific to all aspects of ECI Banknote Activity from account opening through the initiation and settlement of all transactions;
  2. Perform and document a comprehensive OFAC risk assessment of all aspects of ECI activities, including any transactions that are processed through the ECI for another institution;
  3. Designate a compliance officer responsible for monitoring compliance with all OFAC laws and regulations, and an officer responsible for overseeing any funds blocked as a result of any OFAC law or regulation;
  4. Implement an audit program that will provide for independent testing of all aspects of the OFAC compliance program and for an annual comprehensive audit of each line of business relating to the ECI activities;
  5. Provide appropriate OFAC compliance training for all employees in each line of business relating to ECI activities;
  6. Maintain the most current OFAC List of prohibited countries, entities, and individuals;
  7. Retain all OFAC-related records for a period of not less than five years; and
  8. Require the OFAC compliance officer to develop a program to screen customers and transactions for OFAC compliance. The screening program shall, at a minimum:
    1. Ensure that all new customers are compared to the OFAC list and formally approved for activity before any transaction is initiated with the customer;
    2. Specify what information in the account is being compared, e.g., accountholder, signatories, powers of attorney, beneficiaries, and/or beneficial owners;
    3. Require that, whenever OFAC updates the OFAC List, a review shall immediately be performed of existing customers and of all electronic files used to maintain customer information;
    4. Require periodic testing to ensure that existing customers and any electronic customer information files are effectively tested for OFAC compliance;
    5. Require that all ECI activities be compared to the OFAC list and monitored for prohibited activity;
    6. Implement an escalation program to ensure that any potential matches of customers or transactions be reported immediately to the OFAC compliance officer for review and disposition;
    7. Implement effective controls to identify transactions that match an OFAC-sanctioned individual or entity;
    8. Require that any identified transactions be reported to OFAC in accordance with OFAC regulations and to the New York Fed personnel identified in the ECI Agreement; and
    9. Require that a history file of any customers or transactions initially identified as potential matches but subsequently approved by the OFAC compliance officer, be maintained under record retention policies for review by internal audit.
OFAC / AML / Cuba / Iran / Iraq / Libya / Yugoslavia
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