Lessons Learned
From Sanctions Wiki
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.
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.
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
- willfully failing to maintain an effective anti-money laundering (AML) program,
- willfully failing to conduct due diligence on its foreign correspondent affiliates,
- violating IEEPA and
- violating TWEA.
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.
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.
- FRB Press Release
- Order to Cease and Desist Issued Upon Consent Pursuant to the Federal Deposit Insurance Act, as amended
- Order of Assessment of a Civil Money Penalty Issued Upon Consent Pursuant to the Federal Deposit Insurance Act, as amended
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.
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.
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) |
|---|---|---|---|---|---|
| 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 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 |
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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 |
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| 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 |
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| 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.
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| 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 |
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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
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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)
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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:
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 |
|
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
|
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
|
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.
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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:
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.
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:
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
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OFAC / AML / Cuba / Iran / Iraq / Libya / Yugoslavia |
