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$258 Million Penalty for Evading Economic Sanctions

Friday, November 06, 2015
Sandler, Travis & Rosenberg Trade Report

A German bank will pay a total of $258 million in penalties and take other measures for completing financial transactions on behalf of countries and entities subject to sanctions administered by the Office of Foreign Assets Control, including Iran, Libya, Syria, Burma and Sudan. The penalties include $200 million to the New York State Department of Financial Services and $58 million to the Federal Reserve Board. In addition, a consent cease and desist order imposed by the Fed will require the bank to implement an enhanced program to ensure global compliance with sanctions administered by OFAC and prohibit the bank from re-employing the individuals involved in the violations or retaining them as consultants or contractors.

A Federal Reserve press release states that the bank lacked adequate risk management and compliance policies and procedures to ensure that activities conducted at its offices outside of the U.S. complied with U.S. sanctions laws and were reported in a timely manner. Specifically, the NYSDFS adds, bank employees in many overseas offices, in different business divisions and with various levels of seniority were actively involved in developing and using non-transparent methods and practices to evade U.S. economic sanctions, resulting in more than 27,200 U.S. dollar clearing transactions valued at more than $10.86 billion on behalf of sanctioned entities.

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