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$9 Billion Penalty Against Financial Institution for Violating Economic Sanctions

Wednesday, May 06, 2015
Sandler, Travis & Rosenberg Trade Report

The Department of Justice reports that a global financial institution headquartered in France will forfeit $8.8 billion to the U.S. and pay a $140 million fine for processing billions of dollars of transactions through the U.S. financial system on behalf of Sudanese, Iranian and Cuban entities subject to U.S. economic sanctions. A DOJ press release states that this is the first time a financial institution has been convicted and sentenced for violations of U.S. economic sanctions and that the total financial penalty is the largest ever imposed in a criminal case.

Assistant Attorney General Leslie Caldwell said the bank received the unprecedented penalty because it “flouted U.S. sanctions laws to an unprecedented extreme, concealed its tracks, and then chose not to fully cooperate with U.S. law enforcement.” Last year the bank admitted that it knowingly and willingly committed the violations regarding Sudan even as internal emails showed employees expressing concern about those activities, that it continued to do dollar business with Cuba long after it was clear that such business was illegal (behavior the bank itself called “cavalier” and “criminal”), and that it engaged in transactions involving entities tied to Iran nearly two years after it had commenced an internal investigation into its sanctions compliance and pledged to cooperate with the government.

According to the press release, the bank has also agreed to pay a civil monetary penalty of $508 million to the Board of Governors of the Federal Reserve System and a $2.24 billion penalty in connection with its guilty plea in New York State Supreme Court to falsifying and conspiring to falsify business records. The bank will receive credit for payment of these penalties in satisfying its criminal forfeiture penalty. In addition, the Treasury Department’s Office of Foreign Assets Control levied a fine of $963 million, which will be satisfied by payments made to the DOJ.

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