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$1.1 Billion Penalty, Compliance Efforts Imposed for Sanctions Violations

Thursday, April 11, 2019
Sandler, Travis & Rosenberg Trade Report

A financial institution headquartered in the United Kingdom will pay $1.1 billion to U.S. and UK authorities to settle charges that it violated U.S. economic sanctions against Burma, Cuba, Iran, Sudan, Syria, and Zimbabwe. The bank also agreed to extend for two years its deferred prosecution agreements with the Department of Justice and the New York County District Attorney’s Office.

According to the Office of Foreign Assets Control, from June 2009 until May 2014 the bank processed 9,335 transactions totaling $437.6 million to or through the U.S. All of these transactions involved persons or countries subject to U.S. sanctions programs but the majority concerned Iran-related accounts maintained by the institution’s branches in the United Arab Emirates.

OFAC cited as aggravating factors the bank’s “reckless disregard” and failure to exercise a minimal degree of caution or care, the involvement of supervisory and managerial personnel (including those with responsibility for financial crimes and sanctions compliance) in discussions of specific customers or products and services that posed OFAC sanctions risks, and the inadequacy and “multiple systemic deficiencies” of the bank’s compliance program.

However, OFAC also recognized the bank’s “comprehensive global remediation” of its sanctions compliance program since 2013 as a mitigating factor. Specific measures have included spending $2.8 billion on financial crime compliance; increasing staff in its legal and financial crime compliance functions six-fold; implementing additional measures to block payment instructions from countries subject to U.S. sanctions; upgrading its customer due diligence, transaction screening, and other compliance tools and technology; and improving its ability to assess and measure its sanctions compliance risk. The bank has also worked proactively to devise, implement, and support new models of industry cooperation to detect and prevent financial crime, including through public-private partnerships.

In addition, the bank has agreed to ensure it has a management team that is committed to a culture of compliance, conducts regular risk assessments, ensures that internal controls appropriately mitigate sanctions-related risks, conducts regularized audits, and provides ongoing sanctions compliance training.

For more information on U.S. sanctions and ways to ensure your company is in compliance, please contact Kristine Pirnia at (202) 730-4964.

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