OFAC settles with Romanian and UK banks for sanctions violations
The US Treasury’s Office of Foreign Assets Control (‘OFAC’) has published details of settlements with two banks for violations of sanctions – in one case, for breaches of Iran and Syria sanctions, in the other, for breaches of the (now-repealed) Sudan sanctions programme.
First Bank SA
OFAC said that First Bank SA, located in Romania, and its US parent company, JC Flowers & Co., had agreed to pay $862,318 ‘to settle potential civil liability for [its] processing of transactions in apparent violation of OFAC’s Iran and Syria sanctions programs.’
It said First Bank had processed ‘98 commercial transactions totaling $3,589,189 through U.S. banks on behalf of parties located in Iran and Syria,’ and that, in 2018, after JC Flowers had acquired a majority ownership interest in First Bank, First Bank processed Euro-denominated payments for persons located in Iran.
OFAC said that between 2 March 2016 and 5 December 2018, First Bank processed payments which ‘constituted an indirect exportation of financial services to Iran and caused U.S. financial institutions to export financial services to Iran, in apparent violation of §§ 560.203 and 560.204 of the Iranian Transactions and Sanctions Regulations, 31 CFR part 560 (ITSR).’
BOC UK mitigation: a ‘lookback review’
In a separate case, OFAC said it has reached a settlement with Bank of China (UK) Ltd. (‘BOC UK’) of approximately $2.3m. OFAC said that between 4 September 2014 and 24 February 2016, ‘BOC UK exported financial services from the U.S. by processing 111 commercial transactions totaling $40,599,184 through the U.S. financial system on behalf of parties in Sudan.’
A mitigating factor, said OFAC, was that BOC UK had self-disclosed the apparent violations and cooperated with the OFAC investigation: ‘As a result of an internal investigation triggered by a Sudanese customer’s request to process a payment, BOC UK conducted a lookback review to identify potential Sudan-related transactions. That review identified two customers of BOC UK who had engaged in Sudan-related transactions that BOC UK processed through the U.S. financial system.
‘One of the customers was an entity incorporated outside of Sudan that maintained a branch in Sudan that, in 2014, became the instructing party and account signatory to transactions processed by BOC UK on behalf of the entity. Written communications from that customer contained references to the location of the branch in Sudan. BOC UK also processed certain transactions to recipients which appeared to be in Sudan at the time. The other customer was a Sudanese subsidiary of an entity also incorporated outside of Sudan.
‘The information provided by the subsidiary to BOC UK as part of the bank’s know-your-customer documentation identified the subsidiary as being registered in Sudan. In relation to both customers, BOC UK’s internal customer database did not include reference to Sudan in the name or address fields of either customer. Accordingly, SWIFT messages processed for those customers by BOC UK through U.S. banks did not include any references to Sudan.’
The deficiencies, OFAC said, ‘resulted from BOC UK’s staff’s failure to appropriately evaluate and escalate potential transactions with underlying account and transactional documentation indicating ties to Sudan.’
https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20210827
https://home.treasury.gov/policy-issues/financial-sanctions/recent-actions/20210826
