DOJ Announces $298M Fine Against UK Bank for Violations of IEEPA, Etc.
The Justice Department announced on August 18, 2010, that Barclays Bank PLC, a United Kingdom corporation headquartered in London, has agreed to forfeit $298 million to the U.S. and to the New York County District Attorney’s Office in connection with violations of the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA).
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The Office of Foreign Assets Control has also entered into a settlement agreement with Barclays for IEEPA violations that will require the bank to pay an additional $176 million.
Violations Relate to Illegal Conduct on Behalf of Customers from Cuba, Iran, and Sudan
A criminal information regarding its violations was filed August 16, 2010, after which Barclays waived indictment, agreed to the filing of the information, and has accepted and acknowledged responsibility for its criminal conduct.
The violations relates to transactions Barclays illegally conducted on behalf of customers from Cuba, Iran, Sudan and other countries sanctioned in programs administered by OFAC. Barclays agreed to forfeit the funds as part of the deferred prosecution agreements which were approved on August 18. Moreover, in light of the bank’s remedial actions to date and its willingness to acknowledge responsibility for its actions, the Justice Department will recommend the dismissal of the information in two years, provided Barclays fully cooperates with, and abides by, the terms of the deferred prosecution agreement.
Bank's Self-Disclosure of All Violations Resulted in Lower Fines
"Banks like Barclays will not be permitted to disregard sanctions put in place by the U.S. government," said Assistant Attorney General Lanny A. Breuer of the Criminal Division. "Not just once, but numerous times over more than a decade, Barclays stripped vital information out of payment messages that would have alerted U.S. financial institutions about the true origins of the funds. This serious conduct has now resulted in a serious sanction -- forfeiture of $298 million, a public admission of its illegal acts, and the implementation of stringent compliance measures.
OFAC Director Adam J. Szubin added that "the substantial economic benefit to sanctioned parties and the systemic nature of the apparent violations could have resulted in a much more onerous OFAC fine had Barclays not voluntarily self-disclosed and had it not cooperated with OFAC throughout the investigation. This is the first settlement of this magnitude where OFAC determined that all of the apparent violations were voluntarily self-disclosed by the bank."
(According to court documents, from as early as the mid-1990s until September 2006, Barclays knowingly and willfully moved or permitted to be moved hundreds of millions of dollars through the U.S. financial system on behalf of banks from Cuba, Iran, Libya, Sudan and Burma, and persons listed as parties or jurisdictions sanctioned by OFAC in violation of U.S. economic sanctions.
Barclays followed instructions, principally from banks in Cuba, Iran, Libya, Sudan and Burma, not to mention their names in U.S. dollar payment messages sent to Barclays’ branch in New York and to other financial institutions located in the United States. Barclays routed U.S. dollar payments through an internal Barclays account to hide the payments’ connection to OFAC-sanctioned entities and amended and reformatted the U.S dollar payment messages to remove information identifying the sanctioned entities. Barclays also deliberately used a less transparent method of payment messages, known as cover payments, as another way of hiding the sanctioned entities identifying information.)