Settlement part of Interagency Investigation into
Violations of Sanctions Programs
WASHINGTON – As part of a combined $100 million
settlement with federal and state government agencies, the U.S. Department of
the Treasury’s Office of Foreign Assets Control (OFAC) today announced a $33
million agreement with the Royal Bank of Scotland plc (RBS) to settle its
potential liability for apparent violations of U.S. sanctions regulations.
Today’s settlement resolves OFAC’s investigation into apparent violations by
RBS of U.S sanctions programs relating to Iran, Sudan, Burma, and Cuba.
“We remain resolute in enforcing our comprehensive sanctions
against Iran, and we will continue to take aggressive action against those who
would flout our law,” said Under Secretary for Terrorism and Financial
Intelligence David S. Cohen.
OFAC worked closely with its counterparts at the Board of
Governors of the Federal Reserve System (Board of Governors) and the New York
State Department of Financial Services (NYDFS). Together, the three
agencies cooperated with the United Kingdom’s Financial Conduct Authority, and
collaborated thoroughly throughout the investigation. Today’s OFAC
settlement is being entered into simultaneously with the bank’s resolution of
the matter with the Board of Governors and the NYDFS.
“Today’s settlement is the result of an exhaustive
interagency investigation into Royal Bank of Scotland’s activities involving
sanctioned countries,” said OFAC Director Adam J. Szubin. “This action
demonstrates our continuing efforts to aggressively enforce U.S. sanctions laws
against Iran and other sanctioned parties, and underscores our commitment to
work with our federal and state partners in the regulatory community to ensure
the U.S. financial system is protected from the risks associated with this type
of illicit financial behavior.”
From 2005 to 2009, RBS engaged in payment practices that
interfered with the implementation of U.S. economic sanctions by financial
institutions in the United States. Those practices included removing
material references to U.S.-sanctioned locations or persons from payment
messages sent to U.S. financial institutions. With respect to Iran, for
example, RBS accomplished this by developing written procedures to send
payments that omitted information about the Iranian nexus in cover payments
sent to U.S. financial institutions. The procedures instructed employees
to list the actual name of the Iranian financial institution rather than the
Bank Identifier Code in the beneficiary bank field of the payment
instructions. Doing so prevented the RBS payment system from
automatically including references to the Iranian bank or Iran in related cover
messages and resulted in the omission of that data from instructions sent to
U.S. clearing banks. While the instructions were developed to handle
payments involving Iran, RBS identified that similar methods were used for
certain payments involving Sudan, Burma, and Cuba as well.
These actions resulted in apparent violations of the Iranian
Transactions Regulations, 31 C.F.R. part 560; the Sudanese Sanctions
Regulations, 31 C.F.R. part 538; the Burmese Sanctions Regulations, 31 C.F.R.
part 537; and the Cuban Assets Control Regulations, 31 C.F.R. part 515.
Under the settlement agreement, RBS is required to put in
place and maintain policies and procedures to minimize the risk of the
recurrence of such conduct in the future. RBS is also required to provide
OFAC with copies of submissions to the Board of Governors relating to the OFAC
compliance review that it will be conducting as part of its settlement with the
Board of Governors.
RBS’s $33 million settlement with OFAC will be deemed
satisfied by the bank’s payment of a penalty to the Board of Governors for the
same pattern of conduct.