News

Bright Line Law News

Latest news & updates from Bright Line Law.

US fines RBS for alleged sanctions violations

In an example of the global reach of financial regulators, the Royal Bank of Scotland last week agreed a combined $100 million settlement with a number of US federal and state government agencies in connection with alleged sanctions violations.

According to the US Department of the Treasury’s Office of Foreign Assets Control (OFAC), the settlement relates to apparent violations by RBS of US sanctions programs relating to Iran, Sudan, Burma, and Cuba.

The investigation involved collaboration between OFAC and 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). The United Kingdom’s Financial Conduct Authority was also involved.

The allegations in question relate to a period between 2005 and 2009, when OFAC says that RBS engaged in payment practices that interfered with the implementation of US economic sanctions by financial institutions in the United States.

Those practices included removing material references to US-sanctioned locations or persons from payment messages sent to US 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 US financial institutions.

According to OFAC, 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 US 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 US 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.

According to the BBC, RBS has issued a statement saying that it "acknowledges and deeply regrets these failings".

Contact Jonathan Fisher QC

For specialist advice on issues of corporate, regulatory or financial crime, contact Jonathan Fisher QC on +44 (0)20 7427 463 or click here to make an electronic enquiry.

Progress on euro anti-counterfeiting proposals
CONDUCTING BUSINESS IN INDIA
The views expressed in this article represent those of the author and not Bright Line Law.

Related Posts

The White Collar Centre