Treasury Department Reaches $33 Million Settlement with the Royal Bank of Scotland plc

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12/11/2013

  

Treasury Settlement part of Interagency Investigation into

Apparent 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.

News Source : Treasury Department Reaches $33 Million Settlement with the Royal Bank of Scotland plc

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