According to the Wall Street Journal and other news sources, The United StatesTreasury Department has changed how it calculates fines related to sanctions violations, which means larger penalties. The amount of the increases cannot be calculated yet. Treasury will no longer credit many fines paid to other government agencies as part of joint settlements. Two recent sanctions settlements fit the Treasury’s new approach: The Treasury and other agencies reached settlements totaling $1.1 billion with Standard Chartered Bank PLC, which was charged with violating U.S. sanctions, including those against Iran; and settlements totaling $1.3 billion reached with UniCredit Group SpA, which faced similar charges.
The Justice Department, the Federal Reserve and the New York State Department of Financial Services were part of those settlements. The U.K.’s Financial Conduct Authority also reached a separate settlement with Standard Chartered . In the settlements, the Treasury deducted penalties paid to other agencies from its own for matching conduct occurring over the same period of time. Gacki said the department was trying to balance its desire to avoid “unnecessary piling-on” with “a strategic use of its enforcement authorities.”
The Treasury Department issued new guidance on how companies should design effective sanctions compliance programs in May. The framework issued by the Treasury’s Office of Foreign Assets Control suggests that the agency wants companies to have an active sanctions compliance program, rather than a written policy alone, as the U.S. sanctions program becomes more dynamic and complex.framework_ofac_ccViolations of US sanction concerning foreign nations, including Iran, Cuba, North Korea and China are frequently the basis of whistleblower cases under The False Claims Act, which allows individuals with original information not known to the Government, to sue on behalf of the Government and if money are collected for the violations the whistleblower may collect a reward of up to 30% of what the government receives. Frequently the information known to employees of violating corporations is the only way in which the Government can find out about major violations including banks that do business with particular nations on the Treaury’s list. Here is the latest list of named nations with active US sanctions programs:
About santions on Iran:
Standard Chartered Bank (SCB), a global financial institution headquartered in London, England, has agreed to forfeiture of $240 million, a fine of $480 million, and to the amendment and extension of its deferred prosecution agreement (DPA) with the Justice Department for an additional two years for conspiring to violate the International Emergency Economic Powers Act (IEEPA). This criminal conspiracy, lasting from 2007 through 2011, resulted in SCB processing approximately 9,500 financial transactions worth approximately $240 million through U.S. financial institutions for the benefit of Iranian entities.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Jessie K. Liu of the District of Columbia, Assistant Director in Charge William F. Sweeney, Jr. of the FBI’s New York Field Office, Chief Don Fort of the IRS Criminal Investigation (CI), and District Attorney Cyrus R. Vance Jr. of New York County made the announcement.
The New York County District Attorney’s Office (DANY) is also announcing today that SCB has agreed to amend its DPA with DANY and extend for two additional years, and to pay an additional financial penalty of $292,210,160. Under the amended DPA with DANY, SCB has admitted that it violated New York State law by, among other things, falsifying the records of New York financial institutions. SCB has also entered into separate settlement agreements with the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), the Board of Governors of the Federal Reserve System (the Federal Reserve), the New York State Department of Financial Services (DFS), and the United Kingdom’s Financial Conduct Authority (FCA) under which SCB shall pay additional penalties totaling more than $477 million. The Justice Department has agreed to credit a portion of these related payments and, after crediting, will collect $52,210,160 of the fine, in addition to SCB’s $240 million forfeiture.
In connection with the conspiracy, a former employee of SCB’s branch in Dubai, United Arab Emirates (UAE), referred to as Person A, pleaded guilty in the District of Columbia for conspiring to defraud the United States and to violate IEEPA. A two-count criminal indictment was unsealed today in federal court in the District of Columbia charging Mahmoud Reza Elyassi, an Iranian national, 49, and former customer of SCB Dubai, with participating in the conspiracy.
“Today’s resolution sends a clear message to financial institutions and their employees: if you circumvent U.S. sanctions against rogue states like Iran—or assist those who do—you will pay a steep price,” said Assistant Attorney General Benczkowski. “When a global bank processes transactions through the U.S. financial system, its compliance program must be up to the task of detecting and preventing sanctions violations—and when it is not, banks have an obligation to identify, report, and remediate any shortcomings. The Justice Department is committed to protecting our U.S. financial system and will continue to hold financial institutions and individuals to account when they violate U.S. sanctions laws.”
“SCB and the individuals whose charges were unsealed today undermined the integrity of our financial system and harmed our national security by deliberately providing Iranians with coveted access to the U.S. economy,” said U.S. Attorney Liu. “The financial penalty announced today leaves no doubt that repeat corporate offenders with deficient compliance programs will pay a steep price. When bank employees and customers conspire to violate U.S. sanctions and subvert our national security, we will bring them to justice no matter where they reside or operate.”
“U.S. sanctions laws exist to protect our national security and the integrity of our financial systems,” said FBI Assistant Director in Charge Sweeney. “Global banks that facilitate transactions through our financial institutions have to play by these rules, plain and simple. Allowing hostile nations access to our economy is dangerous business. The deferred prosecution agreement and charges announced today make it abundantly clear that any alleged violation of IEEPA, whether on behalf of an individual or entity, will not be taken lightly.”
“The financial penalty announced today should dissuade other financial institutions around the world from thinking they can circumvent U.S. sanctions by moving money around the world through various institutions and in various forms,” said IRS-CI Chief Fort. “Following complex money trails is what we do—so too is holding those accountable who try to avoid following the law.”
“Our office’s unique jurisdiction and expert personnel have again enabled us to deliver hundreds of millions in ill-gotten gains to the People of New York while contributing to America’s longstanding effort to promote democratic values around the world,” said Manhattan District Attorney Vance. “We are honored and privileged to collaborate in this shared endeavor with the supremely talented public servants of the U.S. Departments of Justice and Treasury, the New York Department of Financial Services, and the Federal Reserve Bank of New York.”
A two-count felony criminal information was filed today in the District of Columbia charging SCB with illegally conspiring to violate IEEPA. The first count alleges SCB’s participation in a criminal conspiracy from 2001 through 2007; the United States first charged SCB with this illegal conduct on Dec. 10, 2012, and under the terms of a DPA entered the same day, the government agreed to defer prosecution and SCB agreed to pay a financial penalty of $227 million. The second count alleges SCB’s participation in a criminal conspiracy to violate IEEPA from 2007 through 2011. This latter conspiracy resulted in SCB intentionally processing U.S. dollar transactions through the U.S. financial system for the benefit of Iranian individuals and entities worth approximately $240 million. In the amended DPA, SCB admitted and accepted responsibility for its criminal conduct, agreed to extend the term of the agreement for an additional two years and, among other things, agreed to additional cooperation, compliance and disclosure obligations.
As part of the amended DPA announced today, SCB admitted that, from 2007 through 2011, two former employees of its branch in Dubai, willfully conspired to help Iran-connected customers conduct U.S. dollar transactions through the U.S. financial system for the benefit of Iranian individuals and entities. One of these Iran-connected customers was Elyassi, an Iranian national who operated business accounts with SCB’s Dubai branch while residing in Iran. SCB’s former employees helped Elyassi manage these accounts, concealed their Iranian connections, and facilitated foreign currency transactions in U.S. dollars. SCB’s former employees knew that Elyassi’s business organizations operated from Iran and conducted U.S. dollar transactions for the benefit of Iranian interests, and helped Elyassi disguise his Iranian connections to avoid suspicion.
According to the indictment unsealed today, Elyassi and his co-conspirators registered numerous supposed general trading companies in the UAE, and used those companies as fronts for a money exchange business located in Iran. Between November 2007 and August 2011, Elyassi used a business account at SCB’s Dubai branch to cause U.S. dollar transactions to be sent and received through the U.S. financial system for the benefit of individuals and entities ordinarily resident in Iran in violation of U.S. economic sanctions. The charges in the indictment as to Elyassi are merely allegations, and Elyassi is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
SCB admitted to processing approximately 9,500 U.S. dollar transactions through the United States totaling approximately $240 million on behalf of Elyassi’s companies between 2007 and 2011. More than half of these U.S. dollar transactions were the result of deficiencies in SCB’s compliance program which allowed customers to request U.S. dollar transactions from within sanctioned countries, including Iran.
Since mid-2013, SCB has engaged in significant remediation, including the comprehensive enhancement of its U.S. economic sanctions compliance program and significant improvements to its financial crime compliance program. Once presented with evidence of potential post-2007 sanctions violations, SCB provided substantial cooperation in the government’s investigation, including by producing significant evidence of criminal wrongdoing perpetrated by its employees and customers.
This matter was investigated by the FBI’s New York Field Office and the IRS-CI’s Washington D.C. Field Division. The cases are being prosecuted by the Criminal Division’s Money Laundering and Asset Recovery Section’s Bank Integrity Unit and the U.S. Attorney’s Office for the District of Columbia. Trial Attorney Jennifer Wine of the Bank Integrity Unit and Assistant U.S. Attorneys Michael Friedman and Peter Lallas of the District of Columbia are handling the matters.
The Bank Integrity Unit investigates and prosecutes complex, multi-district, and international criminal cases involving financial institutions. The Unit’s prosecutions focus on banks and other financial institutions, including their officers, managers, and employees, whose actions threaten the integrity of the individual institution or the wider financial system.
The New York County District Attorney’s Office conducted its own investigation in conjunction with the Justice Department, including Assistant District Attorneys Jose Fanjul and Kevin Wilson serving as Special Assistant U.S. Attorneys in the District of Columbia. The Justice Department expressed its gratitude to OFAC, the Federal Reserve, DFS, and the FCA. The Justice Department’s Office of International Affairs provided assistance.