French Bank Fined for Violating US Sanctions Against Syria
The Office of Foreign Assets Control accepted a settlement from a French bank of than $8.5 million for apparent violations U.S. sanctions against Syria, OFAC said in a Jan. 4 notice. Union de Banques Arabes et Françaises (UBAF) operated U.S. dollar accounts for Syrian financial institutions and “indirectly conducted USD business” for those accounts on behalf of the institutions through the U.S. financial system, OFAC said. UBAF agreed to remit $8,572,500 to settle its potential civil liability for 127 “apparent violations.”
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The majority of UBAF’s violations, which occurred between 2011 and 2013, involved the processing of internal transfers on behalf of the Syrian entities followed by “corresponding funds transfers” through a U.S. bank, the notice said. Other violations involved “‘back-to-back’ letter of credit transactions” or other “trade finance transactions” involving sanctioned parties, OFAC said.
The agency said UBAF committed 127 apparent violations of U.S. sanctions, including 114 internal transfers for the Syrian entities totaling about $1.3 billion. Forty-five of the transfers included a U.S. dollar transfer between two of UBAF’s clients -- one sanctioned Syrian entity and a non-sanctioned client -- on UBAF’s “own books,” OFAC said. For other transfers, UBAF conducted a “foreign exchange” (FX) transaction in which it debited an account in one currency and credited “the same sanctioned customer’s account in another currency.” OFAC said the bank then “conducted a U.S.-cleared FX transaction with a non-sanctioned third party that correlated closely with the original FX transaction involving the sanctioned customer.”
OFAC said the 127 transactions that led to the violations were worth about $2 billion. While the bank had “knowledge of OFAC sanctions laws,” the agency said UBAF “incorrectly believed that avoiding direct USD clearing on behalf of sanctioned parties was sufficient.” UBAF voluntarily disclosed the violations, which OFAC said constituted a non-egregious case. Aggravating factors included that the bank demonstrated “reckless disregard” for its sanctions compliance obligations, had knowledge of the conduct that led to the violations and “conferred significant economic benefit” to U.S.-sanctioned parties.
Mitigating factors included that the majority of the violations took place shortly after U.S. sanctions authority against Syria were expanded and that UBAF had a compliance program in place. OFAC also said the bank cooperated with the agency’s investigation, had not received a penalty notice in the previous five years and has improved its compliance program. Those measures include new compliance policies, screening procedures, employee training, a review of its “business lines” and the creation of a “compliance committee” composed of senior management.