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SANCTIONS

Case studies

The breach of sanctions carries high reputational risks for jurisdictions. As a result, greater scrutiny has been placed on compliance with sanctions legislation in recent years. Below are brief case studies of international sanctions breaches committed by well-known institutions, and the penalties imposed for non-compliance.

CASE STUDY 1: ROYAL BANK OF SCOTLAND LTD – 2010

Fined £5.6 million in August 2010 by the Financial Services Authority for failing to adequately screen their customers and payments against the Consolidated List.
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CASE STUDY 2: BARCLAYS PLC – 2010

In August 2010 Barclays agreed to pay US$298 million to US authorities for facilitating payments to countries that were under US sanctions such as Cuba, Iran, Libya, Sudan and Burma. To hide illegal transactions, Barclays altered and routed payment messages to ensure they could clear its branch in New York and other US banks.
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CASE STUDY 3: MABEY AND JOHNSON – 2009

In September 2009, British bridge construction company, Mabey and Johnson, was fined £3.5 million for breaching UN sanctions against Iraq and bribing officials. The company was also required to pay a £1.1 million confiscation order, reparation payments over £1.4 million and the prosecution costs.
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CASE STUDY 4: LLOYDS TSB – 2009

Lloyds TSB forfeited a total of US$350 million to the United States and New York County in January 2009 for assisting customers to skirt around US Sanctions on business transactions with the Sudan, Iran and Libya. Lloyds TSB stripped information such as customer names, bank names and addresses from payments so that they would pass undetected through screening filters in US institutions. This meant the payments appeared to be originating from Lloyds in the UK instead of sanctioned banks.
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CASE STUDY 5: ABN AMRO 2005

In 2005, ABN AMRO paid US$80 million in penalties to US federal and state regulators after being accused of “serious, longstanding and systematic” errors, breaching OFAC rules at its New York and Dubai offices. Rijkman Groenink, the then chief executive, gave up 40% of his bonus in recognition of the company’s failings.
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CASE STUDY 6: UBS - 2004

In 2004, UBS paid a US$100 million fine to the Federal Reserve after its Zurich office breached US sanctions by sending dollars to Cuba, Iran, Libya and Yugoslavia between 1996-2003.
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CASE STUDY 7: CREDIT SUISSE AG - 2009

In December 2009, Credit Suisse AG (a Swiss bank) agreed to pay a financial penalty of US$536 million to the US Department of Justice (DOJ). The penalty was imposed because Credit Suisse had violated New York State Law by falsifying the records of New York financial institutions. The scheme enabled Credit Suisse’s Iranian, Libyan, Sudanese and other sanctioned clients to access the U.S. financial system in violation of US sanctions.
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CASE STUDY 8: AUSTRALIAN AND NEW ZEALAND BANK GROUP LTD (“ANZ”) – 2009

ANZ, Melbourne, Australia, remitted US$5,750,000 million to OFAC.
The settlement covered 16 transactions in the aggregate amount of approximately US$28 million alleged to have violated the Sudanese Sanctions Regulations, and 15 transactions in the aggregate amount of US$78 million alleged to have violated the Cuban Assets Control Regulations.
Details of the Cuban violations were not released. In respect of the Sudanese violations, ANZ actively manipulated the SWIFT messages relating to Sudanese transactions by removing references to Sudan, or the names of entities subject to sanctions in the United States. This in turn impeded the ability of US banks to detect US sanctions violations.
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