Category: 
ANZ Bank, Australia’s third largest bank, recently agreed to pay to the Office of Foreign Assets Control (“OFAC”) a fine of $5.75 million to settle allegations that the bank had engaged in transactions in Sudan and Cuba in violation of the U.S. embargo on those two countries. The OFAC announcement of the settlement noted that ANZ manipulated the SWIFT messages related to the Sudan transactions by removing all references to Sudan. ANZ was liable for these violations as a result of its banking office in New York City.
According to the announcement, 31 transactions with a total value of $106 million were involved. Given the size of the agreed penalty, it is clear that the applicable penalty to this case was not the penalty applicable before the International Economic Powers Penalty Enhancement Act (or $50,000 per transaction) but the enhanced penalties of $250,000 per violation or twice the value of the transaction imposed by that legislation. Under the enhanced penalties, ANZ was theoretically liable for $212 million. [UPDATE: Actually the maximum liability was $57,040,000. The Cuban transactions were subject to a maximum fine of $65,000 each. Thanks to Jim Slear in the comments for catching my mistake]
OFAC cited a number of mitigating factors justifying the reduced penalty including ANZ’s cooperation in the investigation, its voluntary disclosure of the Cuba violations, its adoption of revised compliance procedures, and its agreement to engage in, and report to OFAC, further audits of its activities to insure that it doesn’t process financial transactions involving embargoes countries through U.S. financial institutions. Australian banking authorities have agreed to review these examinations. The $5.75 million paid by ANZ is substantially less than the fines paid by Lloyds, ABN Amro and USB for similar violations which were, respectively, $350 million, $80 million and $100 million.
An article in the Brisbane Times provides more background on ANZ’s dealing with embargoed countries:
ANZ initially became aware of the issue in late 2006 when regulators last year blocked a $US15,000 transaction involving the import of stone from Iran.
ANZ appointed Deloitte to conduct an independent investigation of more than 330,000 trade finance transactions for Australian and international clients going back five years. This ultimately turned up 42 deals found to have breached US economic bans on 13 countries. However the fine from the US Treasury only relates to 31 trade finance transactions involving parties in Sudan and Cuba.
The OFAC announcement states that ANZ didn’t voluntarily disclose the Sudan transactions. That is somewhat hard to reconcile with this report of the Deloitte investigation unless ANZ kept the Deloitte investigation internal until OFAC independently uncovered the Sudan transactions.
Permalink 
Feeds
Subscribe