Barclays Bank PLC Reaches Settlement With US Authorities

Aug 19, 2010   

On August 18, 2010, the United States Department of Treasury Office of Foreign Assets Control announced that it has reached a settlement with Barclays Bank PLC to settle allegations of violations of multiple sanctions programs relating to transactions Barclays conducted with customers from Cuba, Sudan, Burma, and Iran. Barclays Bank is the United Kingdoms second largest bank earning $14.8 billion in net income last year. The Office of Foreign Assets Control (“OFAC”) administers and enforces economic sanctions against targeted foreign countries, regimes, terrorists, international narcotics traffickers, among others.

On August 16, 2010, a criminal information was filed in the U.S. District Court for the District of Columbia charging Barclays with one count of violating the International Emergency Economic Powers Act (“IEEPA”) and one count of violating the Trading with the Enemy Act (“TWEA”). It is a crime to willfully violate, or attempt to violate, any regulation issued under IEEPA and TWEA. Barclays has waived indictment and accepted responsibility for the criminal violations.

Barclays has agreed to forfeit $298,000,000 to the Department of Justice and the New York County District Attorneys Office for violations of the Sudanese Sanctions Regulations, the Iranian Transactions Regulations, and the Cuban Assets Control Regulations promulgated pursuant to IEEPA and TWEA.

According to the complaint, Barclays intentionally engaged in banking practices designed to avoid filters at U.S. Banks created to detect transactions in violation of OFAC regulations. Such practices included not naming or removing the names in payment messages in order to conceal the identity of sanctioned entities, routing payments through internal Barclays accounts to hide connections to sanctioned entities, and using cover payments to hide referencing parties targeted by U.S. sanctions.

Barclays voluntarily self-disclosed the violations under the terms of OFACs Economic Sanctions Enforcement Guidelines. In addition to forfeiting $298 million U.S.D., Barclays has also agreed to enter into a Deferred Prosecution Agreement for the next 2 years. This will require Barclays to improve its U.S. economic sanctions compliance programs as well as require Barclays to conduct annual reviews of its policies and procedures in regards to OFAC compliance. The British Financial Services Authority will assist OFAC in assuring future compliance by Barclays.

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