Take Guard Against Sanctions Screening

July 23, 2019

Recently, Standard Chartered Bank (SCB) was ordered to pay $1.1 billion for conspiring to violate the International Emergency Economic Powers Act (IEEPA) and other international money laundering controls. It included a criminal conspiracy involving some 9,500 transactions worth a quarter of a billion dollars to the benefit of sanctioned Iranian entities.

More than half of the transactions were the result of deficiencies in SCB’s compliance program, which allowed customers to request US dollar transactions from within sanctioned countries. Less than two weeks later, US officials fined one of Europe’s largest banks, UniCredit Bank AG (UCB AG), more than $1.3 billion for processing nearly $400 million for sanctioned entities and countries, including Iran, Libya and Cuba.

UCB AG not only did business with sanctioned entities, it even altered its screening to strip sanctioned countries from transaction information in a conspiracy run by compliance staffers. Prosecutors said the bank “engaged in this criminal conduct through a scheme, formalised in its own bank policies, designed to conceal from US regulators the involvement of sanctioned entities in certain transactions”. In one instance, the bank actually used its sanctions screening software to find and release illegal transactions to blacklisted regimes.

These and other financial institutions (FIs) have been scrutinized as regulators seek to send a strong message that FIs will be heavily fined if they drop the ball on sanctions screening. At the same time, US regulators are warning individuals they may also be held responsible for letting dirty money get through the system. In my opinion, this is a clear wakeup call for anyone in the financial industry.

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