UBAF settles for nearly US$8.6 million for “reckless disregard” of Syria sanctions in internal transfers and L/C transactions

Union des Banques Arabes et Francaises (UBAF) of France has reached a settlement with the US treasury department’s Office of Foreign Assets Control (OFAC) in which the bank has agreed to remit US$8,572,500 to settle its potential civil liability for 127 apparent violations of Syria-related sanctions. 

Nearly two-thirds of the apparent violations admitted by the bank, which facilitates trade finance between Europe and the Middle East, Africa and Asia, involved the processing of internal transfers on behalf of Syrian entities that were followed by corresponding funds transfers through the US financial system.

More than one-third of the apparent violations however involved letter of credit (L/C) transactions involving sanctioned parties, all of which were processed through a US bank.

Transfers and L/Cs

Of the bank’s 127 apparent violations, 114 involved the processing of internal transfers on behalf of Syrian entities totalling nearly US$1.3 billion that were followed by approximately 114 corresponding funds transfers through a US bank.

The remaining 13 apparent violations were either back-to-back L/C transactions or other L/C transactions totalling nearly US$782 million involving sanctioned Syrian parties, all of which were processed through a US bank.

L/C transactions

The majority of L/Cs used in the apparent violations were back-to-back transactions in which a sanctioned Syrian entity was the beneficiary of export L/Cs or the applicant for import L/Cs that did not involve US dollar clearing, but the intermediary entered into or received one or more corresponding US dollar denominated L/C to purchase or sell the same goods.

For the other L/C transactions, UBAF either issued a US dollar denominated L/C on behalf of a sanctioned party or confirmed a US dollar denominated L/C issued by a sanctioned bank and paid on the L/C through a transaction cleared in the US.

Reckless disregard

“UBAF demonstrated a reckless disregard for its US sanctions compliance obligations when it continued to provide USD services to sanctioned Syrian parties after the August 2011 expansion of US sanctions,” according to OFAC.

But the bank escaped the huge maximum civil monetary penalty applicable of US$4.2 billion because it voluntarily self-disclosed the apparent violations in what OFAC describes as a non-egregious case.



Categories: Trade Based Financial crimes News

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