Romanian bank and US parent settle with OFAC for trade finance sanctions violations

Romania’s First Bank and its parent company, US investment firm J C Flowers, have entered into a US$862,318 settlement with the US treasury department’s Office of Foreign Assets Control (OFAC) for apparent violations of the Iran and Syria sanctions programmes.

The bank, which provides letters of credit and documentary collections in its trade finance offering, disclosed sanctions violations in its trade finance operations.

Suspicious timber trade

In 2019, the Romanian regulator flagged a suspicious US dollar transaction that First Bank had processed for a shipment of timber from Romania to Syria.

The bank responded by commencing a five-year lookback in March 2019, the results of which it voluntarily self-disclosed to OFAC.

Underlying trade finance documents

The apparent violations related to three categories of payments. The first involved processing US dollar payments for individuals or entities located in Iran totalling US$991,246 through US banks in which the end user of the underlying commercial transaction was in Iran and the payments were made on behalf of Iranian customers of First Bank.

The second involved processing US dollar payments for individuals or entities located in Syria totalling US$1,061,104 through US banks in which the underlying trade finance documentation showed that the importers were located in Syria.

These transactions constituted an indirect exportation of financial services to Syria and Iran and caused US financial institutions to export financial services to Syria and Iran, in apparent violation of US sanctions.

Prohibitions on US entities

The third category of violations involved processing euro-denominated payments to Iran as a foreign subsidiary of a US company. In June 2018, J C Flowers acquired a majority ownership interest in First Bank, making the bank an entity majority-owned by a US person and thus subject to the US prohibitions, which included a ban on processing euro-denominated payments to Iran.

In an apparent violation of sanctions, First Bank processed 28 euro-denominated payments totalling US$1,536,840 outside the US financial system involving Iranian parties and interests with actual knowledge or reason to know that the payments were for Iranian parties.


Categories: Trade Based Financial crimes News

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