Dubai-based Mashreqbank’s agreement to pay US$100 million in penalties for its deliberate omission of payment transactions with ties to Sudan in violation of US sanctions against the African country may serve as a warning to banks with US operations to diligently monitor their correspondent networks.
The UAE’s oldest privately owned bank failed to provide adequate oversight of transactions by customers in high-risk regions, according to statements issued alongside coordinated enforcement actions by the New York State Department of Financial Services (DFS), Federal Reserve and the US treasury’s Office of Foreign Assets Control (OFAC).
Concealing Sudanese connections
Mashreqbank instructed its employees to avoid populating certain fields in the payment messages sent between banks so as to conceal the prohibited Sudanese element of these transactions, thus bypassing the sanction filters of other banks which might otherwise trigger an alert or freeze the transaction according to DFS investigators.
This resulted in Mashreqbank processing prohibited payments totalling over US$4 billion between 2005 and 2009. Between 2010 and 2014, the bank’s New York branch processed additional Sudan-related prohibited payments totalling approximately US$2.5 million.
Mashreqbank provided “substantial cooperation” throughout the course of investigations into the violations according to both DFS and OFAC.
The bank also voluntarily entered into a retroactive statute of limitations waiver agreement with OFAC so it could investigate the case even though it is normally limited to investigating activities that took place no more than five years ago.
As well as the US$100 million penalty, the settlement with the three US authorities requires Mashreqbank to report on the status and sustainability of the bank’s OFAC compliance programme.
The DFS announcement of the US$100 million penalty on Mashreqbank for violations of US sanctions laws can be found here.
OFAC’s findings of Mashreqbank’s violations of the Sudanese sanctions regulations can be found here.
Categories: Trade Based Financial crimes News