Global banks are the poster children of sanctions violations and the importance of trade compliance.  At the top of the heap is Standard Chartered Bank.

In a long-awaited resolution of a multi-year investigation, the Justice Department, the Treasury Department’s Office of Foreign Asset Control (OFAC), the New York District Attorney’s (DANY), the Federal Reserve, the New York State Department of Financial Services (DFS) and the United Kingdom’s Financial Conduct Authority (FCA) announced a number of settlement agreements in connection with SCB’s violations of Iran Sanctions Programs.

Under the agreements, SCB agreed with the:

• Justice Department to forfeit $240 million, a fine of $480 million and to extend its existing deferred prosecution agreement (DPA) for an additional two years;
• Department of Treasury’s Office of Foreign Asset Control (OFAC) to pay total penalties of $657 million; the Federal Reserve to pay penalties of $163 million; the New York Department of Financial Services to pay total penalties of $180 million; and the UK’s Financial Conduct Authority to pay total penalties of $133 million; and  
• New York District Attorney’s Office to pay a financial penalty of $292 million and extend its DPA with DA-NY for two years.

The Justice Department agreed to credit a portion of these payments and reduced its fine for SCB from $480 million to $52 million, along with the $240 million forfeiture. 

After crediting these payments, SCB is paying a total of over $1.6 billion, consisting of: $240 million in forfeiture, $52 million to DOJ; $657 million to OFAC; $768 million (NY-DA, Federal Reserve, NYDFS and UK FCA). 

At the same time, DOJ filed a new two-count felony information with the US District Court in the District of Columbia which added a second count to an original information filed on December 10, 2012.  The first count filed in 2012 charged SCB with a criminal conspiracy from 2001 to 2007 to violate the International Emergency Economic Powers Act (IEEPA).  In the 2012 settlement, SCB agreed to pay a criminal fine of $227 million.

In the newly-added second count, SCB agreed to defer prosecution of a second IEEPA conspiracy from 2007 to 2011, which resulted in SCB processing approximately 9,500 U.S. dollar transactions to benefit Iranian individuals and entities totaling approximately $240 million.

The Justice Department also announced the indictment of an Iranian national, Mahmoud Reza Elyassi, and the guilty plea of a former SCB employee for a criminal conspiracy to violate the Iran Sanctions Program.

SCB’s sanctions violations arose from activities in SCB’s Dubai and London offices.  Elyassi, an Iranian national who maintained business accounts in SCB’s Dubai branch, conducted foreign currency transactions in US dollars.  SCB’s former employees knew that Elyassi’s business organizations operated from Iran and benefit Iranian interests, and helped Elyassi disguise his Iran connections to avoid detection by SCB officials.

Elyassi and co-conspirators registered numerous general trading companies in the United Arab Emirates and then used these companies as front for money exchange transactions to benefit his business operations in Iran.

For its part, SCB admitted to processing approximately 9,500 US dollar transactions through the United States in violation of the Iran Sanctions Program.  SCB has engaged in significant remediation including the enhancement of its US sanctions compliance program and improvements to its financial crime compliance program.  SCB fully cooperated with the government’s investigation, including by producing significant evidence of criminal wrongdoing by individuals.