The Department of the Treasury’s Office of Foreign Assets Control (OFAC) on Monday announced a settlement with a French bank for processing payments on behalf of sanctioned Syrian financial institutions that were followed by corresponding funds transfers through the U.S. financial system.
Union de Banques Arabes et Françaises (UBAF)—which facilitates trade finance between Europe and the Middle East, North Africa, sub-Saharan Africa, and Asia—will pay $8.57 million to resolve its potential civil liability for 127 apparent sanctions violations. The settlement amount reflects OFAC’s determination that the case was “non-egregious” and that UBAF voluntarily self-disclosed the violations.
According to OFAC, 114 of the 127 apparent violations involved UBAF’s processing of internal transfers on behalf of Syrian entities totaling $1.3 billion that were followed by corresponding funds transfers through a U.S. bank. The remaining 13 apparent violations “were either ‘back-to-back’ letter of credit transactions or other trade finance transactions involving sanctioned parties, all of which were processed through a U.S. bank,” OFAC stated. These were allegedly processed by UBAF between August 2011 and April 2013.
Compliance considerations: In this case, among the aggravating compliance factors that were considered, OFAC noted UBAF “demonstrated a reckless disregard for its U.S. sanctions compliance obligations when it continued to provide USD services to sanctioned Syrian parties after the August 2011 expansion of U.S. sanctions on Syria without properly identifying and managing the relevant sanctions compliance risks that providing those services posed to the bank.” Secondly, OFAC noted, “UBAF management had actual knowledge of the conduct giving rise to the apparent violations.”
The broader compliance message here: “Financial institutions that maintain accounts for entities domiciled in jurisdictions that become subject to comprehensive sanctions should assess the risk that may arise by continuing to provide services to those entities,” OFAC said, “particularly with respect to USD-denominated transactions that directly or indirectly clear through the U.S. financial system.”
Notable: This marks the second fine OFAC has issued against a foreign bank for violations of Syrian-related sanctions in a span of eight days. On Dec. 28, Saudi-based National Commercial Bank agreed to pay $653,347 to resolve 13 apparent violations, eight of which related to Syria.