Swiss bank UBS yesterday reached a $1.7 million settlement with the U.S. Department of Treasury’s Office of Foreign Assets Control to resolve allegations that it violated global terrorism sanctions regulations.
According to OFAC, UBS processed 222 transactions from 2008 to 2013 related to securities held in custody in the United States for a UBS customer in Switzerland who OFAC designated as a “blocked” person in 2001 on its sanctions list.
OFAC said the settlement amount reflected the following compliance failures:
UBS acted with reckless disregard for U.S. sanctions requirements by failing to implement adequate controls to prevent the apparent violations from occurring despite receiving numerous warning signs that its conduct could lead to violations of U.S. sanctions laws;
Multiple business lines and personnel within UBS, including supervisory and management staff within the bank’s compliance department, had actual knowledge of the conduct that led to the apparent violations; and
Although multiple personnel within UBS’ compliance department were aware of the client’s OFAC designation, including the senior-level manager at UBS Switzerland responsible for sanctions compliance, the bank failed to implement any steps or measures to prevent UBS from processing transactions for the client to or through the United States.
OFAC said the base penalty amount was $3.8 million. It decided to reduce the penalty amount, however, because of the following mitigating factors:
UBS hadn’t received a penalty notice or finding of violation from OFAC in the five years preceding the earliest date of the transactions giving rise to the violations;
UBS has a global sanctions policy in place that requires the bank to comply with the sanctions programs administered by OFAC;
UBS took remedial action in response to the apparent violations, including by conducting a thorough internal investigation regarding the apparent violations; and
UBS substantially cooperated with OFAC’s investigation by submitting detailed and organized information, responding thoroughly and promptly to OFAC’s requests for information, and executing a statute of limitations tolling agreement and an extension to that agreement.
“This enforcement action highlights the importance of institutions taking appropriate measures to ensure compliance with all applicable sanctions when they have operations or otherwise conduct business in multiple jurisdictions that have implemented sanctions against particular persons (individuals or entities) or countries,” OFAC said. "This action should also raise awareness regarding the sanctions obligations for foreign financial institutions, including those that purchase, sell, transfer, or otherwise transact in U.S. securities that process transactions to or through the United States."