On Aug. 24, 2009, the Office of Foreign Assets Control (“OFAC”) released enforcement information advising that Australia and New Zealand Bank Group, Ltd. (“ANZ Bank”), based in Melbourne, Australia, paid $5.75 million to settle allegations that, from 2004 to 2006, it violated the Sudanese Sanctions Regulations and Cuban Assets Control Regulations. Specifically, OFAC alleged that ANZ Bank removed, or “stripped,” references to Sudan and the names of entities subject to the Sudanese and Cuban sanctions programs from SWIFT messages before forwarding the messages to U.S. correspondent banks. By removing this information, OFAC claimed, ANZ Bank concealed the identity of the sanctions targets and impeded U.S. banks from identifying the prohibited transactions.
The settlement covers 31 transactions conducted by ANZ Bank, including 16 transactions, valued at approximately $28 million, that allegedly violated the Sudanese Sanctions Regulations, and 15 transactions, valued at approximately $78 million, that allegedly violated the Cuban Assets Control Regulations. OFAC agreed to mitigate the total potential penalty amount in consideration of certain factors, including (1) ANZ Bank’s cooperation, (2) ANZ Bank’s prompt and thorough remedial response, and (3) the fact that ANZ Bank had no OFAC enforcement actions in the five years prior to the transactions at issue. As part of its remedial response, ANZ Bank, among other things, enhanced its OFAC compliance policies and procedures, and agreed to examine further the policies and procedures to determine if additional enhancements would be necessary to ensure, to the best of its ability, that no ANZ transactions that violate U.S. sanctions are processed by or through U.S. financial institutions. ANZ Bank agreed to report its examination findings to OFAC, and the Australian Prudential Regulation Authority, ANZ Bank’s primary regulator, will review the examination results and monitor the resolution of any adverse findings.
This settlement is one of several federal and state enforcement actions in recent years involving the stripping of material information from financial transactions sent by foreign banks through U.S. financial institutions. In December 2005, ABN AMRO Bank N.V. agreed to an assessment of civil penalties totaling $80 million by U.S. federal and state regulators, to resolve allegations that, among other things, its non-U.S. branches stripped information from letters of credit, wire transfers and U.S. dollar checks sent to banks in the United States to conceal the involvement of entities subject to the Iranian and Libyan sanctions programs. In January 2009, Lloyds TSB Bank Plc forfeited $350 million to U.S. and New York prosecutors, to resolve allegations that it stripped information from payment messages sent to U.S. correspondent banks to conceal the involvement of parties sanctioned under the Iranian, Sudanese, and Libyan sanctions programs. According to recent news reports, Robert Morgenthau, Manhattan’s District Attorney, acknowledged that his office is investigating other foreign banks accused of stripping material information from financial transactions “just like Lloyds,” and at least one investigation may soon lead to a deferred prosecution agreement.1
OFAC’s release regarding ANZ Bank’s settlement is available on OFAC’s website at: http://www.treas.gov/offices/enforcement/ofac/civpen/penalties/08242009.pdf.