Our correspondent Andreas Frank (frank-cs.org) writes:
The Royal Bank of Scotland is paying $100 million in fines to New York and federal banking regulators to settle civil investigations into accusations that some of its former employees helped conceal transactions involving customers from Iran, Sudan and other nations subject to international sanctions for about a decade.
Bank regulators in New York contend the former RBS employees used a variety of techniques to conceal about 3,500 transactions involving the transfer of $523 million through New York banks.
“We have a vital responsibility to combat misconduct at banks and continue strengthening the long-term integrity of the financial system,” said Governor Cuomo. “In New York, we will continue our aggressive work rooting out global money laundering that puts our national security at risk.”
Benjamin M. Lawsky, Superintendent of Financial Services, said, “Our continued objective is to create higher standards for ethics and accountability at large banks. That will not happen overnight, but through a sustained effort – including strong enforcement of our anti-money laundering laws – we will work toward that critical goal. RBS took an important step by terminating a number of individual employees who engaged in misconduct. If we truly want to deter future wrongdoing, we should move increasingly toward exposing individual misconduct and holding individuals accountable.”
The joint action announced by the New York State Department of Financial Services, the Federal Reserve and the Treasury Department’s Office of Foreign Assets Control is part of a continuing crackdown on banks that violate American laws against money laundering, specifically banks that enable transactions with countries that are subject to international sanctions.
A person briefed on the matter said bank regulators were working on settlements with about a half-dozen banks over similar violations and those cases could be resolved in the coming months.
The bank regulators gave RBS credit in the settlement for beginning its own internal investigation into the matter in 2010 and dismissing the employees involved in the unlawful money transfers. Most of those employees were dismissed in 2012, said a person briefed on the matter.
“RBS took an important step by terminating a number of individual employees who engaged in misconduct,” Benjamin M. Lawsky, the New York superintendent of financial services, said in a statement. “If we want to deter future wrongdoing, we should move increasingly toward exposing individual misconduct and holding individuals accountable.”
In the settlement, R.B.S. will pay a $50 million penalty to New York bank regulators and a $50 million penalty to the Federal Reserve, of which $33 million will go to the Treasury Department. The British bank has fired four employees and clawed back bonuses from eight more employees. It also agreed to enact measures to stiffen its compliance with anti-money-laundering laws.
RBS said in a statement that the bank “deeply regrets” its failings.
The bank also said related criminal investigations by the Justice Department and the Manhattan district attorney’s office were concluded without those agencies taking any further action against RBS.
The four employees dismissed by R.B.S. included the bank’s former head of global banking services for Asia, the Middle East and Africa and the head of the money laundering prevention unit for corporate markets.
The bank regulators said the former employees helped customers and companies with ties to countries under sanctions strip out identifying data from payment messages. New York bank regulators found that some within RBS operated from written instructions “containing a step-by-step guide” on how to keep United States dollar payments from being detected.
The settlement with RBS is considerably smaller than the $1.92 billion HSBC paid to settle money-laundering accusations last year over transactions the bank processed for Latin American drug cartels and for violating sanctions policies against Iran and Sudan. The London-based HSBC settled with American prosecutors as part of a deferred-prosecution agreement.
Another British bank, Standard Chartered, paid a total of $667 million in fines to settle investigations into accusations that it too violated international sanctions against Iran. Standard Chartered also entered into a deferred prosecution deal with federal prosecutors in December 2012. The deal with federal prosecutors came several months after Mr. Lawsky broke with other regulators to bring his own action against Standard Chartered, which resulted in a settlement in September 2012. NYState Versus Royal Bank of Scotland
