Romanian bank and U.S. parent company agree to pay $860,000 to settle Iran and Syria sanctions violations

Processing of transactions in apparent violation of OFAC’s Iran and Syria sanctions programs

Processing of transactions in apparent violation of Iran and Syria sanctions programs

The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) today announced that a bank located in Romania and its U.S. parent company have agreed to pay approximately $860,000 to resolve its potential civil liability for the bank’s processing of transactions in apparent violation of OFAC’s Iran and Syria sanctions programs.

According to an OFAC release [PDF 213 KB], the bank in Romania processed close to 100 commercial transactions totaling about $3.58 million through U.S. banks on behalf of parties located in Iran and Syria. In 2018, after the U.S. parent company acquired a majority ownership interest in the bank, the bank processed Euro-denominated payments for persons located in Iran.

Specifically, in early 2019, the bank’s regulator flagged a U.S. dollar transaction that the bank had processed for a shipment of timber from Romania to Syria. As a result, the bank commenced a five-year lookback in March 2019. The apparent violations related to three categories of payments:

  • Processing U.S. dollar payments for individuals or entities located in Iran
  • Processing U.S. dollar payments for individuals or entities located in Syria
  • Processing Euro-denominated payments to Iran as a foreign subsidiary of a U.S. company

The apparent violations resulted from the bank’s lack of understanding of the scope of U.S. sanctions regulations applicable to financial institutions without a physical presence in the United States. In particular, the bank’s training and procedures for monitoring potential sanctions-related activity did not address the risk that the bank may be indirectly exporting financial services through the U.S. financial system to sanctioned parties or comprehensively sanctioned jurisdictions noted in underlying trade finance and shipping documents, or processing transactions that did not transit the United States but were processed while majority owned by a U.S. person.

The apparent violations were voluntarily self-disclosed and constituted a non-egregious case.

 

For more information on this topic or to learn more about KPMG’s Trade & Customs Services, contact:

Doug Zuvich
Partner and Global Practice Leader
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E: dzuvich@kpmg.com

John L. McLoughlin
Principal and East Coast Leader
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E: jlmcloughlin@kpmg.com

Andy Siciliano
Partner and National Practice Leader
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E: asiciliano@kpmg.com

Steve Brotherton
Principal and Global Export and Sanctions Leader
T: 415-963-7861
E: sbrotherton@kpmg.com

Luis (Lou) Abad
Principal, Washington National Tax
T: 212-954-3094
E: labad@kpmg.com

Irina Vaysfeld
Principal
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E: ivaysfeld@kpmg.com

Amie Ahanchian
Principal
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E: aahanchian@kpmg.com

Christopher Young
Principal
T: 312-665-3229
E: christopheryoung@kpmg.com

Gisele Belotto
Managing Director
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E: gbelotto@kpmg.com

George Zaharatos
Principal
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E: gzaharatos@kpmg.com

Andy Doornaert
Managing Director
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E: adoornaert@kpmg.com

Jessica Libby
Managing Director
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E: jlibby@kpmg.com