The U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC") has announced a US$619 million settlement with ING Bank N.V. ("ING Bank") to settle potential liability for apparent violations of U.S. sanctions. The settlement resolves OFAC's investigation into ING Bank's intentional manipulation and deletion of information about U.S.-sanctioned parties (ie Cuba, Burma, Sudan, Libya and Iran) in more than 20,000 financial and trade transactions routed through third-party banks located in the United States between 2002 and 2007.
According to the settlement agreement signed by the bank and the U.S. Treasury Department ING deceived U.S. banks into processing illegal wire payments by making it appear transactions involving ING’s subsidiary at the time, the Netherlands Caribbean Bank, originated elsewhere, and not in Cuba or any of the other sanctioned countries, by stripping out the data embedded in the payment messages.
Background: Wall Street Journal
In Australia, the Australian Department of Foreign Affairs and Trade is responsible for the implementation and administration of Australia's autonomous targeted financial sanctions.
Under the Autonomous Sanctions Act 2011, any person holding assets owned or controlled by designated persons or entities must freeze these assets (in other words they are prohibited from using or dealing with these assets without authorisation). There are also controls on the trade in sanctioned goods and services.
Australia currently implements autonomous financial sanctions targeting situations of concern in Burma, Syria and Zimbabwe, and supplementing United Nations Security Council financial sanctions in relation to the Democratic People's Republic of Korea, Iran and Libya. Australia has also implemented autonomous financial sanctions against individuals associated with the former Milosevic regime in the former Federal Republic of Yugoslavia.
For bodies corporate, each of the above offences are of strict liability, unless the body corporate can prove that it took reasonable precautions, and exercised due diligence, to avoid contravening the law in question.
The penalty upon conviction for these offences is
- for individuals: a maximum 10 years' imprisonment or a maximum fine the greater of 3 times the value of the transaction in breach of sanctions (if this can be calculated) or A$275,000.
- for bodies corporate: a maximum fine of 3 times the value of the transaction in breach of sanctions (if this can be calculated) or A$1.1 million, whichever is the greater.
In Australia bribing foreign public officials is an offence under the Criminal Code (Cth). The Criminal Code also contains the principal criminal offences of money laundering in Australia in addition to offences under the Anti-Money Laundering and Counter-Terrorism Financing Act.
The decision to prosecute for a criminal offence is made by the Commonwealth Director of Public Prosecutions.
Austrac's enforcement options include:
- Pursue civil penalty orders (via the Federal Court);
- Seek injunctions to restrain conduct in breach of a civil penalty provision;
- Accept enforceable undertakings in relation to certain matters;
- Issue remedial directions in certain circumstances;
- Require external audits relating to risk management and compliance to be undertaken;
- Require a money laundering and terrorism financing risk assessment;
- Issue infringement notices for certain contraventions;
- Exercise various information-gathering powers; and
- Execute monitoring warrants.
If your company does business overseas your board needs to have a policy prohibiting bribes and facilitation payments and a compliance program in respect of funds remitted internationally. You also need a whistleblower policy encouraging disclosure of fraud and other crimes.
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Posted 28th June 2012 by David Jacobson in Anti-money laundering, Compliance, Financial Services