Lloyds withdraws Cuba business

Campaign News | Saturday, 14 June 2008

According to a Times report, Lloyds TSB bank is to withdraw its business in Cuba following pressure from the US.

The UK newspaper reported on 6 June that the bank faces a £180 million fine for breaking US Office of Foreign Asset Controls (OFAC) rules on dealing with state sponsors of terrorism.

The US places Cuba on its blacklist of countries that it believes sponsor terrorism, alongside Iran and North Korea.

'Once again it appears that the US Office of Foreign Asset Controls (OFAC) is aggressively pursuing a major UK company to force it to terminate all business arrangements with Cuba. This latest application of the extra territorial blockade of Cuba against companies in third countries must be opposed. The UK Government needs to take urgent action to protect UK companies who are conducting perfectly legitimate transactions with Cuba. Following similar cases with Hilton and Barclays it is high time that the UK Government stood up to this further attack upon UK companies,” said CSC Director Rob Miller.


Times Story in full below.

Lloyds TSB expects £180m bill for US blacklist breach

By Christine Seib, UK Times, 6 June 2008

Lloyds TSB will take a £180 million hit to its first-half figures as it prepares to pay a multimillion-dollar settlement for breaking US rules on dealing with sponsors of terrorism.

The high street bank told investors yesterday that its talks with American authorities over “certain historic US dollar payments” were nearing an end.

The talks are thought to refer to payment made to and from individuals or companies from a blacklist of countries that America believes sponsor terrorism. The blacklist includes Iran, North Korea and Cuba.

In an indication that Lloyds TSB expects to pay a multimillion-dollar settlement, the bank said that it would put aside £180 million in the first half of 2008. Lloyds TSB’s announcement, which came as it filed its US accounts, raised questions about a hit to Barclays’ figures on the back of similar breaches.

Lloyds TSB and Barclays said earlier this year that they were providing information to the US Office of Foreign Assets Control (OFAC), the Department of Justice (DoJ) and the New York District Attorney over past dollar transactions. Both banks said at the time that they did not believe that the talks would be material to their finances. Royal Bank of Scotland (RBS) said that ABN Amro, which it bought last year, was being investigated by the DoJ over a similar issue.

Lloyds said yesterday: “Whilst the group does not expect the final outcome to have a material adverse effect on its financial position, discussions have advanced towards resolution since the year-end.”

America banned banks from carrying out transactions in the US in dollars for people or businesses from the countries on its blacklist in the hope that this would starve terrorists of funding. OFAC monitors compliance with the rules.

In 2005 ABN Amro paid $80 million (£40 million) in penalties to US federal and state regulators after being accused of “serious, longstanding and systemic” errors at its New York and Dubai offices that broke OFAC rules. Rijkman Groenink, then chief executive of ABN Amro, gave up 40 per cent of his bonus in recognition of the company’s failings.

In 2004 UBS paid a $100 million fine to the Federal Reserve after its Zurich office breached US sanctions to send dollars to Cuba, Iran, Libya and Yugoslavia between 1996 and 2003. The bank operated a trading centre for dollars in Switzerland under contract with the Fed.

Lloyds TSB is already fighting a $130 million action from the New York District Attorney that accuses the bank of knowingly helping to launder the proceeds from a large securities fraud. According to the attorney’s statement, Lloyds TSB is accused of helping Lycourgos Kyprianou, the former chief executive of AremisSoft, to launder tens of millions of dollars after a securities fraud at the Nasdaq-listed software company. The bank said that it was confident that it would be vindicated.

HSBC has a small representative office in Tehran, the capital of Iran, for customers visiting the country but said that since September last year it had stopped doing certain types of new business from the office.

Bankers said that all UK banks with businesses in the US were frequently in contact with OFAC. “They [OFAC] go through every single transaction,” the source said.

Barclays declined to comment.


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