Another bank fined for trading with Cuba

News from Cuba | Tuesday, 12 June 2012

By Karen Freifeld for Reuters

ING to pay $619 million over Cuba, Iran sanctions

ING Bank NV (ING.AS) agreed to pay $619 million to settle U.S. government allegations that it violated U.S. sanctions against Cuba, Iran and other countries. It was the biggest ever fine against a bank for sanctions violations, officials said.

U.S. authorities said ING moved $1.6 billion illegally through banks in the United States from the early 1990s through 2007 by concealing the nature of the transactions.

ING eliminated payment data that would have revealed the involvement of sanctioned countries and entities, according to authorities. The bank also told clients how to evade computer filters designed to prevent sanctioned entities from gaining access to the U.S. banking system. And it provided U.S. finance services to sanctioned entities through shell companies and misuse of an internal ING account.

Amsterdam-based ING said in a statement its banking unit took a provision in the first quarter to cover the penalty, and that it had taken steps to improve its compliance. It closed its representative office in Cuba in 2007 and terminated its relationships with sanctioned banks.

"The violations that took place until 2007 are serious and unacceptable," ING Chief Executive Jan Hommen said in a statement.

A two-year criminal probe was conducted jointly between the U.S. Department of Justice and the office of Manhattan District Attorney Cyrus Vance Jr. The Treasury Department's Office of Foreign Assets Control conducted its own investigation.

ING is the fourth major bank to settle with New York and U.S. authorities over "stripping" wire transfer information to hide the illegal movement of money through banks in New York on behalf of clients subject to U.S. sanctions.

Credit Suisse AG agreed to pay $536 million in 2009 to settle charges of illegal transactions involving Iran, Cuba and Libya, among other countries. Lloyds TSB Bank Plc agreed to forfeit $350 million that year to settle charges it altered records for clients from Iran, Sudan and other sanctioned countries. Barclays settled similar charges in 2010 for $298 million.

"These cases give teeth to sanctions enforcement, send a strong message about the need for transparency in international banking and ultimately contribute to the fight against money laundering and terror financing," Manhattan District Attorney Cyrus Vance said.

Half of the $619 million from ING will be distributed to New York city and state, and the other half will be paid to the United States.

Beginning in the 1990s, ING's senior bank management instructed employees in Curacao to delete references to Cuba in payment messages sent to the United States to prevent U.S. banks from identifying prohibited transactions, the U.S. Treasury Department said in a statement.

"I strongly request you in payment instructions to our U.S.A correspondents etc NOT!!!! to use the word Cuba or Havana," an ING Curacao executive said in one email in 1997, according to documents.

ING branches in France, Belgium and the Netherlands also omitted identifying information, the Treasury statement said. French ING bank managers provided fraudulent endorsement stamps for Cuban institutions to use in processing travelers checks, and a Netherlands branch routed payments through other corporate clients.

In terms of Iranian transactions, ING's office in Belgium held a U.S. dollar account for the Central Bank of Iran, also known as Bank Markazi, which was used for proceeds of oil purchases by ING customers from the National Iranian Oil Company, according to the Manhattan District Attorney's deferred prosecution agreement.

The Iranian transactions were processed in by ING Netherlands using a method of payment messages known as cover payments.

ING said it had investigated transactions associated with ING Bank's Cuban operations, as well as business with counterparties in other countries subject to the U.S. sanctions.

It said the issues did not involve ING's insurance and investment management operations, nor the retail banking side or ING Direct.

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