International Business

Banking

Dutch bank hit with record fine for passing money through U.S. financial entities on behalf of Cuban and Iranian clients

 

ING Bank secretly passed more than $2 billion through U.S. financial entities on behalf of Cuban and Iranian clients.

jtamayo@ElNuevoHerald.com

In the largest fine ever assessed against a financial institution for violating U.S. sanctions on Cuba and Iran, Netherlands-based ING Bank will pay $619 million to the U.S. government, the Justice Department announced Tuesday.

ING agreed to pay the fine for secretly moving more than $2 billion through U.S. financial institutions in 20,000 transactions from the early 1990s to 2007, all in violation of sanctions on Cuba and Iran, according to the Justice Department.

“ING Bank helped provide state sponsors of terror and other sanctioned entities with access to the U.S. financial system, allowing them to move billions of dollars,” Assistant U.S. Attorney General for National Security Lisa Monaco declared.

Cuba, Iran, Syria and Sudan are on the U.S. list of countries under sanctions for supporting international terrorism. The half-century old U.S. trade embargo against Cuba also bars Cuban entities from using U.S. dollars in their transactions.

The Justice Department statement said ING fabricated endorsement stamps so that two Cuban banks could fraudulently process dollar-denominated travelers checks and advised Cuban and Iranian clients on how to conceal transactions.

Senior ING officials also erased data from reports that would have revealed the involvement of Cuban and Iranian entities, and threatened to punish some employees who failed to remove those references from documents, the statement added.

Jan Hommen, chief executive officer of the bank’s parent ING Groep, based in Amsterdam, called the violations “serious and unacceptable,” but added the company has changed since then.

ING’s insurance and U.S. banking operations were not involved in the case or the sanctions.

“ING has accepted responsibility for its criminal conduct” and agreed to pay the $619 million as part of a deferred prosecution agreement, the Justice statement added.

Half the money will go to the U.S. Attorney’s Office in New York, which has been investigating ING, and the bank will have to make regular reports on how it is complying with the U.S. sanctions rules.

“For years, ING Bank blatantly violated U.S. laws governing transactions involving Cuba and Iran, and then used shell companies and other deceptive measures to cover up its criminal conduct,” Assistant Attorney General Lanny A. Breuer said in the statement.

Adam J. Szubin, director of the Treasury Department’s Office of Foreign Assets Control, which enforces U.S. financial restrictions on foreign countries, added that the fine was “a clear warning to anyone who would consider profiting by evading U.S. sanctions.”

Cuba has faced U.S. sanctions under the trade embargo since 1962. But after the Sept. 11 terror attacks, tougher U.S. measures against terrorism financing began hitting the communist-ruled island’s financial transactions even harder.

Credit Suisse Bank paid a $536 million fine to the U.S. government in 2009 to settle allegations of illegal dealings with Cuba, Iran, and other sanctioned countries, while Switzerland’s UBS paid another $100 million in 2004 for similar complaints.

A Jamaican branch of Canada’s Bank of Nova Scotia was reported to have refused to serve the Cuban Embassy in Kingston, and British-based HSBC bank reportedly shut down several Cuban accounts it held around the world.

Several other financial services companies that operated in Cuba as well as the United States — and were therefore subject to U.S regulations — also closed their operations in the Caribbean island, complaining that the U.S. regulations had become too burdensome and they risked costly violations.

The Cuban government also complained that U.S. officials were freezing funds in allegedly illegal Cuban accounts held in foreign banks. A 2006 report in a state-run newspaper, Trabajadores, estimated the money frozen in 2005 alone at $268 million, but gave no details.

Florida Republican Rep. Ileana Ros-Lehtinen, who regularly leaned on the U.S. government to punish Credit Suisse, UBS and ING Bank, said the record fine “sends an unequivocal message that companies which break U.S. law and conduct business with sanctioned countries will be found out and severely penalized.”

“It is not enough to have tough sanctions laws on the books. ING’s actions prove that vigorous enforcement and punishment of violators is necessary to prevent our laws from being willfully ignored and turned into paper tigers,” said Ros-Lehtinen, the chair of the House Committee on Foreign Affairs.

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