Aug 09 2010 Brett Wolf
Barclays Plc has set aside £194m for a prospective settlement with US authorities over apparent transgressions of America's sanctions laws, Britain's third-largest bank disclosed in a filing with the Securities and Exchange Commission. Thus far, the blacklisted countries and/or entities in question have not been publicly disclosed, nor has the nature of the transactions. However, in light of recent penalties paid by other European banks, it seems likely Barclays is paying the price for "stripping" SWIFT messages to process prohibited transactions, some of which quite probably involved Iranian entities. There has been widespread speculation that Barclays will settle the matter sooner rather than later, possibly within weeks, at which time more details are apt to become public.
"As previously reported, Barclays has been conducting an internal review of its conduct with respect to US dollar payments involving countries, persons and entities subject to US economic sanctions and has been reporting the results of that review to various governmental authorities including the US Department of Justice, the New York County District Attorney's Office and the Office of Foreign Assets Control which have been conducting investigations of the matter," the SEC filing stated.
It added: "Barclays is in advanced discussions with these and other authorities with respect to a possible resolution of the investigations. Barclays provided £194m in the first half of 2010 in relation to the possible resolution of this matter."
As Complinet readers know, American authorities have demonstrated to the world that they are serious about punishing financial institutions that have been involved in "stripping" activity — a practice that apparently was quite common among European financial institutions just a few years ago. Stripping involved removing data from SWIFT wire transfer messages to hide the identities of clients blacklisted by the US Treasury Department so that these prohibited parties could access US dollars and engage in international trade.
This practice first made headlines in December 2005 when the US Office of Foreign Assets Control fined Dutch bank ABN AMRO $40m. In January 2009, Lloyds TSB Bank agreed to pay $350m to US law enforcement agencies to settle claims it "stripped" messages to conceal the identities of banking clients in Iran and elsewhere. And in August 2009, Australia and New Zealand Bank Group agreed to pay $5.8m to settle similar allegations levied by OFAC. The biggest "stripping" penalty came in December of last year when Swiss banking giant Credit Suisse AG agreed to forfeit $536m to settle allegations it stripped SWIFT payment messages involving clients from Iran, Sudan and other countries between 1995 and 2006.
