OFAC Announces $600 Million Sanctions Violations Settlements

The Treasury’s Office of Foreign Assets Control announced three settlements worth more than a combined $600 million with the German, Austrian and Italian branches of UniCredit Group banks, which violated multiple U.S. sanctions, OFAC said in an April 15 press release. The branches committed several violations of U.S.-imposed sanctions, including sanctions on Burma, Cuba, Iran, Libya, Sudan and Syria, OFAC said, and violated the Weapons of Mass Destruction Proliferators Sanctions Regulations. OFAC reached a roughly $550 million settlement with UniCredit Germany, a $20 million settlement with UniCredit Austria and a $37 million settlement with UniCredit Italy, an enforcement notice said.

In settlements for UniCredit Germany, Austria and Italy, all three branches agreed to extensive improvements of their compliance programs. “As the United States continues to enhance our sanctions programs, incorporating compliance commitments in OFAC settlement agreements is a key part of our broader strategy to ensure that the private sector implements strong and effective compliance programs that protect the U.S. financial system from abuse,” Sigal P. Mandelker, under secretary for Terrorism and Financial Intelligence, said in a statement.

The “compliance commitments,” according to the settlements, involve ending the conduct that led to the violations, ensuring that senior management gives compliance programs “adequate resources,” conducting “risk assessments” and implementing “internal controls” on compliance procedures and requiring that a “senior-level executive” submit an annual certification to OFAC for five years confirming that the compliance measures are still being maintained.

OFAC said UniCredit Germany committed more than 2,000 violations of U.S.-imposed sanctions on Cuba, Burma, Sudan, Syria, Iran, Libya and the U.S.’s Global Terrorism Sanctions Regulations. The bank did not voluntarily disclose the violations, according to the enforcement notice, which constituted an egregious case. The bank processed more than 2,000 payments worth more than $500 million through U.S. “financial institutions” between 2007 and 2011, OFAC said, violating multiple U.S. sanction programs. During that same time, UniCredit operated accounts on behalf of Islamic Republic of Iran Shipping Lines (IRISL) and several companies associated with IRISL while trying to hide IRISL’s involvement, OFAC said. The bank continued processing transactions for IRISL for nearly two years after IRISL was added to OFAC’s Specially Designated Nationals List in 2008.

OFAC said UniCredit Austria committed 60 sanctions violations that constitute a non-egregious case and 67 that constituted an egregious case. The bank did not voluntarily disclose the violations, the notice said. The bank processed transactions through U.S. financial institutions for countries, entities and individuals subject to U.S. sanctions for several years, according to the notice, and tried to hide which entities and individuals it was working with. The payment messages used by the bank “did not reveal the involvement of sanctioned parties,” the notice said.

OFAC said UniCredit Italy did not disclose its violations and that they were an egregious case. Similar to the case of UniCredit Austria, the Italy branch also processed transactions on behalf of sanctioned parties through the U.S. and hid the involvement of the sanctioned parties, OFAC said.

OFAC included several aggravating factors in each settlement notice, including UniCredit’s “reckless disregard” for U.S. sanctions, the fact that it processed transactions for entities that were known to be sanctioned and hid the involvement of those entities, the bank’s “willful intent” to evade U.S. economic sanctions and the fact that the bank is a “large and commercially sophisticated financial institution.”

OFAC also included several mitigating factors, including the fact that the bank committed no violation in the previous five years, the bank’s cooperation with OFAC’s investigation, and the bank’s “remedial action” in response to the violations.