The US Treasury Department announced on 12 June that ING Bank, the major Netherlands bank, has agreed to pay a record USD 619 million to settle alleged violations of US sanctions. The settlement amount substantially exceeds the USD 536 paid by Credit Suisse in 2009, the previous record payment for a financial institution charged with sanctions violations.
The Settlement Agreement between ING Bank and the US Office of Foreign Assets Controls ("OFAC"), which administers and enforces US sanctions, sets out detailed allegations of a longstanding and pervasive practice within certain ING Bank units, of altering or deleting information from USD transactions to prevent such transactions being blocked by US banks. The Settlement Agreement includes allegations that ING Bank units (1) had "an explicit policy" of omitting the names of Cuban banks in payment messages, (2) provided Cuban banks with ING France endorsement stamps for the apparent purpose of enabling the Cuban banks to process USD travelers check payments, (3) "used care not to include references to US sanctioned countries in USD SWIFT messages," and (4) transferred to a US exporter a letter of credit that had been altered by a sanctioned Iranian bank. In addition to violations of the Cuban and Iranian sanctions, it is alleged that ING Bank units processed electronic funds transfers in violation of US sanctions concerning Burma, Sudan and Libya.
OFAC announced that its investigation into ING Bank's "intentional manipulation and deletion" of information concerned sanctioned parties involved in more than 20,000 financial and trade transactions routed through third-party banks located in the US between 2002 and 2007.
The Settlement Agreement sets out various facts that no doubt were considered in determining the penalty amount. Although the "apparent violations" were alleged to be part of a widely accepted practice among the ING Bank units, upon discovery ING Bank promptly terminated the conduct and took "remedial action through extensive, global measures," and it cooperated with OFAC in assessing its compliance programs. The Settlement Agreement notes, however, that "ING Bank did not consistently cooperate with OFAC" in its efforts to investigate the violations.
Finally, ING Bank committed in the Settlement Agreement to having its corporate auditors undertake a future review of its compliance policies and procedures, and to submit the results of that review to OFAC. This will likely lead to a requirement for ING to carry out enhanced compliance in addition to the financial penalty imposed.
As noted in our May 2012 Sanctions Update, all potentially impacted entities must ensure they are vigilant in the face of ever increasing international sanctions regimes. As ING has found out to its cost, the impact of US proceedings against a company or an individual can be very serious indeed.
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