Dubai Bank Contributes $ 100 Million to Resolve Sanctions Violations with DFS, OFAC and Federal Reserve | Michael volkov


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The Dubai-based Mashreqbank agreed to pay the New York Department of Financial Services, the Federal Reserve and the Bureau of Foreign Assets $ 100 million for violating the now repealed Sudan Sanctions Regulations. The Sudan Sanctions Regulations were repealed on June 29, 2018.

OFAC issued only a finding of violation, rather than imposing a civil sanction, in light of Mashreqbank’s willingness to accept a retroactive waiver of limitation period agreement and Mashreqbank’s agreement to pay a fine of $ 100 million to the NY DFS and the Federal Reserve.

The NY DFS fined Mashreqbank $ 100 million. The Federal Reserve imposed a cease-and-desist order because Mashreqbank did not have enough policies and procedures to comply with U.S. sanctions laws.

Between 2005 and 2009, the London branch of Mashreqbank processed 1,760 U.S. dollar payments for Sudanese banks and intentionally disguised information from U.S. banks that allegedly identified the payments as illegal. Mashreqbank did so by asking its employees to avoid “filling in certain fields in payment messages” in order to disguise connections with Sudanese banks. Specifically, Mashreqbank employees did not complete field 52 (originating institution) and omitted the true originating bank in field 58 (beneficiary bank) of SWIFT MT202.

As a result, the US correspondent banks processed the transactions because the payment messages did not reveal that the original banks involved in the transactions were based in Sudan. The correspondent banks based in the United States acted under the mistaken belief that the transactions did not originate in Sudan. Mashreqbank processed over $ 4 billion in illegal payments over the four-year period using this technique to disguise the illegal payments.

The NY DFS entered into a consent order with the Mashreqbank and cited the fact that an additional $ 2.5 million in illegal transactions were processed between 2010 and 2014, but that these transactions were “less obviously” payments linked to Sudan. .

Mashreqbank is the oldest private bank in the United Arab Emirates and has a branch in New York. In 2018, the NY DFS entered into a consent order with the bank that fined it $ 40 million for anti-money laundering offenses.

OFAC concluded that Mashreqbak acted in defiance of OFAC’s sanctions program in Sudan because he failed to identify the involvement of US banks in the transactions. OFAC noted that several senior bank officials were aware of the ongoing violations.

In deciding not to impose a civil sanction, OFAC cited several important mitigating factors, including Mashreqbank’s agreement to meet the statute of limitations and extend the agreement on several occasions and its full cooperation throughout the period. ‘investigation. OFAC also cited the fact that Mashreqbak ceased operations before OFAC opened the investigation in 2015.

To address past violations, Mashreqbank has increased its compliance staff by more than 400% since 2007, closed all Sudanese banks’ US dollar accounts in 2009, and implemented new procedures to ensure that all payment messages are completed with precise banking and customer information. The bank also implemented an automated screening program for reviewing customer names, performed an OFAC risk assessment, and implemented improved vendor screening tools. Mashreqbank estimated it has spent more than $ 122 million to improve its compliance program over the past four years, including additional staff, new software and improved training programs. Mashreqbank has indicated that it intends to spend an additional $ 40 million on improvements and compliance enhancements.

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