British Arab Commercial Bank plc OFAC Settlement: $4M

Between September 21, 2010 and August 27, 2014, BACB processed 72 bulk funding payments totaling $190,700,000 related to Sudan, in apparent violation of the Sudanese Sanctions Regulations (SSR) (previously found at 31 C.F.R. Part 538). During this period, BACB operated USD accounts on behalf of at least seven Sudanese financial institutions, including the Central Bank of Sudan, and actively solicited USD business from Sudanese banks.

BAСB's mechanism involved two layers. BACB processed USD transactions for Sudanese parties via an internal book transfer process using a nostro account at a foreign bank — a process that did not touch the U.S. financial system. However, to fund that nostro account, BACB routed large, periodic, USD-denominated wire transfers (bulk funding) from non-U.S. financial institutions in Europe, which then passed those USD transfers through banks in the United States for further credit to BACB's USD nostro account at a non-U.S. financial institution located in a country that imports Sudanese-origin oil. BACB had established this nostro account in 2006 explicitly to facilitate payments involving Sudan. Once funds arrived, BACB instructed the institution to process individual third-party payments to Sudanese parties, including Sudanese financial institutions.

OFAC's analysis confirmed a pattern in which the bulk funding transactions — processed through the United States — corresponded to the third-party payments, which were not processed through the United States. Several BACB employees, including managers and a member of the compliance team, were aware of this arrangement. They believed all Sudanese transactions would be processed outside the United States via European funding sources, and understood how the structure would attempt to circumvent U.S. sanctions regulations.

BACB did not make a voluntary self-disclosure, and OFAC determined that the apparent violations constitute an egregious case. The total base penalty amount was $381,400,000. OFAC proposed a penalty of $228,840,000.

In consultation with BACB's domestic regulator, the United Kingdom's Prudential Regulation Authority, OFAC determined that the bank's operating capacity was such that it would face disproportionate impact if required to pay the proposed penalty. As a result, BACB will remit $4,000,000 to settle these potential violations, and its obligations to pay OFAC the remainder of the proposed penalty amount shall be suspended. The reduction reflects BACB's operating capacity, its representation that it ceased the described conduct, its entering into a settlement agreement, and its maintenance of the compliance commitments articulated in the settlement agreement.

This enforcement action draws attention to, and highlights the risks surrounding, the use of complex payment structures, including bulk funding arrangements, to process payments on behalf of, or otherwise involving, U.S. sanctions targets. OFAC remains committed to ensuring that such structures do not represent an avenue for U.S. sanctions targets to access indirectly the U.S. financial system, realizing that bulk funding is an important part of correspondent banking practice.

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