UBAF OFAC Settlement: $8.6M (2021)

The 114 internal transfer violations, totaling $1,297,651,825.61, fell into two sub-patterns. For 45 of the 114, UBAF processed a USD transfer between a sanctioned Syrian entity and a non-sanctioned client on UBAF's own books, then processed one or more USD transfers on behalf of the non-sanctioned client that cleared through a U.S. bank at transaction dates and amounts that correlated closely to the related internal transfers. For the remaining 69, UBAF conducted a foreign exchange (FX) transaction with a sanctioned Syrian customer on UBAF's books, debiting an account in one currency and crediting the same sanctioned customer's account in another currency, then conducted a U.S.-cleared FX transaction with a non-sanctioned third party that correlated closely with the original FX transaction.

The remaining 13 apparent violations were either back-to-back letter of credit transactions or other trade finance transactions involving sanctioned Syrian parties, all processed through a U.S. bank. For the back-to-back letter of credit transactions, a sanctioned Syrian entity was the beneficiary of export letters of credit or the applicant for import letters of credit that did not involve USD clearing, but the intermediary entered into or received one or more corresponding USD letters of credit to purchase or sell the same goods. For the other trade finance transactions, UBAF either issued a USD-denominated letter of credit on behalf of a sanctioned party or confirmed a USD-denominated letter of credit issued by a sanctioned bank and paid on the letter of credit through a U.S.-cleared transaction.

In total, these 127 transactions amounted to $2,079,339,943.52 and were processed in apparent violation of Executive Order 13582 of August 17, 2011 ("Blocking Property of the Government of Syria and Prohibiting Certain Transactions with Respect to Syria") and Executive Order 13382 of July 1, 2005 ("Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters"). UBAF demonstrated knowledge of OFAC sanctions laws but incorrectly believed that avoiding direct USD clearing on behalf of sanctioned parties was sufficient; the bank acted recklessly by failing to exercise a minimal degree of caution or care in accounting for the risks associated with continuing to provide USD-based services to OFAC-sanctioned parties.

The statutory maximum civil monetary penalty applicable in this matter is $4,158,679,887.04. UBAF voluntarily self-disclosed the Apparent Violations, and OFAC determined the Apparent Violations constitute a non-egregious case. Accordingly, under OFAC's Economic Sanctions Enforcement Guidelines, the base civil monetary penalty amount is $15,875,000. The settlement amount of $8,572,500 reflects OFAC's consideration of the General Factors under the Enforcement Guidelines.

Financial institutions that maintain accounts for entities domiciled in jurisdictions that become subject to comprehensive sanctions should assess the risk that may arise by continuing to provide services to those entities, particularly with respect to USD-denominated transactions that directly or indirectly clear through the U.S. financial system.

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