Barclays to pay $298 million over US sanctions violations

The Associated Press - 16 August 2010

Barclays Bank PLC has agreed to pay $298 million over criminal allegations that it illegally engaged in financial transactions with banks in Cuba, Iran, Libya, Sudan and Burma, the Justice Department disclosed in court papers Monday.

Barclays and the Justice Department's criminal division entered into a deferred prosecution agreement for two years that will delay, and in all likelihood ultimately rule out, any criminal proceedings if Barclays demonstrates to federal prosecutors that it complies with U.S. laws.

The bank was accused of violating the Trading with the Enemy Act and the International Emergency Economic Powers Act.

Barclays, based in London, will pay $149 million to the United States and an additional $149 million under an agreement with the Manhattan district attorney's office in New York.

The bank violated U.S. and New York state criminal laws from the mid-1990s to 2006 by allowing the movement of hundreds of millions of dollars through the U.S. financial system on behalf of banks from Cuba, Iran, Libya, Sudan, and Burma - $500 million in all, the court papers in the case stated.

According to the court papers, Barclays concealed the transactions that it carried out with banks in the sanctioned countries.

The court filings stated that:

• As early as November 1987, sanctioned banks directed Barclays not to mention their names on payment messages sent to the United States.
• Barclays' operating procedures educated employees on how to bypass filters designed to flag incoming payment messages involving sanctioned banks.
• In 2006, Barclays voluntarily disclosed four transactions that violated U.S. sanctions, and the bank began cooperating fully with a broad review by federal and state prosecutors in 2007.

The agreement will be presented to a federal judge for recommended approval.