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Italian bank Unicredit has confirmed it is co-operating with a US investigation into a possible breach of sanctions.

The bank is thought to have broken sanctions against Iran, according to reports by the Financial Times and Reuters, although this has not been confirmed by Unicredit.

The probe centres on a German subsidiary, HypoVereinsbank, which the major Italian bank bought in 2005.

The news follows similar revelations about two UK banks.

Unicredit originally admitted in January as part of a regulatory filing that it was working with US authorities over a sanctions breach, but without naming the country involved.

“A member of the Unicredit group is currently responding to a third party witness subpoena from the New York County District Attorney’s Office in connection with an ongoing investigation regarding certain persons and/or entities believed to have engaged in sanctionable activities,” the January filing said.

Unicredit is thought to have broken sanctions against Iran, according to the Financial Times

Unicredit is thought to have broken sanctions against Iran, according to the Financial Times

According to Unicredit’s latest statement, which does not name Iran either, the investigation is also being conducted by the US Department of Justice.

Last month the US Senate released a report detailing how HSBC helped launder money for Iran, as well as for other US-sanctioned governments of Burma and North Korea and for Mexican drugs cartels.

Then, earlier this month, Standard Chartered Bank – which is headquartered in London, but mainly active in the Middle East, Africa and Asia – agreed to pay New York regulators $340 million to settle claims that it had concealed $250 billion in transactions with Iran.

Meanwhile, Royal Bank of Scotland is also understood to be facing investigations into whether it has broken sanctions against Iran.

The bank would not comment, but confirmed that it had voluntarily approached US and UK officials with information after an internal inquiry uncovered possible infringements.

Germany’s Commerzbank also warned last week that it may have to make a hefty payment to settle a US investigation into its own violations of sanctions on Iran and other countries.

Press reports earlier this month suggested that another German bank, Deutsche Bank, is also being investigated by the US Treasury’s Office of Foreign Assets Control, the Federal Reserve, the US Justice Department and Manhattan’s district attorney’s office for alleged infringements of US-Iran economic sanctions.

Deutsche Bank refused to comment on the reports.

Iran has been subject to US economic sanctions since 1979. The current system operates under the US Treasury Department’s Office of Foreign Assets Control.

The sanctions were toughened in 1997 by then-President Bill Clinton, who signed an order for sanctions that prohibited “virtually all trade and investment activities with Iran by US persons, wherever located”.

Under US criminal law, violations of the Iranian Transactions Regulations may result in a fine up to $1 million and/or jail for up to 20 years.

As part of the sanctions regime, until 2008, banks in the US in some circumstances were allowed to undertake so-called U-turn transactions with Iranian financial institutions.

Those U-turn transactions move money for Iranian clients among non-Iranian foreign banks, such as those in the UK and the Middle East. They are cleared through the US, but neither start nor end in Iran.

To ascertain whether these transactions are permitted, US clearing banks use the wire-transfer messages they get from banks, using the SWIFT payments system.

If the banks do not have enough information to make the call, they are supposed to freeze the assets.

The allegations involving Standard Chartered and HSBC both centred on U-turn transactions.

Standard Chartered was accused of stripping the messages of data that showed the clients were Iranian, replacing it with false entries.

The UK-based bank said that not only did “99.9% of the transactions” relating to Iran comply with U-turn regulations, but that the total value of transactions that did not comply was under $14 million – converse to the $250 billion worth of Iran transactions US regulators said it had hidden.

In July, a US Senate Committee found that HSBC carried out 25,000 transactions totalling $19 billion that were connected to Iran between 2001-07, which it suggested was evidence that the bank may have broken economic sanctions.

 

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British bank Standard Chartered has agreed a $340 million settlement with New York regulators that accused it of hiding $250 billion of transactions with Iran.

The hearing that had been scheduled for Wednesday has now been adjourned.

Standard Chartered’s chief executive Peter Sands has been in New York negotiating with the regulators.

It had admitted that some of its transactions did break US sanctions, but said that the amount totaled just $14 million.

“The New York State Department of Financial Services (DFS) and Standard Chartered Bank have reached an agreement to settle the matter raised in the DFS order dated August 6, 2012,” a statement from the regulator’s superintendent said.

“The parties have agreed that the conduct at issue involved transactions of at least $250 billion.”

Standard Chartered has agreed a $340 million settlement with New York regulators that accused it of hiding $250 billion of transactions with Iran

Standard Chartered has agreed a $340 million settlement with New York regulators that accused it of hiding $250 billion of transactions with Iran

A short statement from Standard Chartered simply confirmed a settlement of $340 million had been reached.

“A formal agreement containing the detailed terms of the settlement is expected to be concluded shortly,” it added.

The bank also said it continued to “engage constructively” with other US authorities.

According to the terms of the settlement, Standard Chartered will pay a “civil penalty” of $340 million to the DFS.

It will also install a monitor for at least two years who will evaluate money-laundering controls at the bank’s New York branch and report directly to the regulator.

“In addition, DFS examiners shall be placed on site at the bank,” the statement said.

Finally, the settlement provided for permanent staff at the bank’s New York office to audit any money-laundering controls.

The $340 million was a “hefty penalty, but nothing like as hefty as it could have been” if the two parties had not negotiated a settlement. The DFS had, for example, talked of revoking Standard Chartered’s New York banking licence.

Last week, New York’s DFS alleged that the US unit of the bank had illegally hidden 60,000 transactions with Iran worth $250 billion over nearly a decade.

It accused the London-based bank of being a “rogue institution” for breaking US sanctions against Iran.

Peter Sands said at the time that he was “completely surprised” by the ferocity of the DFS’s attack, which he described as “disproportionate”.

He did, however, admit that 300 transactions did break US sanctions.

“This was clearly wrong and we are sorry that they happened,” Peter Sands said.

 

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Standard Chartered bank illegally “schemed” with Iran to launder as much as $250 billion for nearly a decade, a US regulator says.

The New York State Department of Financial Services said that the bank hid 60,000 secret transactions for “Iranian financial institutions” that were subject to US economic sanctions.

Standard Chartered bank illegally "schemed" with Iran to launder as much as $250 billion for nearly a decade

Standard Chartered bank illegally "schemed" with Iran to launder as much as $250 billion for nearly a decade

Standard Chartered then covered up its transgressions, it said.

HSBC was recently accused by the US Senate of allowing money laundering.

HSBC has set aside $700 million to deal with those allegations.

 

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