A major Netherlands bank has agreed to forfeit $619 million as part of a settlement agreement with federal prosecutors investigating a 13-year conspiracy at the bank that helped Cuba and Iran bypass US economic sanctions.
ING Bank, headquartered in Amsterdam, admitted that its executives and employees participated in a scheme that facilitated more than $2 billion in Cuban and Iranian financial transactions via the US banking system despite American laws barring such contacts and commerce.
According to federal court documents made public on Tuesday, prosecutors accused the bank of violating sanctions under the Trading with the Enemy Act by facilitating dollar transactions on behalf of Cuba and Cuban entities. They also said the bank’s dealings with Iran and Iranian entities undercut sanctions against that country under the International Emergency Economic Powers Act.
A single criminal charge was filed in US District Court in Washington on Tuesday alleging that ING Bank conspired to conceal the movement of Cuban and Iranian funds through the US banking system. The case involves more than 20,000 transactions and more than 133 million payment messages.
No ING executives or employees were charged with violating US law. Under a deferred prosecution agreement, the company has accepted responsibility for its criminal conduct and that of its employees, officials said. The bank also agrees to cooperate in any further investigation.
“The fine announced today is the largest ever against a bank in connection with an investigation into US sanctions violations,” Assistant Attorney General for National Security Lisa Monaco said in a statement.
“For more than a decade, ING Bank helped provide state sponsors of terror and other sanctioned entities with access to the US financial system, allowing them to move billions of dollars through US banks,” she said.
Bank employees routinely removed references to Iran and Cuba from financial and trade transactions to avoid raising red flags that might result in the funds being seized. They even used a screening program developed by the US Treasury Department to ensure that US-based banks and government officials would not be able to detect Cuban or Iranian links to the funds.
ING’s involvement with Cuba began in 1994, when the company entered a joint venture called the Netherlands Caribbean Bank (NCB). The other partner in the bank was Acemex, a shipping firm owned by the Cuban government.
As a result of that deal, ING was allowed to open its own office in Havana, becoming the first foreign bank granted such permission since Cuba’s 1959 revolution. ING Havana provided trade and commodity finance to Cuban government ministries and international clients, according to court documents.
At the same time, NCB made loans in US dollars and provided letters of credit to commercial clients in Cuba. Many of the resulting transactions were filtered illegally through the US system.
An ING branch in Curacao processed $2 billion in transactions involving sanctioned countries and entities from 2001 to 2006, court documents say.
To prevent disclosure, ING executives ordered lower level employees make sure they were excluding any mention of Cuba or Havana from payment messages.
“Management made clear that any employee who revealed the involvement of Cuban parties in a payment message would be subject to reprimand and possible termination,” according to court documents.
The documents suggest the anti-sanction actions at ING were widely known and widely tolerated at the bank. At one point an attorney in the bank’s legal department described the mislabeled transactions as a “little white lie.”
The documents said ING’s trade finance department in Rotterdam was also involved in the scheme. From 2003 to 2006, the department helped arrange $118 million in US dollar transactions on behalf of four Cuban front companies.
The bank also facilitated $76 million in transactions on behalf of Iran-linked deals. An ING branch in Belgium maintained a US dollar account with the Central Bank of Iran and helped facilitate the purchase by Iran of US-origin aircraft parts. In another deal, the bank helped with the financial logistics of Iran purchasing a US-built aircraft engine.
“Banks that try to skirt US sanctions laws undermine the integrity of our financial system and threaten our national security,” US Attorney Ronald Machen said of the case.
“When banks place their loyalty to sanctioned clients above their obligation to follow the law, we will hold them accountable,” Mr. Machen said.
In a statement, ING said the company itself had discovered the illegal transactions during internal investigations in 2006. Much of the information was voluntarily disclosed to US investigators.
“The violations that took place until 2007 are serious and unacceptable,” said Jan Hommen, CEO of ING Group, in a statement. “The facts as compiled in the statement of the Department of Justice describe a very different ING than the company we’re all working so hard for today.”
He added: “Since starting the investigation in 2006, ING Bank has taken decisive actions to strengthen compliance throughout the organization.”