US imposes $8.6m penalty on French-Arab bank for violating sanctions

The Paris-based Union of Arab and French Banks (UBAF) has agreed to pay an $8.6 million penalty imposed by the US Treasury Department for violating a series of sanctions on Syria.

The Treasury’s Office of Foreign Assets Control (OFAC) said last Monday that it was imposing the penalty on the bank – which facilitates international trade between Europe, the Middle East, Asia, and Africa – for dealing with the Syrian regime through processing US dollar payments.

According to OFAC, the bank effectively processed internal transfers on behalf of Syrian state entities by transferring money from the accounts of sanctioned clients to the accounts of unsanctioned clients, before conducting transactions of equivalent amounts through US banks.

READ: Denmark company charged for violating EU sanctions on Syria

The UBAF processed a total of 127 transactions, most of which took place in late 2011 after a US executive order expanded sanctions on Syria, totalling $2.08 billion. Despite being aware of the measures imposed on Syria and its state entities, the bank reportedly was not aware that it was violating the sanctions by providing indirect means of money transfer.

UBAF then voluntarily revealed its violations to the US Treasury, cooperating to come to a deal and negotiate a penalty. In return for lowering the resulting penalty from a projected $4 billion down to $8.6 million, UBAF assured Washington that it will be strengthening its sanctions compliance programme and training all employees to abide by the measures, as well as eliminating contact with high-risk partners and clients.

Commenting on the penalty, Dr Martin Navias from the Centre of Defence Studies at King’s College London, told opposition news site Syria Direct that, “Firms should be careful and take all steps they can to comply with US sanctions policy. If they identify a problem, they should immediately stop the action, take legal advice and seek some type of arrangement with OFAC that can act to reduce the penalty.”

READ: Fuel tankers from Albania ‘violate Syria sanctions’