Regulation  

RBS fined £61m for violating rogue state sanctions

Royal Bank of Scotland has agreed a $100m (£61m) settlement with a trio of US regulators for violating sanctions against dealing with Iran, Sudan, Burma and Cuba.

The bank yesterday (10 December) reached a settlement with the Board of Governors of the Federal Reserve System, the New York State Department of Financial Services and the Office of Foreign Assets Control (OFAC) with respect to its compliance with US economic sanctions.

The $100m payout will be split evenly between the Fed and the NYDFS. According to a statement from RBS, the fine is covered by remediation provision set aside in previous results.

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In a statement the OFAC said between 2005 and 2009 RBS engaged in practices specifically designed to hide the fact it was dealing with countries forbidden under US sanctions.

In some cases procedures instructed employees to list the actual name of the Iranian financial institution rather than the bank identifier code, thereby preventing the RBS payment system from automatically including references to the Iranian bank or Iran in related cover messages.

RBS’s penalty comes the day after its fellow part taxpayer-owned banking group Lloyds was slapped with the largest ever retail conduct fine ever handed by the Financial Conduct Authority over incentives schemes that led to risks of widespread mis-selling.

It also comes just a year after another high street bank, HSBC, agreed a $1.9bn (£1.2bn) settlement with US authorities over breaches of money laundering controls and international sanctions, including that it was used to channel funds for terrorist activities.

On the RBS settlement, David Cohen, under secretary for terrorism and financial intelligence at the OFAC, said: “We remain resolute in enforcing our comprehensive sanctions against Iran, and we will continue to take aggressive action against those who would flout our law.”

RBS said in a statement: “RBS plc has cooperated fully with the US authorities and acknowledges and deeply regrets these failings.”

It added that the bank has committed almost £300m since 2010 to strengthen its controls regarding sanctions and has enhanced its anti-money laundering and sanctions compliance functions, increasing the team by 730 employees since June 2011.