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Wednesday
Jan292014

Clearstream settles Iran sanctions offense

Clearstream Banking SA of Luxembourg agreed to pay $152 million to settle U.S. Treasury claims that it allowed Iran to evade U.S. sanctions rules by providing access to the American banking system.

The Treasury Department's Office of Foreign Assets Control (OFAC) announced the settlement last Thursday. It said Clearstream held an account at a U.S.-based financial institution through which it enabled the Central Bank of Iran (CBI) to hold beneficial ownership interest in 26 securities. The securities had a nominal value of $2.8 billion.

Clearstream continued to hold the account even after telling U.S. regulators in late 2007 and early 2008 that it ended all of its business Iranian clients.

OFAC's enforcement information said given the facts, Clearstream had reason to know that CBI was the beneficial owner of the securities.

In the Treasury's press release, OFAC Director Adam Szubin said that the settlement "should serve as a clear alert to firms operating in the securities industry that they need to be vigilant with respect to dealings with sanctioned parties, and that omnibus and custody accounts require to ensure compliance with relevant sanctions law."

OFAC said it considered Clearstream's "strong remedial response" into consideration in finalizing the settlement amount.

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Julie DiMauro is the executive editor of FCPA Blog and can be reached here.