$80 Million Levied For Foreign Dealings, Money Laundering
By Paul Blustein
Washington Post Staff Writer
Page D01
The fines rank among the largest penalties ever imposed on a bank, according to Molly Millerwise, a spokeswoman for the U.S. Treasury, although some of the other major fines have involved different types of violations.
The severity of the fines is emblematic of the emphasis that the federal government has placed since the Sept. 11, 2001, attacks on investigating financial institutions’ transactions with countries and firms suspected of having links to terrorists.
Documents released by the regulators did not allege that the money involved was used to bankroll terrorism. But they revealed that ABN Amro’s branch in Dubai, United Arab Emirates, falsified various payments processed at branches in the United States to hide the involvement of Bank Melli Iran, an Iranian government bank, and the Arab Bank for Investment and Foreign Trade, which is partially owned by the Libyan government.
Most of the transactions in question took place between 1997 and 2004, said the documents, which were issued by the Treasury’s Financial Crimes Enforcement Network and other regulators, including the Federal Reserve.
“We don’t know of any money necessarily going to terrorists,” Robert W. Werner, the director of the Treasury’s Office of Foreign Assets Control, which administers sanctions against regimes considered unfriendly to the United States, said in an e-mailed statement. “What we do know is that transactions were conducted in violation of our sanctions programs with Libya and Iran, both of which are state sponsors of terror. We can’t say, however, that the money even went to those regimes.”
In a statement posted on its Web site, ABN Amro said it “recognizes that serious mistakes were made and accepts the sanctions.” The bank, headquartered in Amsterdam, is one of the two dozen largest in the world, with $1.08 trillion in assets as of Sept. 30, according to its last quarterly report. It operates in 60 countries and has more than 3,000 branches.
ABN Amro said many of the violations “were discovered by investigations initiated by the bank and voluntarily reported to regulatory authorities,” and it added that most of the violations took place before July 2004, when it signed an agreement with U.S. regulators concerning clearing activities in its New York branch. Rijkman Groenink, ABN Amro’s chairman, also said the bank has taken significant steps to improve compliance with the applicable regulations.
Payment instructions on wire transfers and letters of credit issued by Bank Melli were modified by ABN Amro’s Dubai branch “such that any reference to Bank Melli Iran was removed,” the government documents stated.
As for Arab Bank, letters of credit that it issued were “reissued” by the Dubai branch in a manner that “obscured the [Arab Bank”> origin of the letters,” according to the documents. Moreover, the Chicago branch of ABN Amro cleared U.S.-dollar checks for Arab Bank that had been submitted by the Dubai branch, “which had arranged for [Arab Bank”> to not endorse or stamp the checks.”
Such transactions involving Iran and Libya were prohibited by federal law during the 1997 to 2004 period that they took place. The restrictions involving Libya have been eased since September 2004, after the nation’s leader, Moammar Gaddafi, agreed to give up his nuclear weapons program, revealed secrets about the nuclear black market and took responsibility for the 1988 bombing of Pan Am Flight 103.
In addition, ABM Amro’s New York branch processed numerous transfers from “shell companies” connected to Russia and other former Soviet republics without instituting adequate controls to determine the nature of the firms’ business, according to the documents. From August 2002 to September 2003, the bank processed about 20,000 of these transfers totaling $3.2 billion, the documents said, despite a report by the U.S. Government Accounting Office that criminals in Russia were using such shell companies to conceal their activities.
ABN Amro will pay $40 million to the Federal Reserve, $20 million to New York state’s bank regulator, $15 million to the Illinois regulator and donate $5 million to an Illinois bank examiners’ education fund.
