01 Feb 2009, David Benyon, Operational Risk & Regulation
New York & Washington, DC - UK bank Lloyds TSB has agreed to hand over $350 million (£231 million) to US enforcement authorities for channelling Sudanese and Iranian money into the US banking system, violating the US International Emergency Economic Powers Act. Investigators from the federal US Department of Justice collaborated with the office of 89-year-old Manhattan district attorney Robert Morgenthau. The New York state and federal authorities will share $175 million each of the landmark payout.
The US justice department said between 1995 and 2007 Lloyds routinely removed customer names, bank names and addresses from payments to avoid red flags from US filtering processes. The bank accepts criminal conduct in the case involving at least $350 million originating in Iran and Sudan and other international hotspots. Court documents named Lloyds' offices in London and Dubai, and say the bank commonly referred to its practice as "stripping" or "repairing" wire transfers. Iranian banks Bank Melli, Bank Saderat and Bank Sepah, plus the Sudanese National Bank of Khartoum, were named as Lloyds clients involved. Lloyds must now open its books to CIA, FBI and other investigative agencies to determine the origin of funds.