OFAC fines National Australia Bank for 'trading with enemies'

LOSSES & LAWSUITS

Under the terms of the Trading with the Enemy Act, the US government restricts the degree to which branches of foreign banks can do business with companies or individuals in certain countries.

OFAC, which monitors such banking activity from within the US Department of the Treasury, has issued an enforcement statement noting that NAB conducted the alleged transactions between November 2003 and December 2005. Most of the transactions were processed through correspondent accounts held by the group at other US banks, although some were processed through NAB's New York branch.

National Australia Bank, which did not break any Australian laws, has been fined US$100,000 but could have faced a US$1 million fine if it had not disclosed the breach to OFAC.

"Due to the significant remediation taken by the bank, including major upgrades to its worldwide compliance policies, as well as the fact that the violations were voluntarily disclosed, OFAC mitigated the potential penalties for these transactions by nearly 90%," said OFAC.

Anti-money laundering regulators have been concerned about the propensity for correspondent banking to be used to launder money from overseas, which has become even more significant with the rise of the internet.