Barclays Scrutinised over Terror State Links

LOSSES & LAWSUITS

NEW YORK & WASHINGTON, DC - The US Department of Justice and the New York District Attorney are investigating UK bank Barclays over suspected breaches of rules over doing business with states accused by the US of sponsoring terror. The bank admitted it has been questioned over dollar payments through its New York branch involving clients from states such as Iran, North Korea, Cuba, Sudan and Syria. The US has prohibited most dollar transactions with clients from these countries as part of its counter-terrorist financing (CTF) efforts.

The ruling marks another tightening up of the rules on European banks operating in the US. In 2005 Dutch bank ABN Amro was fined $80 million for transactions through its New York office that the US government said failed to meet its anti-money laundering (AML) controls.

Barclays warned in its 2007 annual results that the findings of the US investigation "could be substantial". ABN Amro admitted it is still under AML investigation by the Justice Department and negotiating a potentially costly settlement. The reputational risks could be higher than those measures in dollars. UK-based bank HSBC has admitted it maintains a small office in Tehran and that falling foul of US rules would have "serious legal and reputational consequences". Barclays said it was launching its own internal investigation into the US government probe.

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