DUBAI, U.A.E— The United Arab Emirates-based Mashreqbank has agreed to pay $100 million to the New York Department of Financial Services, the Federal Reserve, and the Office of Foreign Asset Control (OFAC) for violation of the now-repealed Sudan Sanctions Regulations.
The Sudan Sanctions Regulations were repealed on June 29, 2018.
The NY DFS imposed a $100 million penalty against Mashreqbank. The Federal Reserve imposed a cease and desist order because Mashreqbank had insufficient policies and procedures to comply with U.S. sanctions laws, JD Supra reported.
Between 2005 and 2009, Mashreqbank’s London branch processed 1,760 U.S. dollar payments for Sudanese banks and intentionally disguised information from U.S. banks that would have identified the payments as illegal. Mashreqbank did this by directing its employees to avoid “populating certain fields in the payment messages” in order to conceal the connections to Sudan banks, reported JD Supra, citing an OFAC release.
‘Mistaken Belief’
As a result, the U.S. correspondent banks processed the transactions because the payment messages did not disclose the fact that the originating banks involved in the transactions were based in Sudan. The U.S.-based correspondent banks acted under the mistaken belief that the transactions did not originate from Sudan. Mashreqbank processed more than $4 billion in illegal payments over the four-year period using this technique to disguise the illegal payments, JD Supra said.
The NY DFS entered into a Consent Order with Mashreqbank, and cited the fact that an additional $2.5 million in illegal transactions were processed between 2010 to 2014 but that these transactions were “less obviously” Sudan-related payments.