By: Danielle McClellan
Barclay’s Bank PLC, headquartered in London, has agreed to pay $2,485,890 to settle a potential civil liability for 159 apparent violations of the Zimbabwe Sanctions Regulations (§ 541.201) between July 2008 and September 2013. Barclay’s processed 159 transactions totaling around $3,375,617 to or through financial institutions located in the US on behalf of corporate customers of Barclays Bank of Zimbabwe. These customers were found to have been owned by 50 percent or more, directly or indirectly, by a person identified on the US Department of the Treasury’s OFAC List of Specially Designated Nationals and Blocked Persons (SDN List).
Barclays Bank of Zimbabwe Limited (BBZ) implemented an electronic customer system in 2006 that prevented it from screening beneficial ownership information for its corporate customers. The only information the bank captured was that of the customer, not of any related parties such a beneficial owner of the customer. Over the years the Barclay’s continued to try and find a work around for the issue but it wasn’t until 2013 that system was fixed.
The base penalty amount for these violations was $5,029,000, OFAC released the following they used in consideration when reaching the settlement amount:
OFAC found the following to be aggravating factors in this case:
- Although Barclays attempted to comply with OFAC sanctions despite various constraints imposed by the local Zimbabwean authorities, Barclays failed to implement adequate controls to prevent the apparent violations from occurring despite numerous warning signs that its conduct could lead to a violation of U.S. sanctions laws;
- Multiple business lines and personnel within Barclays, including supervisory and management staff in the bank’s Compliance and Audit functions, had actual knowledge or reason to know of the conduct that led to the apparent violations (including the bank’s awareness of the limitations of the systems used by BBZ with respect to capturing full information concerning the beneficial ownership of certain of its corporate customers);
- Barclays processed 159 funds transfers totaling approximately $3,375,617 that conferred economic benefit to, and provided indirect access to the U.S. financial system for, blocked persons, causing harm to the Zimbabwe sanctions program and its associated policy objectives;
- Barclays is a large and commercially sophisticated international financial institution; and
- Barclays’ compliance program was inadequate to identify BBZ’s customers as blocked persons and/or prevent the apparent violations from occurring.
OFAC considered the following to be mitigating factors:
- Barclays has not received a penalty notice or Finding of Violation in the five years preceding the earliest date of the transactions giving rise to the apparent violations;
- Barclays took remedial action in response to the apparent violations; and
- Barclays substantially cooperated with OFAC’s investigation by submitting detailed and organized information, and by executing a statute of limitations tolling agreement and an extension to the agreement.
OFAC also considered the fact that the prohibited entities were not publicly identified or designated and included on the SDN List at the time that Barclays processed transactions for or on their behalf.