Barclays Bank PLC, a United Kingdom corporation headquartered in London, has agreed to forfeit $298 million to the United States and to the New York County District Attorney’s Office in connection with violations of the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA), both of which make it a crime to willfully violate (or attempt to violate) any regulation issued under the Acts.

The violations, announced in an Aug. 18 press release issued by the U.S. Department of Justice, relate to transactions Barclays illegally conducted on behalf of customers from Cuba, Iran, Sudan, and other countries sanctioned in programs administered by the Office of Foreign Assets Control (OFAC). A criminal information was filed Aug. 16 in the U.S. District Court for the District of Columbia charging Barclays with one count of violating the IEEPA and one count of violating the TWEA.

Barclays waived indictment, agreed to the filing of the information, and has accepted and acknowledged responsibility for its criminal conduct. Barclays agreed to forfeit the funds as part of the deferred prosecution agreements reached with the DoJ and the New York County District Attorney’s Office. U.S. District Court Judge Emmet Sullivan approved the deferred prosecution agreement Aug. 18.

"Banks like Barclays will not be permitted to disregard sanctions put in place by the U.S. government," warned Assistant Attorney General Lanny Breuer of the Criminal Division. "Not just once, but numerous times over more than a decade, Barclays stripped vital information out of payment messages that would have alerted U.S. financial institutions about the true origins of the funds."

Continued Breuer: "As I’ve said repeatedly, when corporations self-disclose their criminal wrongdoing to us, as Barclays did, they will not get a pass, but we will take their disclosure, cooperation, and remedial efforts into consideration."

OFAC Director Adam Szubin agreed. "The substantial economic benefit to sanctioned parties and the systemic nature of the apparent violations could have resulted in a much more onerous OFAC fine had Barclays not voluntarily self-disclosed and had it not cooperated with OFAC throughout the investigation." He noted that this is the first settlement of this magnitude where OFAC determined that all of the apparent violations were voluntarily self-disclosed by the bank.Background

According to court documents, from as early as the mid-1990s until September 2006, Barclays knowingly and willfully moved, or permitted to be moved, hundreds of millions of dollars through the U.S. financial system on behalf of banks from Cuba, Iran, Libya, Sudan, and Burma, and persons listed as parties or jurisdictions sanctioned by OFAC in violation of U.S. economic sanctions.

According to court documents, Barclays followed instructions, principally from banks in Cuba, Iran, Libya, Sudan, and Burma, not to mention their names in U.S. dollar payment messages sent to Barclays’ branch in New York and to other financial institutions located in the United States. Barclays routed U.S. dollar payments through an internal Barclays account to hide the payments’ connection to OFAC-sanctioned entities and amended and reformatted the U.S dollar payment messages to remove information identifying the sanctioned entities. Barclays also deliberately used a less transparent method of payment messages, known as cover payments, as another way of hiding the sanctioned entities' identifying information.

Barclay’s forfeiture of $149 million to the United States and $149 million to the New York County District Attorney’s Office will settle forfeiture claims by the DoJ and the state of New York. In light of the bank’s remedial actions to date and its willingness to acknowledge responsibility for its actions, the department will recommend the dismissal of the information in two years, provided Barclays fully cooperates with, and abides by, the terms of the deferred prosecution agreement.

OFAC has also entered into a settlement agreement with Barclays for IEEPA violations that will require Barclays to pay $176 million, which is concurrent with the forfeiture paid as a result of the deferred prosecution agreements.

In a separate action, the Federal Reserve Board and the New York State Banking Department announced the issuance of a consent Order to Cease and Desist against Barclays. This order requires Barclays to improve its program for compliance with U.S. economic sanctions requirements on a global basis.

The United Kingdom's Financial Services Authority, the home country supervisor of Barclays, has agreed to assist the Federal Reserve in the implementation and supervision of the order.

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