Treasury fines Luxembourg Firm for Skirting Iran Sanctions

McClatchy Washington BureauJanuary 23, 2014 

— Europe's Clearstream Banking S.A. reached settlement with the U.S. government over allegations that it provided Iran’s central bank unauthorized access to the U.S. financial system in violation of international sanctions, the Treasury Department said Thursday.

The agency’s Office of Foreign Assets Control announced the deal in which Clearstream Banking, based in Luxembourg, will pay $152 million to settle its potential civil liability.

Clearstream allowed the Central Bank of Iran to use a U.S. financial institution as a conduit in order to hold securities, a practice that was prohibited by sanctions designed to force Iran to give up its nuclear ambitions.

“Clearstream provided the Government of Iran with substantial and unauthorized access to the U.S. financial system,” OFAC Director Adam J. Szubin said in a statement. “Today’s action should serve as a clear alert to firms operating in the securities industry that they need to be vigilant with respect to dealings with sanctioned parties, and that omnibus and custody accounts require scrutiny to ensure compliance with relevant sanctions laws.”

Clearstream, alleged Treasury officials, held an account in New York on behalf of Iran’s central bank. This allowed the central bank to have beneficial ownership interests in 26 different securities with a combined value of more than $2.8 billion.

The officials added that Clearstream held those stakes on behalf of Iran, transferring the interests at a later date in violation of the Iranian Transactions and Sanctions Regulations.

Treasury officials met with Clearstream in late 2007 and early 2008, and the company said it’d sever its ties with Iranian clients. But the company transferred the securities to an unidentified European bank’s newly opened account with Clearstream, allowing Iran to keep holding the securities. The recorded ownership had changed, but not the actual ownership, Treasury officials said.

“Clearstream’s strong remedial response to subsequently enhance its sanctions compliance policies and procedures was a major factor in OFAC’s mitigation of the size of the settlement amount,” the Treasury statement said, explaining why penalties were not higher.

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