Friday, August 26, 2011

NY Bank to pay $88 million for Cuba transfers

Posted on Friday, 08.26.11

NY Bank to pay $88 million for Cuba transfers

U.S. Treasure says it processed $178 million in wire transers involving
Cuba or Cubans from December 2005 through March 2006.
By Juan O. Tamayo

The JP Morgan Chase Bank of New York has agreed to pay $88.3 million to
settle allegations of "egregious" violations of Cuban Assets Control
Regulations, the U.S. Treasury Department announced Thursday.

JPMC processed 1,711 wire transfers totaling about $178.5 million from
Dec. 12 of 2005, and March 31 of 2006 involving Cuba or a Cuban national
through a correspondent account, the announcement noted.

Another U.S. financial institution had alerted JPMC in November of 2005
that it might be processing improper wire transfers involving Cuba, the
statement added, without identifying the institution.

JPMC investigated the tip and confirmed it, yet it "failed to take
adequate steps to prevent further transfers" and "did not voluntarily
self-disclose these apparent violations of the CACR," the Treasury
statement added.

The base penalty for that set of actions alone was $111,215,000,
according to the statement, but the bank agreed to pay $88.3 million for
a total of six apparent violations involving Cuba, Iran and Sudan.

The Treasury Department statement revealed few details about the cases,
which were handled by its Office of Foreign Assets Control (OFAC). But
the size of the settlement to be paid by JPMC suggested that the alleged
violations were fairly serious.

In the other apparent violations, JPMC also did not make a timely report
on a trade loan for about $2.9 million that it had issued in 2009 in a
deal involving a ship linked to Iran and listed in Weapons of Mass
Destruction sanctions, the government reported. The base fine for that
case was $3 million.

Bank managers also failed to fully respond to a U.S. government subpoena
last year seeking information about a wire transfer marked "Khartoum,"
the capital of Sudan, which is on the U.S. list of nations that support
terrorism. The base penalty in that case was $250,000.

JPMC officials could not be immediately reached for comment on the
Treasury Department statement.

The Cuba, Iran and Sudan cases "were egregious because of reckless acts
or omissions by JPMC," the statement noted.

"OFAC determined that JPMC is a very large, commercially sophisticated
financial institution, and that JPMC managers and supervisors acted with
knowledge of the conduct constituting the apparent violations and
recklessly failed to exercise a minimal degree of caution or care."

OFAC reduced the potential fine because of the bank's "substantial
cooperation" with the investigations and the fact that JMPC had not
faced such problems in the previous five years.

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