Gunster – Banking Advisory, January 2009
On January 9, 2009, Lloyds TSB Bank PLC (“Lloyds”) and the United States Department of Justice (“DOJ”) entered into a deferred prosecution agreement (“Deferred Prosecution Agreement”) whereby Lloyds agreed to forfeit three hundred and fifty million dollars ($350,000,000) to the United States and the New York County District Attorney’s Office in connection with violations of the International Emergency Economic Powers Act (“IEEPA”).
On that same day, the DOJ filed a criminal information (“Information”) charging Lloyds with violating the IEEPA. Lloyds agreed to the filing of the Information and acknowledged responsibility for its criminal conduct.
The IEEPA makes it a crime to willfully violate or attempt to violate any regulation issued under theIEEPA, including the Iranian Transactions Regulations, which prohibit the exportation of services from the United States to Iran, and theSudanese Sanctions Regulations, which similarly prohibit the exportation of services from the United States to Sudan.
According to the Deferred Prosecution Agreement, beginning in or about 1995 and continuing until January 2007, Lloyds falsified outgoing U.S. wiretransfers that involved countries or persons on U.S.sanctions lists. Specifically, Lloyds removed material information, such as customer names, banknames and addresses, from payment messages inorder to avoid detection of the involvement of sanctioned parties so that the wire transfers would pass undetected through filters at U.S. financial institutions. This process of “stripping,” allowed approximately $350 million in transactions to beprocessed by U.S. correspondent banks used by Lloyds that might have otherwise been blocked or rejected due to sanctions regulations or internal bankpolicy reasons.
According to the Deferred Prosecution Agreement, Lloyds’ conduct was designed to assist its clients inevading U.S. economic sanctions imposed against Iran, Sudan and other countries.
Lloyds’ $350 million forfeiture to the United Statesand the New York County District Attorney’s Officewill settle forfeiture claims by the DOJ and the stateof New York. In light of Lloyds’ remedial actionsand its willingness to acknowledge responsibility forits actions, the DOJ plans to recommend thedismissal of the Information in two (2) years,provided that Lloyds fully cooperates with, andabides by, the terms of the Deferred ProsecutionAgreement.
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Should you wish to receive further information concerning matters discussed in this Banking Advisory, please contact Clemente Vazquez-Bello,Esq. at (305) 376-6082, Andres A. Fernandez, Esq.at (305) 376-6097 or Marina Olman, Esq. at (305)376-6069 or at [email protected],[email protected] or [email protected].
This Banking Advisory is for general information only. It is not legal advice, and legal counsel should be contacted before any action is takenwhich might be influenced by this Banking Advisory.
