• Submitted by: lena campos
• Business and Economy
• 06 / 13 / 2012

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ING Groep NV agreed to pay $619 million to settle U.S. charges it falsified financial records to bypass sanctions on countries including Cuba and Iran, the largest such penalty against a bank.

ING Bank, a unit of Amsterdam-based ING Groep, admitted it moved billions of dollars through the financial system on behalf of Cuban and Iranian clients, violating U.S. sanctions by concealing the nature of the transactions and deceiving U.S. banks into processing illegal wire payments, Manhattan District Attorney Cyrus Vance Jr. and the U.S. Department of Justice said in a statement.

The penalty is the largest against a bank in connection with U.S. sanctions violations, surpassing the $536 million paid by Zurich-based Credit Suisse AG in 2009 to settle similar violations, U.S. and New York officials said.

The ING agreement is part of a four-year investigation of "stripping," in which codes indicating the source of wire transfers are removed. Vance said his office has secured $1.8 billion in settlements since 2009. London-based Lloyds Banking Group Plc paid $350 million and Barclays Plc paid $298 million in agreements reached earlier in the probe into 10 banks that was begun by former District Attorney Robert Morgenthau.

'Strong Message'

"These cases give teeth to sanctions enforcement, send a strong message about the need for transparency in international banking, and ultimately contribute to the fight against money laundering and terror financing," Vance said.

ING Bank moved more than $2 billion illegally through the U.S. financial system from the early 1990s to 2007 via more than 20,000 transactions on behalf of Cuba and Iran, according to court documents.

Half of the $619 million settlement will be distributed by the Manhattan District Attorney's office to the city and the state, and the other half will be paid to the U.S., Vance said in the statement.

ING cooperated with the two-year probe into its conduct, conducted an internal investigation, accepted responsibility for its conduct and voluntarily took remedial actions before entering into deferred prosecution agreements, Vance said.

'Decisive Actions'

"The violations that took place until 2007 are serious and unacceptable," Jan Hommen, chief executive officer of ING Groep, said in a statement. "Since starting the investigations in 2006, ING Bank has taken decisive actions to strengthen compliance throughout the organisation and heighten employee awareness of compliance risks."

The U.S. government restricts certain countries including Iran, Sudan and Cuba from using the U.S. banking system. The U.S. Department of the Treasury's Office of Foreign Assets administers sanctions, and banks in Manhattan, which process most of the world's payments of U.S. dollars, use special filters to prevent sanctioned countries, as well as terrorists and other criminals, from using the banks.

ING processed payments on behalf of sanctioned customers without referring to their origin, eliminated data that would have revealed the involvement of those entities and advised clients on how to conceal their involvement in such transactions to evade filters, Vance's office said.

Havana Office

ING was the first bank to establish an office in Cuba since the country's 1959 revolution, and the government in 1994 issued a license allowing it to participate in Netherlands Caribbean Bank, a joint venture between ING and Acemex, a shipping company owned by Cuba, according to a copy of the deferred prosecution agreement provided by Vance's office. Cuba also allowed ING to open its own office in Havana in 1994.

ING's Curacao office processed U.S. dollar payments for the Netherlands Caribbean Bank, ING's Havana office, and a third Cuban bank without making reference to their Cuban origins, according to the agreement.

Source: SFGate