Great Scot! RBS fined half a billion dollars

May 23, 2010

ABN Amro, a Dutch bank that was bought out by the Royal Bank of Scotland, has settled with the U.S. for violating American law.  Customers and banks affiliated with Cuba, the Sudan, Libya, and Iran channeled money illegally through the U.S. financial system with the assistance of ABN Amro.

Although no Western bank should do what ABN Amro (or Lloyds) has done, it’s unfortunate that only ABN Amro will pay.  Ultimately, it is the sanctioned countries themselves—especially Iran—that must be held to account for their persistent campaign to infiltrate our banks and circumvent U.S. sanctions.  ABN and RBS will be out of cash while Iran gets off “Scot” free.

From Reuters via ABC News:

LONDON – U.S. prosecutors have accused ABN Amro, now largely part of Royal Bank of Scotland , of turning a “blind eye” to U.S. laws, using special procedures to bypass U.S. sanctions against Cuba, Iran and other countries.

RBS, part of a trio of banks that bought ABN in 2007, said on Monday the consortium had agreed to a $500 million fine as part of a final settlement with U.S. authorities. The payment was covered by the provision made before ABN was bought.

In the latest of a series of fines levied by the United States on banks in connection with money laundering offences, ABN was charged with one count of violating the Bank Secrecy Act and a second of conspiracy to defraud the United States, violating laws including the Trading with the Enemy Act.

It involved transactions on behalf of customers from Iran, Libya, Sudan, Cuba and other sanctioned countries.

“ABN Amro facilitated the movement of illegal money through the U.S. financial system by stripping information from transactions and turning a blind eye to its compliance obligations,” Assistant Attorney General Lanny Breuer said.

According to court documents, for a decade until 2005 and, in a limited way, through to 2007, offices, branches, affiliates and subsidiaries of ABN removed or altered names and references to sanctioned countries from payment messages.

The stripping procedures, which also applied to traveler’s checks and letters of credit, allowed the bank to circumvent U.S. controls and pass undetected through filters at U.S. banks.

Prosecutors said the scheme allowed U.S. sanctioned countries to move “hundreds of millions of dollars through the U.S. financial system”.

ABN’s New York branch saw more than $3.2 billion from shell companies and “high risk transactions” flow through it…

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