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Last updated: January 10, 2009 4:31 am
Lloyds TSB will pay $350m to settle US investigations after admitting it enabled Iranian and Sudanese clients to access the US banking system in violation of US sanctions, prosecutors said on Friday.
Lloyds said it falsified business records by altering wire transfer information to hide the identity of its clients, said Robert Morgenthau, Manhattan district attorney, who announced the deferred prosecution agreement on Friday.
The process made it appear that transactions originated at Lloyds in the UK rather than the sanctioned banks, according to Mr Morgenthau, who conducted the investigation with the US justice department.
Washington prohibits certain countries from accessing US financial institutions and the sanctions are enforced by the Treasury’s Office of Foreign Assets Control.
The Lloyds agreement is the first from investigations into the actions of European banks in relation to US sanctions against Iran, Sudan, Libya and others.
Lloyds was one of three banks, including Barclays and Credit Suisse of Switzerland, which disclosed in public filings last year that they were co-operating with Mr Morgenthau and US federal prosecutors.
Mr Morgenthau said on Friday that the joint investigation into similar conduct by other banks was continuing.
Lloyds said last summer that it had made a provision to put aside funds to cover £180m related to historical payments being investigated by the US authorities.
The bank said on Friday night the provision was hedged into dollars at the time and covered Saturday’s announced settlement.
“We are committed to running our business with the highest levels of integrity and regulatory compliance across all of our operations and have undertaken a range of significant steps to further enhance our compliance programmes,” the bank said in a statement last night.
Lloyds said it was continuing discussions with the OFAC regarding the terms of the resolution of its investigation.
Mr Morgenthau said there was an illegal transfer of more than $300m on behalf of Iranian banks and their customers. While Lloyds voluntarily quit the Iranian business by 2004, the Sudanese activity, which resulted in the illegal transfer of over $20m, continued into 2007, after the beginning of the investigation.
Mr Morgenthau said the Iranian banks involved included Bank Melli, Bank Saderat and Bank Sepah; and the Sudanese lenders included National Bank of Khartoum.
The transfers were made to buy goods and services and to finance purchases from foreign vendors in dollars.
“For more than 12 years, Lloyds facilitated the anonymous movement of hundreds of millions of dollars from US-sanctioned nations through our financial system,” said acting assistant attorney general Matthew Friedrich.
“The department will continue to use criminal enforcement measures against the knowing and intentional evasion of US sanctions laws,” he said.
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