The Swiss banking group self-discloses potential civil liabilities related to alleged multiple violations of OFAC programs.

EFG International has agreed to pay slightly more than $3.7 million to settle potential civil liabilities for apparent violations of multiple sanctions programs managed by the Office of Foreign Assets Control (OFAC), an overnight statement released by the US Treasury indicates.

According to them, EFG prompted securities firms in the US to process over 700 securities transactions for clients in Cuba, including 141 of which were for an individual blocked under the so-called Kingpin Act as well as dividend payments to a client sanctioned under the OFAC's Russian sanctions regime. 

Not Egregious

«The settlement amount reflects OFAC’s determination that EFG’s apparent violations were voluntarily self-disclosed and not egregious, and also reflects EFG’s significant remedial measures,» the statement indicates.

The Treasury provided additional detail on the transactions in question, saying that EFG's subsidiaries in different countries had bought and sold securities for foreign clients and that they were conducted through omnibus accounts with US custodians or other market participants, including a subsidiary of EFG based in the US.

Unaware of the Transactions

That meant that the transactions were made in the name of EFG and not the underlying clients, with US market participants being unaware they were processing OFAC-relevant securities deals on behalf of sanctioned individuals.

The government said the maximum possible penalty for the breaches was slightly more than $276 million although the OFAC reduced the amount significantly after determining the bank had self-disclosed the matter while the violations were not deemed egregious.

Various Mitigating Factors

Some of the mitigating factors include the fact that EFG has internally restricted the accounts in a way that prevented them from realizing the economic benefits of their transactions. Moreover, the bank has not been penalized for the past five years and it has since taken significant remedial action.

The statement maintains that the institution has imposed internal restrictions related to any credits of debts from sanctioned client accounts and that it will require compliance approval for any account activity related to clients who are potentially exposed to higher sanctions risks.

Substantial Cooperation

It will also institute a high-risk control framework that identifies countries with similar risks and applies enhanced due diligence to clients with possible exposure to them. It will also conduct annual sanctions risk assessments and controls that meet OFAC requirements. As of the writing of this article, a statement by EFG on the matter has not yet been published on its website.

«EFG substantially cooperated during OFAC’s investigation of the Apparent Violations by conducting an internal investigation to identify exposure to clients under OFAC sanctions, providing well-organized and timely responses to OFAC’s requests for information, and entering into tolling agreements,» the US government said.