Archive for the ‘Finance & Banking’ Category

North Carolina Man Jailed and Debarred for Violating ITAR Brokering Rules

Thursday, January 30th, 2014 by Brooke Driver


By: Brooke Driver

For Donald Bernardo of Matthews, North Carolina, the hits keep on coming. In November of 2011, Bernardo was tried and convicted in a Florida court for his violation of Section 38 of the Arms Export Control Act. Without first registering with the State Department, Bernardo engaged in brokering activities involving Venezuela. Specifically, in return for a fee and commission, he negotiated and arranged contracts, purchases, sales and transfers of regulated C-130 Hercules military transport aircraft. He was sentenced to 12 months of imprisonment and two years of probation at the time of his conviction in November 2011. Upon his release, BIS gave Bernardo a welcome back gift—five years on the denied persons list. For his sake, we hope his commission was worth it.

Illegal Stripping at Standard Chartered Bank Nets $327 Million for OFAC+ Violations

Thursday, January 17th, 2013 by Danielle McClellan


By: John Black

(Editor’s Note: That is perhaps one of the most attention grabbing export control headlines ever.)

On December 10, 2012 the Office of Foreign Assets Control (OFAC) in the US Treasury Department announced a $132 million settlement agreement with Standard Chartered Bank (SCB) to settle alleged violations of US trade embargoes and sanctions. The $132 million OFAC settlement is part of a combined global settlement of $327 million with federal and local government partners. The settlement is related to alleged violations by the London and Dubai offices of SCB of a number of U.S trade embargoes and sanctions programs, including those relating to Iran, Burma, Libya and Sudan and the Foreign Narcotics Kingpin Sanctions Regulations.

“Today’s settlement is the result of an exhaustive interagency investigation into Standard Chartered Bank’s attempts to violate U.S. sanctions programs through the ‘stripping’ from payment messages of critical information,” said OFAC Director Adam J. Szubin. “We remain committed to working with our partners in the regulatory and law enforcement community to ensure that the U.S. financial systems are protected from the risks associated with this type of illicit financial behavior.”

According to OFAC, from 2001 to 2007, SCB’s London head office and its Dubai branch engaged in stripping practices that interfered with the implementation of U.S. economic sanctions by financial institutions in the United States, including SCB’s New York branch. In London, those practices included omitting or removing references to US-sanctioned locations or entities from payment messages sent to U.S. financial institutions. SCB replaced the names of ordering customers on payment messages with special characters, effectively obscuring the true originator and sanctioned party in the transaction; and forwarding payment messages to US financial institutions that falsely referenced SCB as the ordering institution. In Dubai, the practices included sending payment messages to or through the United States without references to locations or entities that the US banks would have spotted as creating US sanctions issues. As a result, millions of dollars of payments were routed through U.S. banks for or on behalf of sanctioned parties in apparent violation of U.S. sanctions.

In addition, SCB’s New York branch settled charges related to eight apparent violations of the Foreign Narcotics Kingpin Sanctions Regulations (FNKSR).

Under the settlement agreement, SCB is required to put in place and maintain policies and procedures to minimize the risk of the recurrence of such conduct in the future. SCB is also required to provide OFAC with copies of submissions to the Board of Governors of the Federal Reserve System (Board of Governors) relating to the OFAC compliance review that it will be conducting as part of its settlement with the Board of Governors.

U.S. Targets Foreign Financial Institutions for ‘Causing’ Violations of Sanctions Regulations

Tuesday, July 20th, 2010 by admin


By: Christopher R. Wall and Thomas M. deButts

The U.S. Department of Justice and the New York District Attorney’s Office, together with the Office of Foreign Assets Control and federal and state bank regulators, have brought a number of cases in 2009 – 2010 against foreign financial institutions that clear dollar transactions through the United States involving prohibited entities and individuals under U.S. sanctions regulations. In the past, banks not subject to U.S. jurisdiction have generally avoided penalties under these regulations. The U.S. Government, however, has widened its enforcement to target financial institutions outside the U.S. for allegedly “causing” U.S. persons to violate U.S. sanctions regulations. (more…)

Management Consultant Facing 30 Years in Prison for Iran Violations

Friday, February 19th, 2010 by Danielle McClellan


By: Danielle McClellan

A former McKinsey and Co. management consultant is currently facing over 30 years in prison after violating the International Emergency Economic Powers Act (IEEPA) and several other violations involving unlicensed money transmitting. Mahmoud Reza Banki, a US citizen, provided money transmitting services to residents of Iran by operating a “hawala” which allows money to be transferred without physically crossing through the banking system. Basically customers transfer money to a “hawala operator” in one country, and then those funds (less any fees) are distributed to recipients in another country by a “hawala associate” on that end. Banki was a hawala operator and received funds from individuals in Saudi Arabia, Kuwait, Latvia, Slovenia, Russia, Sweden, the Philippines, the US and many other countries. (more…)