The specter of foreign bank violations of U.S. economic sanctions reared its head again in December. The Royal Bank of Scotland Group plc and The Royal Bank of Scotland plc (together, for the purposes of this article, RBS) have been investigated for violations of U.S. law, following accusations that RBS engaged in transactions that involved countries subject to international sanctions, such as Iran, Sudan and Burma. In separate actions, RBS agreed to settlements with the Board of Governors of the Federal Reserve System, the Office of Foreign Asset Control (OFAC), and the New York State Department of Financial Services (DFS). The combined settlement total was $100 million. This is another bump in the road for RBS, which was bailed out by the UK government and currently owns 81.14 percent of the RBS Group;1 there are also, however, several features of interest in the settlements.
Claims Asserted
In 2010, RBS initiated an investigation into its U.S. dollar payment practices in the UK.2 The concern was that RBS U.S. dollar transactions were violating U.S. sanctions programs relating to Iran, Sudan, Burma and Cuba. The investigation concerned procedures that allowed RBS to process transactions linked to U.S. sanctioned entities through U.S. banks without detection.
