On 27 August 2015, OFAC announced a $1,700,100 settlement with UBS AG (“UBS”) for 222 apparent violations of § 594.201 of the Global Terrorism Sanctions Regulations (31 C.F.R. part 594). The settlement notice is here.
Between January 2008 and January 2013, UBS was alleged to have processed 222 transactions related to securities held in the United States, on behalf of a UBS customer, located in Zurich, who had been designated by OFAC in October 2001, pursuant to Executive Order 13224, “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism.”
Despite blocks and restrictions placed on the client’s accounts by UBS at the time of OFAC’s designation, UBS allegedly continued to engage in investment-related activity on behalf of the client, including processing USD securities-related transactions, receiving dividends, capital calls, management fees, and cash distributions in connection with a US private equity investment.
Although UBS identified all of the apparent violations, OFAC deemed that the disclosures did not constitute voluntarily self-disclosures on the basis that they were “substantially similar” to another apparent violation of which the OFAC was already aware.
OFAC cited as an aggravating factor the fact that UBS acted with “reckless disregard” by failing to implement adequate controls to prevent the apparent violations despite receiving numerous warning signs that its conduct could lead to breaches of US sanctions laws.