$1.7M SETTLEMENT AGREEMENT REACHED BETWEEN UBS AG AND OFAC

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.

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About Michael O'Kane

Michael O’Kane is a partner and Head of the Business Crime team at leading UK firm Peters & Peters. Described as ‘first-rate’ (Legal 500 2012), he “draws glowing praise from commentators” (Chambers 2013) for handling the international aspects of business crime, including sanctions, extradition and mutual legal assistance. Called to the Bar in 1992 and prior to joining Peters & Peters he was a senior specialist prosecutor at the Crown Prosecution Service Headquarters(CPS). At CPS HQ he was a key member of a small specialist unit responsible for the prosecution of serious and high profile fraud, terrorist and special interest criminal matters including the Stansted Airport Afghan hijacking and the prosecution of Paul Burrell (Princess Diana’s butler). Michael joined Peters & Peters in 2002. He became a partner in May 2004, and Head of the Business Crime team in May 2009. Since joining Peters & Peters, Michael has dealt with a wide range of business crime matters. He has particular expertise in international sanctions, criminal cartels, extradition, corruption, mutual legal assistance, and FSA investigations. Described as“ an influential practitioner in fraud and regulatory work, so much so that he is top of the referral lists of many City firms for independent advice for directors” (The Lawyer’s Hot 100 2009), he was recognised as one of the UK’s most innovative lawyers in the 2011 FT Innovative Lawyer Awards and included in the list of the UK's leading lawyers in 'The International Who's Who of Asset Recovery 2012. In 2012 he was the winner of the Global Competition Review Article of the Year. Michael regularly appears on television and radio to discuss his specialist areas and he is the author of the leading textbook on the UK Criminal Cartel Offence “The Law of Criminal Cartels-Practice and Procedure” (Oxford University Press 2009). Recent/Current Sanctions Work • Representing 109 individuals and 12 companies subject to designation by the European Council under targeted measures imposed against Zimbabwe. This is the largest and most complex collective challenge to a sanctions listing ever brought before the European Court. • Acting for a former Egyptian Minister and his UK resident wife, challenging their designation by the European Council of Ministers under targeted measures brought against former members of the Egyptian Government. • Advising a company accused in a UN investigation report to have breached UN sanctions imposed in relation to Somalia. • Advising a UK company in relation to ongoing commercial relationships with an Iranian company listed under both EU and UN sanctions. • Advising an individual in relation to a UK investigation for alleging breaching nuclear export controls.

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