Barclays Bank Plc has agreed with OFAC a $2,485,890 settlement of its potential civil liability in connection with 159 apparent violations of US sanctions on Zimbabwe. Barclays is said to have processed the prohibited transactions, totalling around $3.4m, through financial institutions located in the US, including its own New York branch, on behalf of corporate customers of Barclays Bank of Zimbabwe (BBZ) that were subject to sanctions.
In around 2005, local restrictions in Zimbabwe prevented Barclays from implementing compliance procedures in that country. As a consequence, Barclays UK screened cross-border transactions involving BBZ or BBZ’s customers on its behalf, using the Zimbabwe branch’s electronic customer records and documentation. There were several shortcomings with Barclays’ procedure, including system limitations that prevented BBZ from accurately capturing information on beneficial ownership, ambiguous and difficult Know Your Customer processes, and BBZ’s failure on updating paper records to also update the corresponding electronic records used by Barclays UK to screen for compliance.
Between October 2012 and September 2013, US financial institutions blocked funds transfers that Barclays New York processed on behalf of an entity beneficially owned by sanctioned firm Industrial Development Corporation of Zimbabwe, yet Barclays is said to have failed to upload identifying information for this entity to its sanctions screening filter in a timely or accurate manner once its internal investigation confirmed beneficial ownership following the initial blocked transfers.
OFAC found that, in spite of Barclays’ attempts to comply with sanctions while contending with constraints imposed by the local Zimbabwean authorities, the bank’s conduct was aggravated by its failure to implement adequate procedures despite numerous warning signs that its conduct could lead to a violation of US sanctions, and the fact that multiple business lines and personnel, including supervisory and management staff, had knowledge of or reason to know about the conduct that led to the apparent violations. OFAC stated that Barclays’ conduct was mitigated by the absence of prior enforcement action against it, the remedial action it took in response to the apparent violations, its substantial cooperation with OFAC’s investigation, and its waiver of the statute of limitations in respect of the action against it. OFAC also noted that the prohibited entities it dealt with were not publically identified or designated at the time of the transactions in question.
A link to OFAC’s enforcement notice is here.