The ratio is the first thing to notice: a $217 million settlement for payments that totalled $37 million.
What OFAC counted
OFAC’s web posting says “Lloyds had a policy of intentionally manipulating and deleting information about U.S. sanctioned parties — notably Iran, Sudan, and Libya — in wire transfer instructions executed on behalf of its bank and non-bank customers.” From June 2003 to August 2006 it routed at least 4,200 electronic funds transfers, worth $36,988,457, through third-party banks in the United States:
- Iran: at least 165 transfers worth $13.7 million, June to October 2003, for the Government of Iran or persons in Iran, including Iranian financial institutions.
- Sudan: at least 574 transfers worth $13.9 million, June 2003 to August 2006.
- Libya: about 3,542 transfers worth about $9.4 million, June 2003 to April 2004, for one Libyan customer.
Lloyds said it had stopped dollar clearing for Iranian bank customers in 2003. The dollar accounts concerned were vostro accounts, dollar accounts Lloyds kept for Iranian and Sudanese financial institutions. See correspondent banking abuse and wire stripping.
The settlement
OFAC did not treat the matter as self-disclosed, but credited substantial cooperation: Lloyds engaged an independent consulting firm to review all applicable payment messages and all periodic account statements for the vostro accounts, and handed the results over in electronic form. Remediation included an annual review of its policies and a statistically significant sample of dollar payments by Internal Audit for two years, overseen and certified by an independent third party that the UK’s Financial Services Authority had to approve. The $217 million was deemed satisfied by an earlier payment of a greater amount to the Justice Department and the New York County District Attorney.
What the record shows
- The settlement is far above the value counted. That fits OFAC describing a policy that ran for three years rather than a set of isolated errors. See the stripping-era note.
- A single customer can dominate the count. About 3,500 of the 4,200 transfers were for one Libyan customer.