WASHINGTON DC - A unit of thje giant Unicredit banking group has pleaded guilty to bypassing U.S. sanctions to carry out transactions for clients the U.S. had outlawed.
UniCredit Bank AG (UCB AG), which is headquartered in Munich, and operating under the name HypoVereinsbank, has been hit with a massive fine of $1.3 billion.
UniCredit is a conglomerate of merged Italian and German banks which operates in fifty markets in 17 countries in Central and Eastern Europe and Central Asia. The group, which has a capitalisation of 316 billion euro, has 8.500 branches, and employs 147,000 people.
UniCredit Bank Austria (BA), another financial institution in the UniCredit Group, headquartered in Vienna, Austria, agreed to forfeit $20 million and entered into a non-prosecution agreement to resolve an investigation into its violations of IEEPA.
While the parent UniCredit SpA, is not directly caught up in the offences committed, it has given an undertaking to ensure it's subsidiaries' obligations are fulfilled.
According to court documents, over the course of almost 10 years, UCB AG knowingly and willfully moved at least $393 million through the U.S. financial system on behalf of sanctioned entities, most of which was for an entity the U.S. government specifically prohibited from accessing the U.S. financial system. UCB AG engaged in this criminal conduct through a scheme, formalized in its own bank polices and designed to conceal from U.S. regulators and banks the involvement of sanctioned entities in certain transactions. UCB AG routed illegal payments through U.S. financial institutions for the benefit of the sanctioned entities in ways that concealed the involvement of the sanctioned entities, including through the use of companies that UCB AG knew would appear unconnected to the sanctioned entity despite being controlled by the sanctioned entity.
"When the United States sanctioned Iranian entities for proliferating weapons of mass destruction, UCB AG went to great lengths to help one such entity – Islamic Republic of Iran Shipping Lines – evade sanctions to gain access to the U.S. financial system," Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division said Monday. "The integrity of our financial system requires financial institutions to comply with our laws, and UCB AG willfully failed to do so. Today’s guilty plea and $1.3 billion penalty are just punishments for undermining U.S. sanctions and putting our financial system at risk."
"UCB AG’s actions in deliberately providing a designated weapons-of-mass-destruction proliferator with access to the U.S. financial system for almost two years after such access was prohibited by U.S. law were particularly egregious," U.S. Attorney Jessie K. Liu of the District of Columbia said Monday. "The bank’s impending guilty plea and the accompanying monetary penalty announced today send a clear message that financial institutions that subvert U.S. sanctions, and therefore our national security, should expect severe consequences."
"This case is a prime example of how some institutions erroneously believe they can game the U.S. financial system and conceal their nefarious activity," Assistant Director in Charge William F. Sweeny of the FBI’s New York Field Office said Monday. "The FBI will root out and aggressively investigate institutions, like UCB AG, that conspire to violate U.S. sanctions on behalf of prohibited entities."
"The financial penalty announced today should dissuade other financial institutions around the world from scheming and circumventing U.S. sanctions by moving money around using various institutions and companies," said Special Agent in Charge Jackson. "Following the money is what we do—so too is holding those accountable who try to avoid following the law."
UCB AG will waive indictment and be charged in a one-count felony criminal information, according to documents to be filed in federal court in the District of Columbia, charging UCB AG with knowingly and willfully conspiring to commit violations of IEEPA and to defraud the United States, from 2002 through 2011. UCB AG has agreed to plead guilty to the information, has entered into a written plea agreement and has accepted responsibility for its criminal conduct. UCB AG will enter its guilty plea before a judge in the District of Columbia. UniCredit Group banks will pay total financial penalties of approximately $1.3 billion. The plea agreement, subject to approval by the court, provides that UCB AG will forfeit $316,545,816 and pay a fine of $468,350,000.
According to admissions in the non-prosecution agreement and accompanying statement of facts, between 2002 and 2012, BA used non-transparent methods to send payments related to sanctioned jurisdictions such as Iran through the United States. BA conspired to violate IEEPA and defraud the United States by processing transactions worth at least $20 million through the United States on behalf of customers located or doing business in Iran and other countries subject to U.S. economic sanctions or customers otherwise subject to U.S. economic sanctions. As a result of its crimes, BA will forfeit $20 million and has agreed to additional compliance and sanctions enhancements.
In addition, UCB AG has entered into a plea agreement with the New York County District Attorney’s Office (DANY) for violating New York State law pursuant to which it will pay $316,545,816. BA has also entered into a non-prosecution agreement with DANY for violating New York State law. DANY conducted its own investigation alongside the Justice Department.
UniCredit SpA, UCB AG and BA have also entered into various settlement agreements with the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), the Board of Governors of the Federal Reserve System (the Federal Reserve) and the New York State Department of Financial Services (DFS) under which they will pay additional penalties of approximately $660 million as follows: $611,023,421 to OFAC, which will be satisfied in part by payments to the Justice Department and the Federal Reserve, $157,770,000 to the Federal Reserve and $405 million to DFS.
The case was prosecuted by Senior Trial Attorney Margaret A. Moeser of the Bank Integrity Unit in the Criminal Division’s Money Laundering and Asset Recovery Section, and Assistant U.S. Attorney Michelle Zamarin of the District of Columbia. The case was investigated by the FBI and the IRS-CI.
The Bank Integrity Unit investigates and prosecutes complex, multi-district, and international criminal cases involving financial institutions. The Unit’s prosecutions focus on banks and other financial institutions, including their officers, managers, and employees, whose actions threaten the integrity of the individual institution or the wider financial system.