US Department of Finance Office of Foreign Asset Control (OFAC) has announced a settlement deal with Latvian Swedbank in relation to a violation of Crimean sanctions.
Swedbank has agreed to pay USD 3 430 900 (EUR 3 144 179) to settle its possible civil liability for violating sanctions imposed on Crimea by OFAC.
In 2015 and 2016 Latvian Swedbank client used the bank’s electronic platform using a Crimean IP address to send a payment to persons in Crimea using US correspondent banks.
The settlement amount reflects the findings of OFAC, that the violations committed by Latvian Swedbank were not voluntarily and selflessly disclosed.
As mentioned in the report from OFAC, before the annexation of Crimea in 2014, Swedbank had attracted a shipping industry client in Crimea that owned three specific companies with accounts in Latvian Swedbank.
Between the 5th of February 2015 and the 14th of October 2016 this client had initiated 386 transactions worth a total of USD 3 312 120 (EUR 3 035 326),
using accounts owned by various companies. These transactions were processed using US correspondent banks.
Around March 2016 the owner of those companies tried to sent payments using a Crimean IP address to a US correspondent bank, which rejected the payments. The reason given was the possible relation to Crimea. A warning was sent to Latvian Swedbank.
Latvian Swedbank attempted to acquire additional information from those US correspondent bank and the owner of those companies. US banks provided no additional information, and the owner of the companies in question claimed none of the payments are related to Crimea. Based on this claim, Swedbank forwarded the declined payments to a different US correspondent bank, which processed them in the end.
According to OFAC, Latvian Swedbank had reasons to know explanations from the client about payments not being related to Crimea were false.
The clients data confirmed he was physically located in Crimea. Swedbank was aware of this the moment sanctions were breached.
As a result of actions by Latvian Swedbank the executive order of the 19th of December 2014 “Block the property of certain persons and prohibit certain transactions in relation to the Crimean region of Ukraine” was breached. Specifically, Latvian Swedbank allowed its client to initiate transactions from Crimea, using its internet banking platform. These transactions were then processed by US correspondent banks. As a result of this action financial services were exported to Crimea in breach of the executive order.
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