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Lloyds TSB pays 350 million USD for violating US sanctions

Sunday, January 11th 2009 - 20:00 UTC
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Britain's Lloyds TSB bank has agreed to pay a 350 million US dollars penalty to US authorities over financial transfers that violated US sanctions. The US Justice Department said Lloyds TSB had acknowledged “criminal conduct” and agreed to forfeit the funds in return for an end to its investigation.

Prosecutors said the bank faked records so clients in Iran, Libya and Sudan could do business with US institutions. Lloyds TSB said that it had cooperated fully. "We are committed to running our business with the highest levels of integrity and regulatory compliance across all of our operations, and have undertaken a range of significant steps to further enhance our compliance programmes," it said in a statement. US prosecutors said that the bank's misconduct took place between 1995 and 2007. "For more than 12 years, Lloyds facilitated the anonymous movement of hundreds of millions of dollars from US-sanctioned nations through our financial system," Assistant Attorney General Matthew Friedrich said. According to court documents, Lloyds removed information such as customer names, bank names and addresses so that wire transfers would pass undetected through filters at US banks. This process - known as stripping - meant that more than 350m USD (£230m at current exchange rates) that might otherwise have been blocked was processed by US institutions. Lloyds TSB had agreed to forfeit half the money to the US and half to New York County. In return, the Justice Department would recommend that charges against the bank be dismissed in two years, it said. Lloyds said it had set aside £180m last year against a possible settlement - before sterling weakened against the US dollar - and it did "not anticipate any further enforcement actions". The US prohibits certain countries, institutions and individuals from accessing the US banking system, based on its foreign policy and national security goals. It lifted sanctions on Libya in 2004, but measures remain in place against Iran and Sudan. In related news the heads of the UK's biggest banks gathered at Prime Minister Gordon Brown's weekend Chequers retreat as new plans to kick-start lending took a step closer. Lloyds TSB chief executive Eric Daniels and Barclays chairman Marcus Agius were among the guests along with Chancellor Alistair Darling and London Stock Exchange chairman Chris Gibson-Smith, the Sunday Times said. A Downing Street spokesman played down the meeting, calling it a "long-standing lunch" which had been in the diary for some time. But the gathering will fuel speculation over the latest steps to help a beleaguered banking sector and boost lending to ailing businesses. Since October, UK banks have been given guarantees worth hundreds of billions and £37 billion in taxpayer cash to strengthen their finances. This has left the State as a majority shareholder in Royal Bank of Scotland and likely to own almost half of Lloyds TSB and HBOS when their merger completes this week. Despite these moves, the Bank of England's latest survey said lending to businesses and households was set to decline further in the first three months of 2009.

Categories: Economy, Mercosur.

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