State Street Subsidiary Violated Iranian Sanctions, Treasury Says
May 28 2019 - 4:47PM
Dow Jones News
By Mengqi Sun
A subsidiary of State Street Corp. violated Iranian transactions
and sanctions regulations, the Treasury Department said Tuesday,
but the government stopped short of issuing a monetary penalty.
The Treasury's Office of Foreign Assets Control said custodian
bank State Street Bank & Trust Co. violated U.S. Iranian
sanctions regulations by processing payments on behalf of a person
in Iran.
State Street Bank, acting as a trustee for a customer's employee
retirement plan, processed at least 45 pension payments totaling
more than $11,000 to a plan participant between 2012 and 2015, OFAC
said. The person was a U.S. citizen with a U.S. bank account but
was residing in Iran, according to OFAC.
The bank disclosed the violations and subsequently improved its
compliance program, OFAC said in explaining its decision to not
impose a monetary penalty.
"We take our [anti-money-laundering] and sanctions
responsibilities seriously and we have cooperated fully with OFAC
throughout the process, " State Street said in a statement Tuesday.
"In the four years since we reported this issue, we have made a
number of enhancements to our global sanctions compliance
program."
OFAC said the bank's internal system indicated the payment
recipient's address was in Tehran, Iran, and that the unit that
oversaw payments related to the retirement plan used its own
sanctions-screening filter, instead of the bank's centralized
screening system, according to the enforcement order.
The screening software raised alerts on about 45 transactions
because of the Iranian address, OFAC said, and the alerts were
escalated to the compliance staff for the servicing unit, rather
than the bank's specialized sanctions compliance staff. The
servicing unit's compliance staff reviewed and approved the 45
distribution payments, according to the enforcement order.
Payments from the business unit now go through the bank's
central screening system, and alerts are escalated and reviewed by
the bank's central compliance unit, OFAC said.
The enforcement comes weeks after the regulator issued guidance
on expectations for sanctions compliance programs. The guidance is
part of a Treasury effort aimed at improving transparency around
the department's evaluation and resolution process.
Write to Mengqi Sun at mengqi.sun@wsj.com
(END) Dow Jones Newswires
May 28, 2019 16:32 ET (20:32 GMT)
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