STT State Street Corporation

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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