Metro Bank in probe over Iran sanctions breaches

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Metro Bank

Metro Bank

METRO Bank is undergoing a major review of its compliance controls after handling money from Cuba and Iran in breach of strict US and EU sanctions.

The review is being handled by a top level team of investigators at law firm DLA Piper, which was hired after the Iranian funds were received by the bank last year.

Metro notified US officials of the Cuba offence in November 2017.

It is the latest in a series of problems for the bank which spent much of last year reeling from the impact of a major error in the way it accounted for its property loans.

Both its founder chairman Vernon Hill and chief executive Craig Donaldson quit amid the ensuing fallout.

Metro admitted to the sanctions breaches in a 200-page fundraising prospectus in September but gave no further details beyond a brief, four-sentence paragraph on page 32.

It refused to give any details beyond that statement when asked by the Evening Standard.

In the September statement, Metro admitted it had been in a “banking relationship” with a UK-based entity subject to US Cuban sanctions, then last year discovered a payment to one of its customer accounts had come from the UK subsidiary of an Iranian entity.

The payment had been made via a “UK-based financial institution”, Metro’s statement said.

It is believed DLA Piper’s review is serious and at a fairly advanced stage, examining how Metro’s “Know Your Customer” (KYC) rules had broken down, and whether there had been other breaches. Metro said it had been keeping the US Treasury’s sanctions policing unit, the Office of Foreign Assets Control (OFAC), informed since the Cuba failings in 2017 but declined to say whether DLA Piper is answerable to the bank or the tough US regulator.

OFAC declined to comment.

One senior compliance consultant not involved in the situation said the US authorities would be extremely concerned about the double breach.

He said: “Getting it wrong on Cuba is bad enough, but to mess up with Iran so soon afterwards suggests something is seriously wrong with their systems, especially so recently. Those two countries in particular are such big no-nos.”

Depending on how the authorities assess the review outcome, Metro could face swingeing fines although it has not made any provisions in its accounts for such an outcome. Iran is sanctioned in the UK and EU as well as the US.

Compliance experts said that, under KYC rules, it is no excuse to say a payment from a banned company came via a third party. Banks also have a duty to make sure they are not dealing with anyone on the regular OFAC lists of banned organisations and individuals.

In September last year, Metro advertised for a head of anti-money-laundering and sanctions, on a salary of £92,500.

Source » standard.co.uk

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