## Facts

- The United States charged Barclays Bank PLC, a U.K.-based bank with a New York branch, for facilitating U.S.-dollar transactions involving parties subject to U.S. sanctions programs administered by the Office of Foreign Assets Control (OFAC).
- From at least the early 1990s through 2006, Barclays processed transactions linked to sanctioned jurisdictions and parties, including Cuba, Iran, Sudan, and others, through the U.S. financial system.
- Barclays used “stripping” and “cover payment” methods to omit or remove identifying information from payment messages, preventing U.S. financial institutions from detecting sanctioned parties.
- Barclays sometimes routed transactions through internal “sundry” accounts to make payments appear to originate from Barclays as remitting bank, further concealing the true parties in interest.
- OFAC quantified at least 1,285 electronic funds transfers (approximately $112.695 million) routed through Barclays New York and other U.S. banks (Aug. 2002–Sept. 2006) in apparent violation of IEEPA/TWEA-based sanctions regulations.
- By altering payment information, Barclays caused its U.S. branch and other U.S. intermediary banks to process transactions that would have been blocked or rejected if complete information had been provided.
- Barclays conducted an internal review, self-disclosed to U.S. authorities, cooperated with investigations, and reported implementing remediation and sanctions-compliance enhancements.

## Issues

1. Whether a foreign bank’s deliberate alteration or omission of payment-message information to conceal sanctioned parties, while routing U.S.-dollar transactions through U.S. banks, constitutes willful violations or attempted violations of IEEPA and TWEA and their implementing regulations.
2. Whether such conduct can establish criminal liability by “causing” U.S. financial institutions (including the bank’s U.S. branch) to process prohibited transactions.
3. Whether a deferred prosecution agreement with forfeiture, admissions, cooperation duties, and compliance obligations is an appropriate disposition for institutional sanctions-evasion conduct.

## Decision

- Barclays waived indictment and agreed to proceed by a two-count criminal information alleging willful violations and attempted violations of IEEPA and TWEA.
- The parties entered a two-year deferred prosecution agreement (DPA) that included a factual statement and Barclays’ acceptance of responsibility for the described conduct.
- The court approved the DPA and a $298 million forfeiture as part of a coordinated resolution involving federal and state authorities and OFAC.
- Prosecution was deferred during the DPA term contingent on compliance with reporting, cooperation, and compliance-enhancement requirements; dismissal was contemplated upon successful completion.
- The presiding judge expressed concern about resolving serious corporate conduct through a DPA and the absence of individual prosecutions, but ultimately approved the agreement.

## Legal Principles

- A financial institution may face criminal exposure under IEEPA and TWEA for willfully evading U.S. sanctions when it routes U.S.-dollar transactions through U.S. banks while concealing the involvement of sanctioned parties.
- Stripping or omitting identifying information in payment messages to defeat sanctions screening can support liability for willful violations or attempted violations, including on a “causing” theory when U.S. intermediaries process transactions they otherwise would block or reject.
- In corporate sanctions cases, a DPA may be used to resolve charges where the institution admits facts, accepts responsibility, pays substantial forfeiture, cooperates, and undertakes compliance remediation under ongoing obligations during a defined deferral period.
- A DPA can require the defendant to preserve the government’s ability to rely on admitted facts in any later prosecution and to refrain from contradicting the agreed factual statement.

## Conclusion

The court approved a two-year deferred prosecution agreement and $298 million forfeiture after Barclays admitted to long-running sanctions-evasion practices that concealed sanctioned parties in U.S.-dollar payment messages, allowing prohibited transactions to clear through U.S. financial institutions in violation of IEEPA and TWEA.


United States v. Barclays Bank PLC, No. 1:10-cr-00218 (D.D.C. 2010)