Thursday, January 23, 2014

US Treasury Intimidation of Luxembourg Bank Successful

This will sure teach any bank in the world not to provide banking services to anyone who is not in the good graces of the US empire.

The U.S. Department of the Treasury’s Office of Foreign Assets Control oday announced a $152 million agreement with Clearstream Banking, S.A. of Luxembourg, to settle its potential civil liability for apparent violations surrounding Clearstream’s use of its omnibus account with a U.S. financial institution as a conduit to hold securities on behalf of the Central Bank of Iran.

"Clearstream provided the Government of Iran with substantial and unauthorized access to the U.S. financial system,” said OFAC Director Adam J. Szubin.  “Today’s action should serve as a clear alert to firms operating in the securities industry that they need to be vigilant with respect to dealings with sanctioned parties, and that omnibus and custody accounts require scrutiny to ensure compliance with relevant sanctions laws.”

From at least December 2007 through June 2008, Clearstream held an account at a U.S. financial institution in New York through which the CBI maintained a beneficial ownership interest in 26 securities, with a nominal value of $2.813 billion, and exported certain associated securities-related services to the Central Bank of Iran.  Clearstream, as intermediary, served as the channel through which the CBI held interests in these securities and transferred those interests at a later date, thereby exporting custody and related services from the United States to the CBI in apparent violation of the Iranian Transactions and Sanctions Regulations (ITSR), 31 C.F.R. part 560.

Following meetings with OFAC officials in late 2007 and early 2008, in which Clearstream conveyed its decision to terminate its business with Iranian clients, Clearstream transferred the above-mentioned securities entitlements free-of-payment (FOP) from the CBI’s account at Clearstream to a European bank’s newly-opened custody account at Clearstream.   This new custody account allowed the CBI to continue holding its interests in the securities through Clearstream’s omnibus account in the United States.  Given the totality of facts and circumstances surrounding the transfers, Clearstream had reason to know that the CBI was retaining beneficial ownership of the securities following the FOP transfers.  As a result of the FOP transfers, the record ownership of the securities entitlements on Clearstream’s books changed, but the beneficial ownership did not, resulting in the CBI’s interest being buried one layer deeper in the custodial chain.  Clearstream’s exportation of services from the United States to the CBI then continued after the securities entitlements were moved to the European bank’s custody account.

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