Dutch bank pays steep price for ignoring US sanctions on Iran and Cuba

ING’s involvement with Cuba began in 1994, when the company entered a joint venture called the Netherlands Caribbean Bank (NCB). The other partner in the bank was Acemex, a shipping firm owned by the Cuban government.

As a result of that deal, ING was allowed to open its own office in Havana, becoming the first foreign bank granted such permission since Cuba’s 1959 revolution. ING Havana provided trade and commodity finance to Cuban government ministries and international clients, according to court documents.

At the same time, NCB made loans in US dollars and provided letters of credit to commercial clients in Cuba. Many of the resulting transactions were filtered illegally through the US system.

An ING branch in Curacao processed $2 billion in transactions involving sanctioned countries and entities from 2001 to 2006, court documents say.

To prevent disclosure, ING executives ordered lower level employees make sure they were excluding any mention of Cuba or Havana from payment messages.

“Management made clear that any employee who revealed the involvement of Cuban parties in a payment message would be subject to reprimand and possible termination,” according to court documents.

The documents suggest the anti-sanction actions at ING were widely known and widely tolerated at the bank. At one point an attorney in the bank’s legal department described the mislabeled transactions as a “little white lie.”

The documents said ING’s trade finance department in Rotterdam was also involved in the scheme. From 2003 to 2006, the department helped arrange $118 million in US dollar transactions on behalf of four Cuban front companies.

The bank also facilitated $76 million in transactions on behalf of Iran-linked deals. An ING branch in Belgium maintained a US dollar account with the Central Bank of Iran and helped facilitate the purchase by Iran of US-origin aircraft parts. In another deal, the bank helped with the financial logistics of Iran purchasing a US-built aircraft engine.

“Banks that try to skirt US sanctions laws undermine the integrity of our financial system and threaten our national security,” US Attorney Ronald Machen said of the case.

“When banks place their loyalty to sanctioned clients above their obligation to follow the law, we will hold them accountable,” Mr. Machen said.

In a statement, ING said the company itself had discovered the illegal transactions during internal investigations in 2006. Much of the information was voluntarily disclosed to US investigators.

“The violations that took place until 2007 are serious and unacceptable,” said Jan Hommen, CEO of ING Group, in a statement. “The facts as compiled in the statement of the Department of Justice describe a very different ING than the company we’re all working so hard for today.”

He added: “Since starting the investigation in 2006, ING Bank has taken decisive actions to strengthen compliance throughout the organization.”  

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