[News] Cuba, OFAC, Fines and Extraterritoriality

[Anti-Imperialist News]

https://www.counterpunch.org/2019/09/26/cuba-ofac-fines-and-extraterritoriality/ 



  Cuba, OFAC, Fines and Extraterritoriality

by Nelson Valdes <https://www.counterpunch.org/author/nelson-valdes/> - 
September 26, 2019
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Those of us who follow events going on in Cuba–as well as 
Cuba’s international relations – should discuss the extraterritorial 
power that the US Treasury Department has to impose huge financial fines 
on non US foreign financial institutions.

To my knowledge there has been little discussion as to the reasons 
that foreign financial institutions accept the extraterritorial powers 
of the United States on such matters. For example, the Bank of Scotland 
is not a small bank. Yet, since it provided the service to Cuba of 
exchanging old US dollars for new US dollars; the bank was given an 
extraterritorial fine of $100 million dollars and the bank agreed to pay 
it. [1]

How come?

What exactly compels foreign financial institutions to accept 
the extraterritorial power and reach of the US Treasury Department? This 
is all based on a FICTION. That is, it is assumed that funds [in US 
dollars] deposited in a foreign account are deemed to have been  
deposited in a U.S. account. In other words, the US dollar has a quality 
of extraterritoriality where the sovereignty of the United States 
government and its laws have sway. The “fine” that is to be paid by the 
foreign bank–that is, the amount of funds that can be seized by US 
Treasury –  is limited by the value of the funds deposited into the 
account at the particular foreign bank. In other words, the foreign bank 
is just handing over Cuban capital to the US government.

Who are the people within the US Treasury Department involved in 
monitoring Cuba’s financial transactions abroad? Are these US employees 
closely connected with rightwing Cuban Americans? Is there a 
financial incentive/reward for disclosing such financial transactions to 
OFAC? Are US embassies around the globe given the task of monitoring 
Cuba’s financial transactions in each country? Is the NSA involved in 
monitoring such financial activities, as well?

Presently US law establishes that: “any “person subject to the 
jurisdiction of the United States “may not do business in Cuba or with 
Cuban nationals or businesses. “Persons subject to the jurisdiction of 
the United States” includes:

    + U.S. residents,

    + U.S. corporations and their U.S. or foreign subsidiaries,

    + any person or corporation, including foreign ones – operating
    within the United States and its territories.

Thus, a foreign corporation such as the Bank of Scotland who has a 
branch in the US, is held accountable for what any branch anywhere else 
in the world does.

The losses imposed on Cuba by OFAC already amount to over $1.5 
trillion dollars.  There has been no compilation of the fines paid by 
foreign companies  to the US Treasury Department. However, the number of 
fines and the amounts of the fines have dramatically increased during 
democratic administrations.

12/11/13 – Royal Bank of Scotland = $100 million dollar fine

07/22/13 – American Express= $5.2 million

06/28/13 – Intensa SaoPaolo = $ 3 million

-American Steamship Owners Mutual Protection and indemnity Association= 
$348,000

2004

-Credit Suisse/- UBS= $140 million

– Dutch Bank ABN Amro= $500 million

It should be noted that states within the US have an incentive to 
get involved in this policy. Since, often, the fines are split between 
the US Treasury and the state where the proceedings take place.

On June 12, 2012 for example ING of the Netherlands agreed to forfeit 
$619 million dollars “to settle criminal charges”. ING, interestingly, 
was not charged with an actual violation but with “conspiring to violate 
US economic sanctions and with violating New York state laws by 
illegally moving billions of dollars through the US financial system on 
behalf of Cuban and Iranian entities.”

It is not unusual to collapse the charge against Cuba with some 
other country in the so-called “terrorist” list.

And IT SHOULD BE noted the following 
<http://blogs.wsj.com/corruption-currents/2012/06/12/ing-bank-forfeits-619-million-in-largest-ever-ofac-settlement/>:

    “The forfeited $619 million will be split evenly between the US
    Government and the State of New York ($309.5 million each). ING Bank
    waived indictment on a single charge of conspiracy to violate the
    Trading With the Enemy Act (TWEA), 50 U.S.C. App., § 1 et seq, and
    the International Emergency Economic Powers Act (IEEPA), 50 U.S.C.
    §§ 1701-1706, and entered into separate Deferred Prosecution
    Agreements with the US Department of Justice (DoJ) and New the New
    York County District Attorney’s Office (DANY).”

    “According to the OFAC civil penalty document, ING processed more
    than 20,000 wire transfers and other transactions in violation of
    Cuba sanctions from October 2002 to July 2007 totaling more than
    $1.65 billion. It processed 41 transactions between December 2003
    and September 2007 in violation of sanctions against Myanmar that
    totaled $15.5 million.”

The ING statement was higly revealing at the time it was issued. It read:

    ING Bank reaches agreement with US Authorities

    Amsterdam, 12 June 2012

    ING Bank announced today that it has entered into a Settlement
    Agreement with U.S. Department of the Treasury’s Office of Foreign
    Assets Control (OFAC) and Deferred Prosecution Agreements with the
    Department of Justice, the United States Attorney’s Office for the
    District of Columbia and the District Attorney of the County of New
    York (together the “U.S. Authorities”) in relation to the
    investigation by those agencies into compliance with U.S. economic
    sanctions and U.S. dollar payment practices until 2007.

    Under the terms of the Deferred Prosecution Agreements, no further
    action will be taken against ING Bank if it meets the conditions set
    forth in the agreements. As part of the settlement, ING Bank has
    agreed to pay a total penalty of USD 619 million. As announced on 9
    May 2012, ING Bank took a provision in the first quarter of 2012 to
    cover this issue.

    ING Bank previously disclosed in its annual reports and other
    public filings that it was in discussions with authorities
    concerning compliance with OFAC requirements in relation to
    transactions executed by Commercial Banking. Since 2006, prior to
    receiving inquiries from the U.S. Authorities, ING initiated two
    extensive internal investigations. Much of the findings, which were
    voluntarily disclosed to OFAC, focused on conduct relating to
    transactions associated with ING Bank’s Cuban operations, as well as
    business with counterparties in other OFAC sanctioned countries.

    The discussions with authorities on these issues did not involve
    ING’s Insurance and Investment Management operations, nor Retail
    Banking or ING Direct.

    ING Bank has cooperated closely and constructively with regulators
    and other authorities throughout this process. The U.S. Authorities
    have recognized ING’s substantial cooperation in the resolution and
    ING’s efforts and commitment to continuously enhance compliance
    within the organisation.

    “The violations that took place until 2007 are serious and
    unacceptable. 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,” said Jan Hommen, CEO of ING
    Group. “Since starting the investigations in 2006, ING Bank has
    taken decisive actions to strengthen compliance throughout the
    organisation and heighten employee awareness of compliance risks.
    This continues to be a key priority in the interests of our
    customers, employees and other stakeholders, and serves to ensure
    we remain abreast of compliance risks in an increasingly complex
    financial services industry.”

    ING Bank is fully committed to conducting its business with the
    highest levels of integrity, which includes strict compliance with
    all applicable laws, regulations and standards in each of the
    markets and jurisdictions in which it operates. ING Bank has taken
    various steps to strengthen global compliance risk management. The Bank:

    Voluntarily terminated relationships with sanctioned banks and
    entities, including closing its representative office in Cuba in
    2007 and liquidating the Netherlands Caribbean Bank, which was
    concluded in 2009.  Created a central team focused on preventing and
    detecting money laundering and terrorist financing and related
    policies and procedures.  Implemented enhanced compliance and risk
    management procedures on a global basis to improve the Compliance
    function and increased the number of compliance staff, which now has
    in excess of 400 full time ING employees dedicated to Compliance
    across our worldwide operations.  Enhanced its global
    compliance training programme as part of ING’s continuing focus on
    building a compliance-based culture. Amended key policies and
    guidelines and the international rollout of several programmes for
    education, awareness and monitoring of sanctions and compliance
    issues.  All enhancements that have been implemented in the past
    years are designed to meet or exceed current rules and regulations
    of law enforcement agencies and are aimed at preventing practices of
    this type from occurring in the future.

    Press enquiries Carolien van der Giessen +31 20 576 6386
    Carolien.van.der.Giessen at ing.com”

    Investor enquiries ING Group Investor Relations +31 20 576 6396
    Investor.relations at ing.com

    ING PROFILE ING is a global financial institution of Dutch origin,
    offering banking, investments, life insurance and retirement
    services to meet the needs of a broad customer base. Going forward,
    we will concentrate on our position as an international retail,
    direct and commercial bank, while creating an optimal base for an
    independent future for our insurance and investment management
    operations.

Not a single foreign banking or financial institution has fought back 
the United States government’s “fines.” In fact, the Patriot Act – which 
is the overarching legal framework used against Cuba’s financial 
resources abroad – excludes judicial remedy. Thus, when it comes to the 
US dollar imperial extraterritoriality applies.

*Notes.*

[1] 
http://www.bloomberg.com/news/2013-12-11/rbs-to-pay-100-million-to-settle-u-s-sanctions-violation-probe.html

BIBLIOGRAPHY:

http://www.mayerbrown.com/files/Publication/bc828278-4516-41ea-bc07-5cbcf909be56/Presentation/PublicationAttachment/6746390a-c4f7-46fe-afb3-0a9b3cc7cccb/05_Lakatos_Bloechliger.pdf

and

http://www.omm.com/obama-administration-eases-some-of-the-restrictions-on-cuba-but-broad-and-long-standing-economic-sanctions-remain-in-place-04-15-2009/

and

http://www.steptoe.com/publications-newsletter-pdf.html/pdf/?item_id=585 
tem_id=585 
<http://www.steptoe.com/publications-newsletter-pdf.html/pdf/?item_id=585%20tem_id=585>

/*Nelson P. Valdes* is Professor Emeritus at the University of New Mexico./

-- 
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863.9977 https://freedomarchives.org/
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