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<div class="header reader-header reader-show-element" dir="ltr"> <font
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href="https://www.counterpunch.org/2019/09/26/cuba-ofac-fines-and-extraterritoriality/">https://www.counterpunch.org/2019/09/26/cuba-ofac-fines-and-extraterritoriality/</a></font>
<h1 class="reader-title">Cuba, OFAC, Fines and
Extraterritoriality</h1>
<span class="post_author_intro">by</span> <span
class="post_author" itemprop="author"><a
href="https://www.counterpunch.org/author/nelson-valdes/"
rel="nofollow">Nelson Valdes</a> - September 26, 2019</span></div>
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<p>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.</p>
<p>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]</p>
<p>How come?</p>
<p>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.</p>
<p>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?</p>
<p>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:</p>
<blockquote>
<p>+ U.S. residents,</p>
<p>+ U.S. corporations and their U.S. or foreign
subsidiaries,</p>
<p>+ any person or corporation, including foreign ones –
operating within the United States and its
territories.</p>
</blockquote>
<p>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.</p>
<p>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.</p>
<p>12/11/13 – Royal Bank of Scotland = $100 million dollar
fine</p>
<p>07/22/13 – American Express= $5.2 million</p>
<p>06/28/13 – Intensa SaoPaolo = $ 3 million</p>
<p>-American Steamship Owners Mutual Protection and
indemnity Association= $348,000</p>
<p>2004</p>
<p>-Credit Suisse/- UBS= $140 million</p>
<p>– Dutch Bank ABN Amro= $500 million</p>
<p>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.</p>
<p>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.”</p>
<p>It is not unusual to collapse the charge against Cuba
with some other country in the so-called “terrorist”
list.</p>
<p>And IT SHOULD BE noted <a
href="http://blogs.wsj.com/corruption-currents/2012/06/12/ing-bank-forfeits-619-million-in-largest-ever-ofac-settlement/">the
following</a>:</p>
<blockquote>
<p>“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).”</p>
<p>“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.”</p>
</blockquote>
<p>The ING statement was higly revealing at the time it
was issued. It read:</p>
<blockquote>
<p>ING Bank reaches agreement with US Authorities</p>
<p>Amsterdam, 12 June 2012</p>
<p>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.</p>
<p>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.</p>
<p>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.</p>
<p>The discussions with authorities on these issues did
not involve ING’s Insurance and Investment Management
operations, nor Retail Banking or ING Direct.</p>
<p>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.</p>
<p>“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.”</p>
<p>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:</p>
<p>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.</p>
<p>Press enquiries Carolien van der Giessen +31 20 576
6386<br>
<a class="moz-txt-link-abbreviated" href="mailto:Carolien.van.der.Giessen@ing.com">Carolien.van.der.Giessen@ing.com</a>”</p>
<p>Investor enquiries ING Group Investor Relations +31
20 576 6396<br>
<a class="moz-txt-link-abbreviated" href="mailto:Investor.relations@ing.com">Investor.relations@ing.com</a></p>
<p>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.</p>
</blockquote>
<p>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.</p>
<p><strong>Notes.</strong></p>
<p>[1] <a
href="http://www.bloomberg.com/news/2013-12-11/rbs-to-pay-100-million-to-settle-u-s-sanctions-violation-probe.html">http://www.bloomberg.com/news/2013-12-11/rbs-to-pay-100-million-to-settle-u-s-sanctions-violation-probe.html</a></p>
<p>BIBLIOGRAPHY:</p>
<p><a
href="http://www.mayerbrown.com/files/Publication/bc828278-4516-41ea-bc07-5cbcf909be56/Presentation/PublicationAttachment/6746390a-c4f7-46fe-afb3-0a9b3cc7cccb/05_Lakatos_Bloechliger.pdf">http://www.mayerbrown.com/files/Publication/bc828278-4516-41ea-bc07-5cbcf909be56/Presentation/PublicationAttachment/6746390a-c4f7-46fe-afb3-0a9b3cc7cccb/05_Lakatos_Bloechliger.pdf</a></p>
<p>and</p>
<p><a
href="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/">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/</a></p>
<p>and</p>
<p><a
href="http://www.steptoe.com/publications-newsletter-pdf.html/pdf/?item_id=585%20tem_id=585">http://www.steptoe.com/publications-newsletter-pdf.html/pdf/?item_id=585
tem_id=585</a></p>
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<p> <em><strong>Nelson P. Valdes</strong> is Professor
Emeritus at the University of New Mexico.</em> </p>
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