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The DOJ’s sanctions-related scrutiny of banks

Author: Dr. Angelika Hellweger  6 April 2023
2 min read

Angelika Hellweger of Rahman Ravelli outlines the significance of the US Department of Justice’s examination of banks’ relationships with sanctioned clients.

Credit Suisse Group and UBS Group are among the banks being scrutinised as part of a US Department of Justice (DOJ) probe into whether financial professionals helped Russian oligarchs evade sanctions.

The Swiss banks were among those targeted in a wave of subpoenas, which were sent out before Credit Suisse’s crisis that led to its proposed takeover by UBS. A number of US banks have also received subpoenas.

The DOJ is looking to assess which bank employees dealt with sanctioned clients, how such clients were vetted and whether any laws were broken.

Before Russia’s invasion of Ukraine prompted a range of further sanctions, Credit Suisse had a reputation for catering for rich Russians and handled more than $60 billion for them, earning the bank up to $600 million a year in revenue. By the time Credit Suisse ended its relations with individual Russians last May, it was holding approximately $33 billion for them.

Last year saw the DOJ launch its KleptoCapture task force to enforce sanctions on wealthy Russians who are allied to President Vladimir Putin. The US government has since seized many high-value, Russian-owned assets and numerous individuals have also been charged with helping oligarchs hide their wealth.

The DOJ’s focus on identifying and assessing the relationships between bank employees and sanctioned clients shows how much emphasis the authorities are now putting on individuals’ accountability when it comes to corporate enforcement. The DOJ approach has made sanctions the latter-day equivalent of the Foreign Corrupt Practices Act – and companies have to ensure that their approach to compliance recognises and reflects this.

It almost sounds too obvious to say that compliance with sanctions laws is key – and that the penalties for banks that do not can be substantial. This was seen recently when Wells Fargo & Co was fined $67.8 million for the firm’s unsafe or unsound practices relating to historical inadequate oversight of sanctions compliance risks at its subsidiary, Wells Fargo Bank, N.A. Wells Fargo Bank, N.A. also agreed to set aside $30 million to settle its potential civil liability for apparent violations of sanctions against Iran, Syria, and Sudan. Between 2008 and 2015, Wells Fargo and its predecessor, Wachovia Bank, provided a foreign bank located in Europe with software that the foreign bank then used to process transactions with US-sanctioned jurisdictions and persons. 

That was a case that can serve as a reminder of the need for banks to ensure they have adequate controls in place so they are capable of identifying - and then ensuring they do no business with - sanctioned clients.

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Dr. Angelika Hellweger

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Angelika is a specialist in international, high-level economic crime investigations and large-scale commercial disputes. She has widely-recognised expertise in representing corporates and conglomerates in Europe, the Middle East, Africa and United States.

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