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01 October 2023

Lloyds TSB forfeits $350m in US case

By Reuters

Lloyds TSB Group has agreed to forfeit $350 million (Dh1.28 billion) to US authorities in connection with charges it faked records so clients from Iran, Sudan and elsewhere could do business with the US banking system.

The actions violated the International Emergency Economic Powers Act, which allows the US president to block commerce with countries deemed a threat to the US.

The US Justice Department and Manhattan District Attorney said the London-based Lloyds had agreed to the forfeiture to settle charges stemming from the investigation.

"Lloyds' criminal conduct was designed to assist its clients in avoiding detection by filters employed by US banks because of US economic sanctions against Iran, Sudan and Libya," said a fact sheet on a deferred prosecution agreement between the government and Lloyds that was filed in US District Court in Washington, DC.

Lloyds said it had set aside £180 million (Dh1bn) last year to cover a possible settlement in the US case and it "does not anticipate any further enforcement actions".

The US Justice Department said, from 1995 to 2007, Lloyds' offices in Britain and the Gulf removed information such as customer names, bank names and addresses so wire transfers would not be flagged and blocked as improper by US financial institutions.

"This process of 'repairing' or 'stripping'… allowed more than $350m in transactions to be processed by US correspondent banks that might have otherwise been blocked or rejected," the department said. Most of that was money sent from overseas and into the US, said Matthew Friedrich, acting assistant attorney general for the criminal division.

The stripping allowed $300m to be sent between the US and Libya, $21m between the US and Sudan and $20m between Libya and the US without scrutiny.