NEW YORK (
) -- Japan's largest bank,
Bank of Tokyo-Mitsubishi UFJ
, is expected to pay a $250 million fine after illegally transferring funds to sanctioned countries such as Iran,
The New York Times
Bank of Tokyo will make the $250 million payment to the New York State Department of Financial Services (DFS) to settle the state regulator's accusations the company routed payments worth an aggregate roughly $100 million from 2002 to 2007 through its New York bank branches, according to the
The potential regulatory settlement, which hasn't been formally announced, comes amid a crackdown by U.S. regulators on money-laundering and payments firms have facilitated to countries restricted by the Office of Foreign Assets Control, (OFAC).
U.S.-based banks are restricted from sending or facilitating the transfer of money to countries such as Iran, North Korea and Cuba. Recent regulatory settlements, however, indicate the world's largest banks made skirting the law a common practice and pumped hundreds of billions of dollars into sanctioned countries.
Regulators seek to ensure international banks cannot use U.S.-based bank branches from sending money to restricted countries, in an effort to shelter the domestic banking system from funding terrorist activity, money laundering and the business of drug cartels.
International banking conglomerates such as Bank of Tokyo,
all have settled with regulators in recent years on claims of significant violations.
Domestic banking giants such as
have also settled OFAC violations in recent years.
While Barclays, Standard Chartered and HSBC paid hundreds of million dollars in fines to the U.S. government, Bank of Tokyo so far has paid a fraction of that amount. In December, the bank paid an $8.5 million fine for alleged violations of OFAC in making payments to Iran, Burma, Cuba and Sudan between 2006 and 2007.
Bank of Tokyo Mitsubishi UFJ's Tokyo operations engaged in practices designed to conceal the involvement of countries or persons subject to U.S. sanctions in transactions that BTMU processed through financial institutions in the United States," the settlement stated.
The bank may have received leniency for self-reporting its violations. In 2007, Bank of Tokyo's senior management learned of the firm's payments to restricted countries and self-reported the violations to OFAC, a complaint states.
"BTMU's conduct concealed the involvement of U.S. sanctions targets and displayed reckless disregard for U.S. sanctions; the general manager of the Operations Center in Tokyo knew or had reason to know that procedures had been implemented instructing employees to manipulate payment instruction," OFAC said in the settlement.
The regulator said its settlement with Bank of Tokyo reflected the firm's remediation efforts on poor controls, its cooperation with regulators and its previous history of complying with the law.
report, New York state DFS Superintendent Benjamin Lawsky may take a far harsher stance against Bank of Tokyo. In August, Lawsky settled similar allegations of illicit payments with Standard Chartered for $340 million.
Lawsky appears intent to use the power of the New York DFS to enforce banking industry law and regulation.
The regulator is able to enforce conduct of banks with operations in the state of New York, and consequently, has a big influence on Wall Street.
Earlier in June, Lawsky and New York State Gov. Andrew Cuomo (
a handful of insurance giants including
had created so-called 'shadow insurance' to the tune of $50 billion in the state.
-- Written by Antoine Gara