ENFORCEMENT INFORMATION FOR SEPTEMBER 7, 2007
National Australia Bank Ltd. Settles Burmese Sanctions Regulations, Sudanese Sanctions Regulations and Cuban Assets Control Regulations Allegations: National Australia Bank Ltd. ("NAB") has remitted $100,000 to settle allegations of violations of the Burmese Sanctions Regulations, 31 C.F.R. Part 537, the Sudanese Sanctions Regulations, 31 C.F.R. Part 538, and the Cuban Assets Control Regulations, 31 C.F.R. Part 515, (the "Alleged Violations") occurring between November 2003 and December 2005 involving the processing of several transactions through the United States. The transactions were voluntarily disclosed to OFAC following an extensive review by NAB of all of its transactions that were processed through the United States during this time period. Some of the transactions were processed through NAB’s branch in New York City, but the majority were processed through correspondent accounts held by it at other U.S. banks. Due to the significant remediation taken by the bank, including major upgrades to its worldwide compliance policies, as well as the fact that the violations were voluntarily disclosed, OFAC mitigated the potential penalties for these transactions by nearly 90%.
This enforcement action was based on actions prior to the effective date of the "International Emergency Economic Powers Enhancement Act" of 2007, which made it illegal for a person, wherever located, to "cause" a violation of IEEPA. Without this basis for asserting jurisdiction over NAB’s actions taken outside of the U.S. that did not involve one of its own branches, and without a corresponding settlement agreement elaborating the details of the violations and applicable CFR provisions, it is difficult to determine what methods were used for processing payments and what theories of liability OFAC asserted.
In particular, it is impossible to tell whether OFAC asserted extraterritorial jurisdiction over NAB’s actions taken outside of the U.S. Compare the ABN AMRO case—the only other non-U.S. bank settlement made prior to the enhancement act—where OFAC used theories of "facilitation" and "evasion" on the part of the unwitting U.S. branches of ABN AMRO as its bases for fining those U.S. branches of a Dutch bank.
Here, however, the enforcement information extract states that "the majority [of the illicit payments were] processed through correspondent accounts held by [NAB] at other U.S. banks," and it is unclear how if at all OFAC might have asserted jurisdiction over NAB for those particular transactions.
For the transactions processed through NAB's U.S. branches, those branches would have been, at a minimum and even if unwittingly, exporting financial services to Sudan (538.205) and dealing in property in which Cuba had an interest (515.201). The Burma case is less clear absent details regarding the transaction.