U.S. prosecutors have accused ABN Amro, now largely part of Royal Bank of Scotland , of turning a blind eye to U.S. laws, using special procedures to bypass U.S. sanctions against Cuba, Iran and other countries.
RBS, part of a trio of banks that bought ABN in 2007, said on Monday the consortium had agreed to a $500 million fine as part of a final settlement with U.S. authorities. The payment was covered by the provision made before ABN was bought.
In the latest of a series of fines levied by the United States on banks in connection with money laundering offences, ABN was charged with one count of violating the Bank Secrecy Act and a second of conspiracy to defraud the United States, violating laws including the Trading with the Enemy Act.
It involved transactions on behalf of customers from Iran, Libya, Sudan, Cuba and other sanctioned countries.
ABN Amro facilitated the movement of illegal money through the U.S. financial system by stripping information from transactions and turning a blind eye to its compliance obligations, Assistant Attorney General Lanny Breuer said.
According to court documents, for a decade until 2005 and, in a limited way, through to 2007, offices, branches, affiliates and subsidiaries of ABN removed or altered names and references to sanctioned countries from payment messages.
The stripping procedures, which also applied to traveler's checks and letters of credit, allowed the bank to circumvent U.S. controls and pass undetected through filters at U.S. banks.
Prosecutors said the scheme allowed U.S. sanctioned countries to move hundreds of millions of dollars through the U.S. financial system.
ABN's New York branch saw more than $3.2 billion from shell companies and high risk transactions flow through it.
Last year, British bank Lloyds was fined $350 million by U.S. authorities on similar charges it faked records so clients from Iran, Sudan and elsewhere could do business within the U.S. banking system. Credit Suisse paid $538 million in fines in December.
ABN's fine adds to a string of bad news for RBS linked to the bank it bought at the height of the crisis in an audacious deal with Santander and Fortis which ultimately proved to be the British bank's downfall.
Last month, the U.S. Securities and Exchange Commission filed civil fraud charges against Goldman Sachs over a security it arranged and sold with credit insurance from ABN - which left RBS on the hook for $841 million in losses.
(Reporting by Clara Ferreira-Marques; Additional reporting by Ben Berkowitz)