Business And Markets

S. Korea Lender Agrees to Settle US Probe Over Payment to Iran

S. Korea Lender Agrees to Settle US Probe Over Payment to Iran
S. Korea Lender Agrees to Settle US Probe Over Payment to Iran

Industrial Bank of Korea, one of South Korea’s largest banks, will pay $86 million to settle US and New York state criminal and civil charges it allowed an illegal transfer of more than $1 billion to Iran that violated US sanctions.
Authorities said on Monday that IBK entered a two-year deferred prosecution agreement with the US Department of Justice and a non-prosecution agreement with New York Attorney General Letitia James.
The cases stem mainly from an alleged 2011 scheme by former IBK client Kenneth Zong, a US citizen formerly of Anchorage, Alaska and now in his early 80s, to violate Iran sanctions by arranging transfers to entities controlled by that country, Reuters reported. 
IBK, based in Seoul, accepted responsibility for conduct detailed in court papers, accusing it of a felony violation of the Bank Secrecy Act for having inadequate anti-money laundering controls at its New York branch from 2011 to at least 2014.
The settlements include the forfeiture of $51 million, plus a $35 million civil fine paid to the New York State Department of Financial Services. They also require improved customer due diligence and management oversight.
“Banks conducting business in the US have a responsibility to ensure that they establish safeguards against the exploitation of the banking system by sanctioned entities that foster, promote, or engage in terrorism,” US Attorney Geoffrey Berman in Manhattan claimed.
Carl Loewenson, a US-based lawyer for IBK, declined to comment. The bank also declined to comment.
IBK had about $242 billion of assets as of June 30, 2019, with about $180 million in the New York branch. It has been licensed in the state since 1990.
Authorities said Zong, posing as a small business owner, faked contracts and invoices for the sale of marble tiles to convert the Korean won drawn from restricted IBK accounts into more easily-traded dollars, and then disbursing the money globally.
Zong had four co-conspirators, including three Iranian nationals and one US citizen, prosecutors said.
Zong was imprisoned in South Korea after being convicted of crimes there and has not been permitted to leave the country, according to court papers and James’ office.

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