Barclays PLC on Monday agreed to pay $2.5 million to settle U.S. claims that the bank processed transactions for government-backed entities in Zimbabwe that were subject to U.S. sanctions.
The U.S. slapped sanctions on Zimbabwe in 2003 after the government of President Robert Mugabe engaged in a campaign of terror and intimidation to hold onto power in the face of a strong challenge.
The Treasury Department ruled that Barclays’ actions were a “nonegregious” case of sanctions violations. Beginning in 2005, Barclays was hit with what OFAC called “local restrictions” that made it harder to comply with the U.S. restrictions on trade and financial transactions for government-related entities, the enforcement order said.
In response to those local restrictions, Barclays’ began screening transactions for potential violations from the U.K. rather than inside Zimbabwe, OFAC said
However, that screening operation relied on data produced by Barclays’ Zimbabwe branch, which only had the capability to identify the primary beneficiary of an account, not related beneficiaries. That allowed sanctioned parties to hide individuals and companies that should not have been allowed to transfer funds, OFAC said.
Barclays identified and attempted to correct that problem in 2007 and again in 2009 and 2011 when further shortcomings were identified, the regulator said.
Eventually, outside institutions noticed that Barclays unknowingly attempted to process four transactions from IDCZ-related accounts and blocked them beginning in October 2012, OFAC said.
Because Barclays did not properly upload information about those accounts into its system after the blocked transactions in 2012, the bank processed three additional such transactions between November 2012 and September 2013, OFAC said.
All of those transactions were blocked by outside financial institutions, according to the enforcement order.
OFAC said that it reduced the potential penalties that Barclays faced because the bank cooperated in the agency’s investigation and took into account that the Zimbabwean entities made efforts to shield their identities, among other factors.
Barclays also has not been found in violation of U.S. sanctions within the last five years, OFAC said. The bank agreed to a $298 million settlement over alleged violations on Cuba, Iran and other countries in August 2010.
“Barclays continues to maintain a robust sanctions compliance program across its global operations and has implemented specific controls designed to ensure that payments of the type that gave rise to this matter do not occur again,” Mark Lane, a spokesman for the bank, said in an email.
Representatives for OFAC could not immediately be reached for comment on Monday.
–Additional reporting by Ryan Davis. Editing by Stephen Berg.