In three episodes, the firm processed 873 securities-related transactions – totalling $30,409,488 – through US custodians or involving US person counterparties, breaching various restrictions. The Swiss bank's apparent violations were voluntarily self-disclosed, and the bank acted to remedy the problem.

Switzerland’s EFG International has agreed to pay $3.74 million to settle its potential civil liability for apparent violations of multiple sanctions administered by US authorities.

Between 2014 and 2018, EFG caused US securities firms to process 727 securities-related transactions totalling $29,939,701 for clients in Cuba, 141 securities-related transactions totalling $468,615 for an individual blocked under the Kingpin Act, and, in 2023, five dividend payments, with a combined value of $1,200, for US-custodied securities of a person blocked under a Russian sanctions programme.

In these three episodes, the firm processed 873 securities-related transactions – totalling $30,409,488 – through US custodians or involving US person counterparties, breaching various restrictions.

The case was brought against the bank by the Office of Foreign Assets Control at the US Treasury. 

“The settlement amount reflects OFAC’s determination that EFG’s apparent violations were voluntarily self-disclosed and not egregious, and also reflects EFG’s significant remedial measures,” OFAC said in a statement yesterday. 

Cuba
Between January 2014 and July 2018, EFG subsidiaries located in the Bahamas, Cayman Islands, Luxembourg, Monaco, and Switzerland processed 727 securities-related transactions and funds transfers totalling $29,939,701 through omnibus accounts at US custodians or otherwise involving US market participants, including EFG Miami, on behalf of clients who resided in Cuba or whose beneficial owners were Cuban nationals.

EFG’s clients included a Panamanian company beneficially owned by a person located in Cuba, two private investment firms domiciled in the British Virgin Islands and Panama whose ultimate beneficial owner was another Cuban national and resident, and individuals who EFG had reason to know resided in Cuba based on residency cards they provided to their respective EFG subsidiaries. 

For 404 of these transactions executed on behalf of a family that included Cuban residents, EFG involved EFG Miami as a broker. 

Kingpin Act case
In 2009, EFG’s Singapore branch opened an investment account for a Chinese national that OFAC later designated in 2014 as a Specially Designated Narcotics Trafficking Kingpin (SDNTK). Upon the designation, as per its policy, EFG Singapore imposed an internal restriction on the account to prevent it processing any payments to or from the client’s account and restricted trading in the account.

However, for more than four years, EFG Singapore did not notify its US custodian or other US securities firms transacting with the omnibus account that held the client’s sub-account. 

This omission caused the US firms to process 141 securities transactions – nearly all of which were corporate actions such as interest payments and dividend distributions associated with the designated client’s securities in the account – totalling $468,615. 

When it spotted this failure in 2018, EFG Singapore implemented additional controls and informed the involved US securities firms of the underlying SDNTK interest.

Designated Russian individual
In 2023, OFAC designated a client of EFG’s Swiss subsidiary pursuant to Executive Order 14024, “Blocking Property with Respect to Specified Harmful Foreign Activities of the Government of the Russian Federation” of 15 April 2021. Following the designation, EFG imposed an internal restriction on the client’s account and notified US custodians about securities positions that they held on behalf of the recently OFAC-designated client. Because of an error, however, EFG’s notification to the custodians overlooked three securities positions that the client, prior to his designation, pledged to EFG Switzerland under a securities lending agreement and that were under EFG’s name rather than the client’s.

EFG discovered that this lapse caused at least five dividend transactions, worth about $1,200, to be processed through US securities firms.