New Enforcement Approach Orders by David Cohen, Treasury UnderSec'y for Terrorism and Financial Intelligence.

[ by Howard Haykin ]

The U.S. Treasury Department plans to hold bankers personally responsible and subject them to fines when their banks help countries such as Iran evade economic sanctions.  This shift is similar in nature and scope with recently declared intentions to hold individual bankers liable for failures to prevent laundering of drug money and other criminal proceeds, a Treasury spokesman told Reuters.

The policy shift, which has as yet resulted in any actual enforcement actions - and that is operating on the presumption that such policies have already been put in place - amid mounting pressure to crack down on banks and bankers for a wide range of financial misdeeds, and end their perceived status as "too big to jail."

Theoretically, sanctions arising from criminal cases involving financial institutions typically are levied at the corporate level.  However, individuals can and do face liability ... when they are personally responsible for sanctions violations. 

[C-I Note:  I don't believe that anyone has ever disputed that view;  however, theoretical vs. practical application of those principals can differ "by night and day."  A noble thought, but one that has not been embraced by regulators as a practical solution or approach.]

The Treasury's Office of Foreign Assets Control (OFAC) ...  is responsible for administering the U.S. sanctions regime and can fine parties that violate it.  While the office has levied big financial penalties against banks - most recently Britain's HSBC HSBCUK.UL and Standard Chartered STANB.UL, it has not exercised its authority to penalize individual bankers. The office lacks authority to directly pursue other penalties, such as jail time.

"There have been cases involving individuals that OFAC has brought, but not individuals who were explicitly employees of financial institutions acting on behalf of the financial institution," veteran OFAC official Dennis Wood said at an anti-money-laundering conference in Florida earlier this week.

In the future, where there is evidence suggesting specific bankers were "directing" sanctions-evading activity at an offending bank, OFAC will seek to hold those individuals responsible, Sullivan said. If warranted it will refer to the Justice Department for possible prosecution cases involving individual bankers, he said.

The new enforcement approach was ordered by David Cohen ... Treasury's undersecretary for terrorism and financial intelligence, who assumed that post in June 2011. Cohen oversees both OFAC and Treasury's anti-money-laundering unit, the Financial Crimes Enforcement Network (FinCEN).

For further details, go to;   [ Reuters, 3/22/13 ].