Lloyds TSB Bank has agreed to pay a $350 million penalty to U.S. authorities for falsifying records to allow clients from Iran, Sudan and Libya illegal access to the U.S. financial system.
The London-based bank admitted responsibility for violating U.S. sanction laws under deferred prosecution agreements filed Friday by the U.S. Justice Department and the New York County District Attorney's Office.
Their joint investigation accuses Lloyds of deliberately removing customer information - a process known as "stripping" - so that wire transfers would pass undetected through filters at U.S. financial institutions.
The process made it appear the transactions originated at Lloyds rather than the sanctioned banks.
In a statement announcing the deals struck with investigators, the bank said it is committed to maintaining the highest levels of integrity and has taken significant steps to enhance its compliance programs.
Under terms of the agreements, Lloyds must turn over all the data it still has that was removed from past money transfers to U.S. authorities. The bank is required to cooperate fully with U.S. authorities for the next two years.
Manhattan District Attorney Robert Morgenthau said the case against Lloyds grew out of an investigation into suspicious money transfers by alleged Iranian front companies and charities in New York.
In the New York agreement, Lloyds admitted that from 2002 to 2004 it allowed Iranian banks and their customers to illegally move more than $300 million. Most of the money was sent into the United States, but it is not clear if any of the funds ended up in terrorist hands.
Money transfers from sanctioned countries violate the International Emergency Economic Powers Act, which allows the U.S. president to block commerce with countries deemed a threat to the United States.
Some information for this report was provided by AFP, AP and Reuters.