Fed Hands Barclays Bank a Cease and Desist Order Plus a $298 Million Fine

Thursday, August 19, 2010

What did Barclays Bank do that angers the Federal Reserve Board (FRB) so much it handed a "cease and desist order" and levied a $298 million fine on the British bank and its New York branch? It must be some dealing with Iran, North Korea or somebody closely affiliated with the US' enemies, according to this Fed release from late Wednesday:
The Federal Reserve Board and the New York State Banking Department on Wednesday announced the issuance of a consent Order to Cease and Desist against Barclays Bank PLC, London and the bank's branch in New York. The Order requires Barclays Bank to improve its program for compliance with U.S. economic sanctions requirements on a global basis.
While it is most interesting that a US regulatory authority can levy a fine on a British bank entity outside of the USA, the move was actually assisted by the UK's Financial Services Authority (FSA), the Fed said further:

The United Kingdom's Financial Services Authority, the home country supervisor of Barclays Bank, has agreed to assist the Federal Reserve in the implementation and supervision of the Order.
A fine of 2 times $149 million is a little more than just a slap on the wrist. The move involves several American punishment institutions:
In separate, coordinated actions, the U.S. Department of Justice and the District Attorney for New York County announced the execution of deferred prosecution agreements with Barclays Bank, and the Treasury Department's Office of Foreign Assets Control announced a settlement for violations of its regulations. The settlement agreements all relate to U.S. dollar payments routed through banks in the United States that involved entities or persons subject to U.S. economic sanctions. In the settlements with the Department of Justice and the District Attorney, Barclays Bank has agreed to pay $149 million, each, to the United States and to New York, for a total of $298 million. A copy of the Order is attached.
A link to a PDF copy leads to a blank page only.
The field is wide open for speculation remembering that Wachovia was fined $160 million for laundering $378 billion for Mexican drug cartels (or 1/3 of Mexco's GDP!!!) in March 2010.
Comparing these fines/settlements Barclays wrongdoings may have involved similar sums as I don't want to presume that US authorities apply two scales of justice.
Barclays was down 1.2% in early London trading.

1 comment

Unknown said...

I have learned so much after finding you. I appreciate your insight. Thank you. Why does the Fed Reserve have so much power? I believe it is a wholly unconstitutional entity. Congress should be in control of all money within the U.S. What are your thoughts?

20 August, 2010 02:39

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