OFAC action against EFG sends warning to UK firms

The Swiss private banking group was tripped up when omnibus accounts it held in the United States caused securities firms there unwittingly to process transactions for sanctioned Cuban and Russian customers. United Kingdom entities that retain omnibus accounts with American institutions run the same risks of breaching US sanctions legislation, cautions Denis O'Connor.

Denis O'Connoris a fellow of both the Institute of Chartered Accountants in England & Wales and the Chartered Institute of Securities and Investment. He was a member of the British Bankers' Association Money Laundering Committee from 2003-10 and a member of the Joint Money Laundering Steering Group's board and editorial panel between 2010 and 2016. He has been a frequent speaker at industry conferences on financial crime issues, both in the United Kingdom and abroad.

UK firms can learn valuable lessons from the recent enforcement action taken by the US Office of Foreign Assets Control (OFAC) against the Swiss private banking group EFG International AG (EFG) for multiple breaches of US sanctions. [1] Between 2014 and 2018 EFG caused US securities firms unknowingly to process 727 securities transactions with a value of $29.9 million for Cuban customers, 141 securities transactions with a value of $468,000 for a sanctioned individual and, in 2023, five dividend transactions with a value of $1,200 for a Russian sanctioned person. As EFG voluntarily disclosed these breaches to OFAC and due to the significant remedial measures EFG have taken, they received a financial penalty of $3,700,000.