Barclays stripped data from wire transfers, in order to evade US sanctions, at a processing centre in Poole.
As the bank’s $298 million settlement with US prosecutors was begrudgingly approved by an angry judge, Barclays admitted that the Dorset processing centre stripped out identifiable data on the transfers in a deliberate attempt to avoid them being noticed.
Barclays was alleged to have introduced operating procedures that showed staff how to bypass software filters that automatically flag payment messages involving sanctioned banks. It introduced a system of ‘cover payments’, which are less transparent about the sender and beneficiary of money, to avoid them being noticed.
Barclays' settlement concerns charges of making around $500 million worth of illegal transactions with embargoed countries including Iran, Burma, Cuba, Sudan and Libya, between 1995 and 2006.
Judge Emmet Sullivan yesterday rubber stamped the deal at a hearing in a Washington DC federal court, but made absolutely clear his exasperation that prosecutors were not targeting the individuals responsible. The bank was being given a “free ride”, he said.
“These are shocking charges. What the bank is being charged with is doing business with the enemy,” he said in an exchange with the prosecution, reported in the Guardian. “You don’t believe the government is putting on kid gloves here at all?”
He also questioned why the penalty was hitting Barclays’ investors rather than “the assets of the board of directors”. It should have been a case of individuals “taking criminal responsibility” for their actions, he said.
Prosecutors insisted Barclays executives had been unaware of the transactions or the efforts to mask the data, but that “plenty of potential individuals at lower levels” were identified as part of the processing. Attorney for the prosecution, Kevin Gerrity, said: “It’s a different question as to whether there was any criminal intent.”
The judge did not accept that argument, after hearing that Barclays had spent $250 million on its own internal investigation of the matter. “There was no paper trail? Senior management has to know who is responsible,” he said, according to the Associated Press. He added that the efforts must have been co-ordinated by a “mastermind”.
As part of the deal, Barclays will have to prove it is acting within the law. The bank said it is taking steps to improve procedures, including introducing “sanctions training” for 100,000 staff and making a “substantial” investment in better payment and customer screening technology.
The charges will be deferred for two years and then ultimately dropped.