1708609888 Banco Santander settles Iran before US regulator admits having 17

Banco Santander settles Iran before US regulator, admits having 17 frozen accounts | Companies

Santander bankExterior view of the Banco Santander headquarters in Boadilla del Monte (Madrid).Getty.

Banco Santander is accountable to the North American regulator and admits that at the end of 2023 it has 17 blocked accounts in the United Kingdom, Belgium and Brazil of customers sanctioned in the United States for terrorism, a mandatory review they carry out every year must be in the country. This fact is only known a few weeks after the publication of the case of the Iranian accounts in the United Kingdom, which is not included in these 17 cases because it involved an unsanctioned British citizen, although he acted as a front company for the Iranian regime using his bank account was closed.

The details of these 17 suspended accounts were disclosed by the group on Wednesday evening in a document sent to the US Securities and Exchange Commission (SEC). It explains that this firewall was activated on a number of customers sanctioned by the US for their ties to the Iranian regime, with most of them already blocked by the bank at the end of 2022.

“The group has taken significant steps to withdraw from the Iranian market, such as closing its representative office in Iran and suspending all banking activities there, including correspondent relations, accepting deposits from Iranian companies and issuing letters of credit.” Export credit , except for the legacy transactions described above,” the document states.

Santander's detailed accounts, which the bank reports to the SEC each year, are outside the Iranian case reported by the British newspaper Financial Times. According to this media, Iran used the accounts of Santander UK and Lloyds to transfer funds, thereby circumventing the veto of the Tehran regime for its nuclear development programs. In this case, the account was closed but is not included in the list as it did not breach any sanctions and was from a British customer based in the UK. That is, it was not directly sanctioned.

Regarding anti-money laundering measures, the group states that violating these rules has “serious legal and reputational consequences,” but does not specifically refer to a case in a specific market. Of course, given the Iran case, this warning comes at a sensitive time for the bank.

Reputational risk

“We have been and may in the future be the subject of negative media coverage about ourselves or our customers, including with respect to suspected conduct such as failure to detect and/or prevent financial criminal activity or failure to comply with security regulations.” FCC [el supervisor de delitos de blanqueo estadounidense]. “Adverse media coverage of this nature about us, whether warranted or not, could materially and adversely affect our reputation,” the document said. And it expects a possible collapse in its share price: “The reputational damage to our company and our global brand could be severe if we are found to have breached AML requirements.” [prevención del blanqueo de capitales]Combating bribery and corruption.”

According to information provided last night, Santander has seven blocked accounts (from five different customers) in its UK subsidiary. He acknowledges that these clients are “designated by the United States under the Specially Designated Global Terrorist sanctions program.” Some bank accounts that were already blocked at the end of the previous year. “It is a very complex issue because there are so many frontmen.” “It is not easy to link a person to a criminal network,” explains a financial source outside the bank of Cantabrian origin.

Something similar is happening in the Belgian branch through Santander Consumer Finance, where another seven accounts are blocked for an Iranian bank that is also on the North American blacklist. “The accounts have been blocked since 2008. In the year ending December 31, 2023, the Belgian branch did not generate any income or profit on these accounts,” clarifies the company headed by Ana Botín. In 2022, Santander's consumer finance division had another sanctioned customer in Greece, but left the bank before the end of the year.

Back to the reports: At the end of last year, three more blocked accounts were held in Brazil by as many customers residing in that country, who were also included by the United States in its sanctions program. In addition, the group has guarantees regarding the benefits of an Iranian company that is in the same global terror sanctions program. Specifically, these are guarantees for the obligations of contractors who took part in public tenders in Iran before April 27, 2007.

“The income and profits generated in these accounts in the year ended December 31, 2023 were insignificant relative to the general profits of Banco Santander,” the company emphasizes each point. And it points out that it has no contractual right to terminate current contracts without paying the guaranteed amount or forfeiting any outstanding amounts. For this reason, it states: “It intends to continue to provide guarantees and manage these assets in accordance with current legislation.”

This detailed statement, sent to the SEC but not included in the annual report submitted to the Spanish National Securities Market Commission (CNMV), is made in the United States in response to the requirements of the country's regulator. As stated in the Exchange Act, “an issuer must disclose in its annual or quarterly reports whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings with Iran relating to individuals or named entities” in accordance with certain Implementing regulations,” explains Santander.

In fact, this information is mandatory even if the activities, transactions or dealings were carried out in accordance with applicable law. That is, it is not the detection of an error, but rather a description of the mere process so that the manager can confirm it.

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