Page last updated at 01:01 GMT, Saturday, 10 January 2009

Lloyds pays $350m to end US case

LLoyds TSB sign
Lloyds TSB said it had taken steps to improve regulation

UK-based bank Lloyds TSB has agreed to pay a $350m penalty to US authorities over financial transfers that violated US sanctions.

The US Justice Department said Lloyds TSB had acknowledged "criminal conduct" and agreed to forfeit the funds in return for an end to its investigation.

Prosecutors said the bank faked records so clients in Iran, Libya and Sudan could do business with US institutions.

Lloyds TSB said that it had cooperated fully with the probe.

"We are committed to running our business with the highest levels of integrity and regulatory compliance across all of our operations, and have undertaken a range of significant steps to further enhance our compliance programmes," it said in a statement.

Wire transfers

US prosecutors said that the bank's misconduct took place between 1995 and 2007.

"For more than 12 years, Lloyds facilitated the anonymous movement of hundreds of millions of dollars from US-sanctioned nations through our financial system," Assistant Attorney General Matthew Friedrich said.

According to court documents, Lloyds removed information such as customer names, bank names and addresses so that wire transfers would pass undetected through filters at US banks.

This process - known as stripping - meant that more than $350m (230m at current exchange rates) that might otherwise have been blocked was processed by US institutions.

Lloyds TSB had agreed to forfeit half the money to the US and half to New York County.

In return, the Justice Department would recommend that charges against the bank be dismissed in two years, it said.

Lloyds said it had set aside 180m last year against a possible settlement - before sterling weakened against the US dollar - and it did "not anticipate any further enforcement actions".

The US prohibits certain countries, institutions and individuals from accessing the US banking system, based on its foreign policy and national security goals.

It lifted sanctions on Libya in 2004, but measures remain in place against Iran and Sudan.

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