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NY Regulator Cracks Down on Sanctions Violations

Tuesday, 25 Jun 2013 | 4:30 PM ET
Adam Jeffery | CNBC

Wall Street banks are being investigated for transactions that violated sanctions on Cuba, Iran, Myanmar, Sudan and other countries with ties to terrorism, New York state's chief financial regulator disclosed Tuesday.

"When you see that banks are systematically stripping information from wire transfers to hide the fact that they're doing business with terrorist nations, it makes your blood boil," said Benjamin Lawsky, superintendent of the state's Department of Financial Services, the new agency that regulates financial services and products.


Making Consultants Play by the Rules
Ben Lawsky, New York state's superintendent of financial services, talks with CNBC's Kate Kelly about the financial regulatory landscape, saying, "We want banks to do business, but not funny business."

Lawsky told CNBC's "Power Lunch" that it's "surprising" how many banks violate sanctions, adding that his agency is investigating a "line-up of other banks." He did not specify the number of inquiries, however, or which banks are being looked at. Each case is different, too, with executives and managers found responsible in some instances and low-level personnel to blame in others.

Last week, the Bank of Tokyo-Mitsubishi UFJ agreed to pay New York $250 million for deleting information from $100 billion in wire transfers with Iran and other nations on the U.S. sanctions list.

The settlement is the latest example of Lawsky's flexing the agency's muscles. But some market observers have argued that the $250 million fine amounts to a "slap on the wrist."

Last year, Standard Chartered agreed to pay the state $340 million over transactions linked to Iran and other countries. But Lawsky defended the settlement with Bank of Tokyo-Mitsubishi, saying it struck the right balance between encouraging business in the state—just "not funny business."

"As regulators, most importantly, we need to create real deterrents, and we need to send a message that doing business that facilitates terrorism, for example, is not going to be tolerated," Lawsky said.

Reuters contributed to this report

Watch "Power Lunch" Monday to Friday at 1 p.m. EDT!

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By CNBC's Drew Sandholm. Follow him on Twitter @DrewSandholm.

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