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UPDATE 1-Deutsche Boerse to pay $152 mln in U.S. sanctions probe

Anna Yukhananov and Aruna Viswanatha
Thursday, 23 Jan 2014 | 4:05 PM ET

WASHINGTON, Jan 23 (Reuters) - A Deutsche Boerse unit agreed to pay $152 million to settle allegations that it held some $2.8 billion in securities in the United States for the central bank of Iran, the U.S. Treasury said on Thursday.

The unit, Clearstream Banking of Luxembourg, had an account with a U.S. financial institution in New York from December 2007 to June 2008 through which Iran's central bank held interest in 26 corporate and sovereign bonds, the Treasury Department said. It did not name the U.S. financial institution involved.

"Clearstream provided the government of Iran with substantial and unauthorized access to the U.S. financial system," Adam Szubin, who leads the Treasury office that enforces U.S. sanctions, the Office of Foreign Assets Control, said in a statement.

Deutsche Boerse, which had already disclosed the settlement amount in November, said on Thursday the settlement closed the probe without a formal finding that Clearstream had violated U.S. sanctions laws.

U.S. sanctions on Iran's disputed nuclear program prohibit Iran's central bank and other Iranian institutions from any financial dealings with the United States in order to starve Tehran of cash. The sanctions have also made it difficult for Iran to get access to the U.S. currency it needs to pay for oil transactions.

Clearstream met with U.S. officials about the account in 2007 and 2008, and decided to end its business with Iranian clients, Treasury said.

According to the settlement, in February 2008 Clearstream transferred the rights to the Iranian central bank's securities to a custody account of a European commercial bank held by Clearstream.

But Iran continued to own those securities, and the securities continued to sit in Clearstream's New York account, the Treasury Department said.

Emails also showed that several Clearstream employees, including at least one supervisor and one senior executive, recognized that transferring the securities to a custody account still meant Iran's central bank owned them, according to the settlement.

Clearstream neither admitted nor denied the Treasury Department's allegations.

Clearstream eventually cooperated with OFAC and stopped dealing with Iran, according to the Treasury Department, which said it agreed to reduce the ultimate size of the fine.

Under the settlement, Clearstream is required to maintain policies that ensure similar actions do not happen again.

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