Reported by Mengqi Sun

EFG International agreed to pay about $3.7 million to settle allegations the Swiss private bank violated U.S. sanctions by holding and investing securities on behalf of blacklisted individuals, the U.S. Treasury Department said.

Between 2014 and 2018, Zurich-based EFG allegedly processed 868 securities transactions for customers in Cuba and for a Chinese national blacklisted for foreign narcotics trafficking, Treasury’s Office of Foreign Assets Control said Thursday. EFG, which has around 40 global subsidiaries, also processed five dividend payments in 2023 for another person blocked under sanctions imposed over Russia’s anti-democratic activities abroad. The U.S. has a comprehensive economic embargo on Cuba.

In total, the unlawful transactions amounted to $30.4 million.

Its subsidiaries in several countries purchased and sold securities on behalf of foreign clients through omnibus accounts with U.S. custodians and other market participants. Because these transactions were done through the omnibus accounts in the name of EFG and not underlying clients, OFAC said, U.S. market participants weren’t aware that they were ultimately processing securities transactions for blacklisted individuals or entities. 

Omnibus investment accounts enable several individuals to pool their money and invest as a single entity.

Read full report: https://www.wsj.com/articles/swiss-private-bank-efg-to-settle-u-s-sanctions-violations-c8a86006