New Enforcement Action Highlights Potential OFAC Risks for Non-U.S. Financial Institutions

On January 9, 2009, Lloyds TSB Bank plc entered into a deferred prosecution agreement with the U.S. Department of Justice regarding certain violations of U.S. sanctions administered by the Office of Foreign Assets Control against Iran and Sudan. Under the agreement, Lloyds will pay an unprecedented penalty of $350 million to the United States and the State of New York. This prosecution appears to be the first time an enforcement action has been brought against a non-U.S. financial institution for causing OFAC violations in the United States by a non-affiliated U.S. person.

The Alert Memo highlights key aspects of the agreement and its potential implications for future actions by the DOJ and OFAC.