Banco Santander is accountable to the North American supervisor and admits that it has 17 blocked accounts in the United Kingdom, Belgium and Brazil of clients sanctioned for terrorism in the United States at the end of 2023, a mandatory review that it has to do every year in the country. This fact is known only a few weeks after the case of Iran's accounts in the United Kingdom was published, which is not included in these 17, since it was an unsanctioned British citizen, although he acted as a front company for the Iranian regime, so its bank account was closed.
The details of these 17 blocked accounts were provided by the group on Wednesday night in a document sent to the United States Securities and Exchange Commission (the SEC). There it is explained that this firewall has been activated on a series of clients sanctioned by the US for their links with the Iranian regime, most of them already blocked by the bank at the end of 2022.
“The group has taken significant steps to withdraw from the Iranian market, such as closing its representative office in Iran and ceasing all banking activities there, including correspondent relationships, taking deposits from Iranian entities and issuing export letters of credit. , except for the legacy transactions described above,” the entity states in the document.
The accounts detailed by Santander, which the bank reports each year to the SEC, are outside the Iranian case that the British newspaper reported. Financial Times. According to this medium, Iran would have used Santander UK and Lloyds accounts to move funds, bypassing the veto against the Tehran regime for its nuclear development programs. In that case, the account was closed, but is not included in the list because it did not violate any sanctions, being a British client established in the United Kingdom. That is, it was not directly sanctioned.
Regarding measures to prevent money laundering, the group says that there are “serious legal and reputational consequences” if these rules are breached, although it does not make explicit reference to any of the cases in any specific market. Of course, this warning comes at a delicate moment for the bank due to the Iranian case.
Reputational risk
“We have been, and may in the future be, subject to negative media coverage about us or our clients, including with respect to alleged conduct such as failure to detect and/or prevent any financial crime activity or failure to comply with FCC regulations. [el supervisor de delitos de blanqueo estadounidense]. “Negative media coverage of this type about us, whether deserved or not, could materially and adversely affect our reputation,” the document explains. And it counts on a possible hit to the share price: “The reputational damage to our business and global brand could be severe if we are found to have violated AML requirements.” [prevención del blanqueo de capitales]anti-bribery and corruption.”
According to the information sent last night, Santander maintains seven blocked accounts (of five different clients) in its United Kingdom subsidiary. These clients, he acknowledges, “are designated by the United States under the Specially Designated Global Terrorist sanctions program.” Some bank accounts that were already blocked at the close of the previous year. “This is a very complex issue, due to the number of front men that exist. It is not easy to link a person with a criminal network,” explains a financial source outside the bank of Cantabrian origin.
Something similar happens in the Belgian branch, through Santander Consumer Finance, where it has another seven accounts blocked for an Iranian bank that is also on the North American blacklist. “The accounts have been blocked since 2008. No income or profit was generated by the Belgian branch in these accounts in the year ending December 31, 2023,” clarifies the entity chaired by Ana Botín. In 2022, the Santander Consumer Finance division had another sanctioned client in Greece, but it left the bank before the end of that year.
Back to what was reported, in Brazil at the end of last year it maintained three other blocked accounts of as many clients domiciled in this country, also included by the United States in its sanctions program. Additionally, the group has assurances about benefit from an Iranian entity that is in the same global terrorist sanctions program. Specifically, these are guarantees on obligations of contractors who participated in public tenders in Iran dating back to before April 27, 2007.
“The income and profits generated in these accounts in the year ended December 31, 2023 were insignificant in relation to the general profits of Banco Santander,” the entity states in each point. And it warns that it is not contractually authorized to cancel current agreements without paying the guaranteed amount or forfeiting any outstanding amounts owed to it. For this reason, it states “it has the intention to continue providing guarantees and maintaining these assets in accordance with applicable legislation.”
This lengthy explanation, which has been sent to the SEC but is not included in the annual report communicated to the Spanish National Securities Market Commission (CNMV), occurs in the United States due to the demands imposed by the country's regulator. According to the Exchange Act, “an issuer is required to disclose in its annual or quarterly reports, as applicable, whether it or any of its affiliates knowingly participated in certain activities, transactions or dealings involving Iran or designated individuals or entities.” in accordance with certain executive orders,” explains Santander.
In fact, this information is mandatory even when the activities, transactions or dealings have been carried out in compliance with the applicable law. That is, it is not the recognition of a fault, but rather it details the mere operation so that the supervisor can corroborate it.
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