UniCredit: The Customer Hidden From the U.S. Bank

The UniCredit Bank AG Bank Austria sanctions resolution included $611,023,421 in civil settlements with the Office of Foreign Assets Control over concealed payments for sanctioned customers. In its criminal plea agreement, the German bank accepted responsibility for conduct that routed payments through companies it knew were controlled by a sanctioned customer, concealing that connection from U.S. institutions. For someone inside payment operations or sanctions compliance, that is the trail that matters: what the bank knew about the customer and what it let the next bank see.

Which UniCredit Bank Is Which?

UniCredit Bank AG was the German bank operating as HypoVereinsbank in Munich. UniCredit Bank Austria was the Vienna bank. Their parent, UniCredit S.p.A., agreed to ensure that both banks fulfilled their obligations under the resolution.

The Justice Department’s April 15, 2019 announcement described different agreements for each bank. UniCredit Bank AG had signed a criminal plea agreement, accepted responsibility for its conduct and agreed to plead guilty to conspiring to violate U.S. sanctions and defraud the United States.

Bank Austria entered a non-prosecution agreement. In that criminal agreement and its accompanying statement of facts, the bank admitted using non-transparent methods to send payments connected to sanctioned jurisdictions, including Iran, through the United States between 2002 and 2012. It also agreed to compliance and sanctions improvements.

What Is Correspondent Banking in AML?

Correspondent banking lets one financial institution make payments or process transactions for another, foreign institution. The customer at the U.S. bank’s counter can therefore be another bank, with the people and businesses behind the payments further down the chain.

That separation made concealment useful in UniCredit’s case. According to the Justice Department’s account of the criminal plea agreement, the German bank knew who controlled the companies sending payments and concealed that connection from U.S. institutions. The U.S. bank handling the payment was left without the customer information the foreign bank already had.

The Hudson Institute’s 2021 report Countering Global Kleptocracy: A New US Strategy for Fighting Authoritarian Corruption explains why dollar access gives U.S. sanctions influence over foreign banks. Its analysis ties that influence to banks’ dependence on the dollar and the reach of U.S. enforcement over dollar transfers. UniCredit’s case makes the operational point concrete: the banks and customers could be overseas while the payment still passed through a U.S. institution.

What Are Examples of Sanctions Evasion?

Concealing the real customer behind a dollar payment is the sanctions evasion described in UniCredit’s criminal case. The Justice Department’s account of the German bank’s criminal plea agreement described how the bank routed payments through companies it knew would appear unconnected to the sanctioned entity even though that entity controlled them. The bank wrote concealment into its policies, leaving the U.S. banks downstream to screen payments with the connection hidden.

According to the criminal court documents described in that announcement, UniCredit Bank AG knowingly moved at least $393 million through the U.S. financial system for sanctioned entities.

The Shipping Customer Behind the Accounts

The Office of Foreign Assets Control’s settlement agreement with UniCredit Bank AG describes dollar accounts operated for the Islamic Republic of Iran Shipping Lines and companies it owned or was otherwise connected to. The agency alleged that the bank managed those accounts without identifying the shipping company’s interest in transactions sent through U.S. intermediaries.

OFAC alleged that UniCredit Bank AG used automated transfers and selectively applied account controls to process the shipping company’s payments without identifying its involvement. For someone working with payment systems, that connects the customer records to the controls governing what left the bank.

OFAC added the shipping company to its sanctions list in September 2008. According to the agreement, UniCredit Bank AG continued processing transactions involving the company’s interests through the United States for almost two years afterward.

In OFAC’s account, the connection existed inside the bank. It disappeared on the way to the U.S. intermediary.

The Civil Assessments Covered Different Obligations

The Federal Reserve imposed a $157,770,000 civil assessment for which UniCredit S.p.A., UniCredit Bank AG and UniCredit Bank Austria AG were jointly responsible.

The New York Department of Financial Services separately imposed a $405 million civil penalty in its order addressing sanctions violations by the UniCredit entities.

The Justice Department’s announcement specified that payments to the department and the Federal Reserve would partly satisfy the OFAC amount.

What the Payment Trail Shows an Insider

The useful evidence connects the customer’s actual control to the bank’s payment instructions and internal decisions. In UniCredit’s case, the government described both concealment through controlled companies and a scheme formalized in bank policies. That makes the account relationships and the instructions for handling them part of the same story.

A payment operations employee may know what information went into a transfer and what reached the correspondent. A customer relationship employee may know which companies served the same business. A sanctions specialist may know how an account restriction affected the payments that followed. We connect those views to the records showing who knew about the relationship and who authorized the treatment.

Other banks’ criminal admissions show why access to the U.S. payment system is central. In its amended deferred prosecution agreement, Standard Chartered accepted responsibility for conduct in which employees helped Iran-connected customers route dollar transactions through U.S. institutions.

In the criminal case described in the Justice Department’s plea announcement, Danske Bank admitted misrepresentations about its Estonian branch customers and anti-money laundering controls to preserve U.S. correspondent access. UniCredit concealed the sanctioned customer’s involvement in payments. Danske misrepresented the customers and controls behind its access. In both, the information reaching the U.S. bank was part of the mechanism.

For an insider, the original payment instructions, ownership records, internal approvals and explanations sent to a correspondent can connect the movement of money to the decision that allowed it. Our work is to build that account with you and identify the whistleblower program suited to the conduct.

Different whistleblower laws reward different kinds of information. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Which program fits your sanctions evidence is exactly what we work out with you.

You Know Who Was Behind the Payment

If you saw customer connections hidden from a correspondent or internal instructions that kept sanctioned payments moving, tell our whistleblower experts what the bank knew. We build the case with you, bring in sanctions and money laundering whistleblower lawyers who understand correspondent banking, and stay beside you through the pursuit of a recovery.