UBS, Switzerland's largest bank, agreed to pay a $100 million fine to settle allegations it illegally transferred funds to parties in countries subject to US economic sanctions, the Federal Reserve said today.
In announcing the settlement, the Fed said the allegations stemmed from "US dollar banknote transactions with counterparties in jurisdictions subject to sanctions under US law, specifically Cuba, Libya, Iran and Yugoslavia."
In the settlement, UBS did not admit guilt to the allegations.
The Fed said the transactions were conducted through the UBS' Extended Custodial Inventory facility in Zurich, which was operated through a contract with the Federal Reserve Bank of New York. ECIs act as "cash depots" run by banks on behalf of the Fed to aid distribution and repatriation of U.S. currency abroad.
"The Reserve Bank determined that certain former officers and employees of UBS engaged in intentional acts aimed at concealing the transactions and terminated the contract in October 2003," the Fed said.
News of a settlement and fine had been expected. Earlier this month, UBS said it was talking with regulators in Switzerland and the United States about the breach of contract with the New York Fed.
In assessing the penalty, the Fed said it had taken into account UBS' cooperation in the investigation. It also said the order was being issued in coordination with a separate action taken by the Swiss Federal Banking Commission.