Dutch bank ABN Amro has been ordered by US officials to pay fines totalling US$80 million for transactions that US banking regulators say violated money-laundering laws and sanctions imposed on Iran and Libya.

The bank modified payment instructions on some letters of credit (L/Cs) and "reissued" others, apparently to obscure transactions with the two countries, the regulators say.

State-owned banks

The regulators say they found evidence to show that ABN Amro's Dubai branch falsified various documents so that transactions could be processed by the bank's US branches.

The documents were changed to obscure the involvement of two state-owned banks, Iran's Bank Melli and Libya's Arab Bank for Investment and Foreign Trade (ARBIFT).

Documents modified

ABN Amro's Dubai branch modified payment instructions on wire transfers and L/Cs issued by Bank Melli "such that any reference to Bank Melli Iran was removed," according to documents produced by the regulators.

The documents say L/Cs issued by ARBIFT, were subsequently "reissued" in a manner that obscured the Libyan origin of the credits.

According to US regulators, ABN Amro's transactions involving Iran and Libya were prohibited by federal law during the 1997 to 2004 period that they took place.

Serious mistakes

In a statement issued by ABN Amro, the bank says it "recognises that serious mistakes were made and accepts the sanctions," made against it by the regulators.

These include fines of US$40 million to the Federal Reserve, US$35 million to bank regulators in New York state and Illinois, and a donation of US$5 million to the Illinois bank examiner's education fund.

Remedial Action Programme

Chairman of ABN Amro's managing board, Rijkman Groenink, said in a statement that the bank recognised that compliance in certain areas did not meet standards and agreed with some of the regulators' findings.

"The regulators were right to ask us to correct the deficiencies, and earlier this year we put into place an extensive Remedial Action Programme to address them," he said. "Further improving our compliance is the highest priority of the bank," he added.

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