AIB fined by US treasury over Libya deal
The breach was first reported on RTÉ’s on.business.ie website. The details were confirmed by an AIB spokesperson who explained software supplied via the US Treasury’s Office of Foreign Asset Control (OFAC) to detect such breaches failed to discover the transfer of funds of an Allfirst customer into a Libyan account.
The bank would not discuss details of the transfer but it is understood that the amount transferred in 2001 was not significant. Despite the software failure OFAC fined Allfirst $4,000.
US Treasury Department documents show Allfirst was fined for transferring a customer’s funds into a Libyan bank account. Under an order of President Ronald Reagan in 1986, all contracts, loans and financial dealings with Libya are prohibited.
The AIB spokesperson said the software maker had accepted its programme was deficient and had supplied Allfirst with a free upgrade.
Allfirst was a wholly-owned AIB’s subsidiary when the illegal transaction was executed. AIB sold the bank to M&T Bank last month, retaining a 22.5% stake in the enlarged group.
Buffalo-based M&T, which is 7.3%-owned by legendary investor Warren Buffett’s Berkshire Hathaway Inc, paid $2.1bn in shares and $900m in cash for Allfirst. This leaves AIB with a major stake in the 22nd biggest bank in the US.
Allfirst gave AIB an unwelcome place in Irish and US corporate history when rogue currency trader John Rusnak lost the bank $690m through a series of disastrous foreign currency transactions. The list of countries subject to US sanctions also includes Iraq, Iran, North Korea and Cuba.
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