Intesa Sanpaolo Payed $2.95 Million Settlement Over Iran Sanctions Violations
An Italian bank was penalized for processing transactions linked to an Iranian government-controlled entity, exposing compliance lapses with U.S. sanctions.
The U.S. Office of Foreign Assets Control (OFAC) announced on June 28, 2013, that Intesa Sanpaolo S.p.A. (“Intesa”) had agreed to a $2,949,030 settlement for apparent violations of U.S. sanctions, including significant breaches tied to Iran. The violations primarily involved financial transactions processed on behalf of Irasco S.r.l., an Italian company identified as being controlled by the Government of Iran (GOI).
Since the late 1990s, Intesa maintained a relationship with Irasco, but failed to recognize that the company was effectively acting on behalf of the Iranian government. Despite clear ties to Iranian state-owned financial institutions and export projects, Intesa processed 31 transactions for Irasco, totaling over $3.14 million, between 2004 and 2006. These payments were terminated in the United States, violating the Iranian Transactions Regulations (ITR). OFAC noted that under U.S. law, even indirect financial benefits directed toward Iran are deemed to be exports of services to Iran, which are prohibited.
OFAC determined that Intesa did not voluntarily self-disclose these violations and acknowledged that the bank’s lack of proper due diligence allowed transactions benefiting Iran to pass through the U.S. financial system. The enforcement action highlights the consequences of not identifying and mitigating exposure to entities affiliated with sanctioned nations, especially when it involves indirect transactions that could provide financial benefits to such countries.
Beyond the Iran-linked transactions, Intesa also processed payments involving Cuba and Sudan, which contributed to the total base penalty of $9.36 million. However, the final settlement amount reflected mitigating factors, including Intesa’s cooperation with OFAC and improvements to its compliance programs. OFAC also noted that the violations were classified as non-egregious, acknowledging that Intesa had taken steps to strengthen its compliance protocols after the incidents came to light.
The case serves as a warning to international banks about the complexities of U.S. sanctions laws, particularly regarding indirect exposure to sanctioned entities. Intesa’s failure to recognize Irasco’s ties to the Iranian government led to significant penalties and underscored the need for stringent compliance systems to identify high-risk customers and transactions.
IRASCO Overview
IRASCO S.r.l. is an Italian company based in Genova and established in 1994. According to its LinkedIn page, 51% of its shares are owned by ASCOTEC HOLDING GMBH (fka AHWAZ STEEL Commercial & Technical Service) and 49% by the Iran International Engineering Company (IRITEC).
ASCOTEC is owned by the Iranian Mines & Mining Industries Development & Renovation Organization (IMIDRO). ASCOTEC has several subsidiaries in Germany.
IRITEC was founded in 1975 as a joint venture between the Italian company Italiampianti and the Iranian State. IRITEC was instrumental in constructing Mobarakeh Steel Co, one of Iran’s most lucrative industrial complexes, which is partially owned by the IRGC Cooperative Foundation (BTS). IRITEC has a subsidiary in Germany called IRIKA Engineering and Commercial Services GmbH and several other companies registered in Spain.IRASCO’s LinkedIn account indicates the company’s main activities include “the supply of industrial plants, machinery, spare parts, provision of services, transfer technology and know-how, projects development to Iran, mainly in the field of steel and metallurgy related industries, oil and gas, mine and mining industries” and offers “execution of turn key projects, procurement of equipment, spare parts and consumable materials, supply of technical assistance, trading of steel products, mine and mining industries products, projects financing and personnel training.”