US investigates UniCredit over sanctions

UniCredit is being probed by the New York County District Attorney's Office and the US Treasury Department's Office of Foreign Assets Control (OFAC)

Story highlights

  • UniCredit is being investigated by US authorities for possibly breaking sanctions.
  • UniCredit also said that the investigation concerns HypoVereinsbank.
  • Latest instance of a European financial institution coming under scrutiny by US regulators.

UniCredit, Italy's largest bank by assets, is being investigated by US authorities for possibly breaking sanctions that prohibit doing business with certain countries, according to public documents published by the bank.

While the documents do not mention a particular country, a person familiar with the situation said the investigation involves Iran -- the target of US and European sanctions. Although UniCredit first disclosed the investigation by US authorities at least seven months ago, it appears never to have been reported in the media.

UniCredit is being probed by the New York County District Attorney's Office and the US Treasury Department's Office of Foreign Assets Control (OFAC), according to the documents. The US Department of Justice is also investigating, UniCredit said in a statement at the weekend.

UniCredit also said that the investigation concerns HypoVereinsbank (HVB) -- which was not mentioned in the public documents. HVB was a German bank acquired by UniCredit in 2005 that now operates as UniCredit Bank AG.

The investigation is the latest instance of a European financial institution coming under scrutiny by US regulators over allegations involving illicit dollar transactions with Iran and other countries. Less than a week ago, it emerged that US authorities were investigating Royal Bank of Scotland for possible breaches of Iran sanctions. Earlier this month, Standard Chartered agreed to pay a $340m fine to New York's Department of Financial Services following allegations that the UK bank broke US sanctions on Iran.

"A member of the UniCredit Group is currently responding to a third-party witness subpoena from the New York County District Attorney's Office in connection with an ongoing investigation regarding certain, persons and/or entities believed to have engaged in sanctionable conduct," according to a passage in UniCredit's 463-page prospectus for a capital increase published in January.

"The relevant UniCredit Group member also has disclosed to OFAC information that it has provided to the District Attorney's office and is involved in ongoing discussions with these authorities and is co-operating fully."

The same paragraph, under the heading "other significant events," was also published in UniCredit's 2011 annual report and in its first-half 2012 financial report.

"It is not possible at this time to predict the outcome of the ongoing investigation, including the timing and any potential financial impact it may have upon the operating results of the company in any future financial period," UniCredit said in the documents.

On Saturday, the bank said: "‪HVB on its own initiative is conducting a broader review of its historic compliance with US economic sanctions. The investigation and review are ongoing, and it would be inappropriate to comment further at this time."