Metro Bank avoids fine over Iran and Cuba breaches

METRO Bank has escaped a fine from US authorities over its handling of money from Cuba and Iran that was found to be in breach of Western sanctions.

The high street lender said it had “concluded the matter without fine or penalty” with the US government following the launch of a review of its compliance controls in 2020. Metro Bank hired top investigators at the law firm DLA Piper after the lender disclosed that it received funds from Iran and Cuba, both of which are sanctioned in America.

Daniel Frumkin, chief executive of Metro Bank, said the issues arose with US authorities because the lender did not believe certain laws, namely the sanctions, applied to it. However, the number of Metro Bank’s shareholders that reside in the US caused authorities to decide the lender did in fact come under the country’s regulatory remit.

Mr Frumkin said: “We weren’t complying with the US treasury rules when we should have done. But we told them, they didn’t approach us about it.

“It’s a smaller version of what some of the biggest banks went through – it’s a pretty standard thing to get caught out by this. But we did such good work that we did not end up with a fine.

“The reason the expense lines were so big is that we had to hire a law firm to prove a negative. At that point, the government wants a neutral third party to handle it.”

According to its interim results published in July 2021, Metro set aside provisions of £25.4m in order to cover the potential costs of remediation. That resulted in a statutory loss before tax of £138.9m. In its most recent report, remediation costs had been reduced to £3m, with statutory losses more than halving to £60.2m.

The bank said: “Remediation costs have sharply reduced as we continue to close out legacy issues. We concluded the matter with the US Office of Foreign Assets Control in relation to Cuba and Iran without fine or penalty.”