Switzerland’s biggest bank has been fined $100 million for violating United States trade sanctions by issuing dollars to countries on Washington’s blacklist.
UBS admitted “very serious mistakes” had been made and said it would now stop banknote trading outside Switzerland.
The fine is to be levied by the United States Federal Reserve - the US central bank. UBS is one of the few foreign banks permitted to retire old banknotes and issue new ones on behalf of the Fed.
“We accept the sanctions, take full responsibility and would like to express our regret,” said Peter Wuffli, chief executive officer of UBS.
“We will do everything we can to prevent similar incidents and put this matter behind us.”
UBS has already dismissed a number of employees and disciplined others since the affair came to light last summer.
The Fed had accused UBS of supplying dollars to countries subject to US economic sanctions.
The Fed said the transactions were conducted through UBS’s Extended Custodial Inventory (ECI) facility in Zurich which was operated through a contract with the Federal Reserve Bank of New York.
ECIs act as cash depots run by banks on behalf of the Fed to help distribute new banknotes and retire old ones.
UBS had agreed not to do business in US banknotes with countries under a US trade embargo.
But following an internal investigation after queries from the Fed, UBS found dollars had been traded with Yugoslavia, Iran, Libya and Cuba.
The investigation revealed that UBS employees had submitted false reports to the Fed to conceal the transactions.
“The behaviour highlighted by the investigation cannot and will not be tolerated in UBS,” said Wuffli.
News of a settlement and fine had been expected. Earlier this month, UBS said it was talking with regulators in Switzerland and the US about the breach of the contract with the Fed.
In assessing the penalty, the Fed said it had taken into account the bank’s cooperation in the investigation.
The Swiss Federal Banking Commission has reprimanded UBS and will assess the effectiveness of the bank’s corrective measures.
UBS said it would now stop its banknotes trading business with parties in countries outside Switzerland.
It said it would limit its banknotes business to physical delivery to financial institutions in Switzerland and Liechtenstein.