RBS 2014 Annual Report Download - page 121

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RBS – Interim Results 2015
Notes
16. Litigation, investigations and reviews (continued)
RBS may be subject to formal and informal supervisory actions and may be required by its US banking
supervisors to take further actions and implement additional remedial measures with respect to these and
additional matters. RBS’s activities in the United States may be subject to significant limitations and/or
conditions.
US dollar processing consent order
In December 2013 RBS and RBS plc agreed a settlement with the Board of Governors of the Federal
Reserve System (Fed), the New York State Department of Financial Services (DFS), and the Office of
Foreign Assets Control (OFAC) with respect to RBS plc’s historical compliance with US economic sanction
regulations outside the US. As part of the settlement, RBS and RBS plc entered into a consent Cease and
Desist Order with the Fed (US Dollar Processing Order), which remains in effect until terminated by the Fed.
The US Dollar Processing Order (which is publicly available) indicated, among other things, that RBS and
RBS plc lacked adequate risk management and legal review policies and procedures to ensure that activities
conducted outside the United States comply with applicable OFAC regulations. RBS agreed to create an
OFAC compliance programme to ensure compliance with OFAC regulations by RBS’s global business lines
outside of the United States, and to adopt, implement, and comply with the programme. Prior to and in
connection with the US Dollar Processing Order, RBS has made investments in technology, hired and
trained personnel, and revised compliance, risk management, and other policies and procedures.
One of the requirements RBS agreed in the US Dollar Processing Order (as part of the OFAC compliance
programme) was to hire an independent consultant to conduct an annual OFAC compliance review of
compliance policies and their implementation and an appropriate risk-focused sampling of US dollar
payments. RBS appointed the independent consultant and their review was submitted to the authorities on
14 June 2015. In addition, pursuant to requirements of the US Dollar Processing Order, RBS has provided
the required written submissions, including quarterly updates, in a timely manner.
US/Swiss tax programme
In August 2013, the DOJ announced a programme for Swiss banks (the Programme), to settle the long-
running dispute between the US tax authorities and Switzerland regarding the role of Swiss banks in
concealing the assets of US tax payers in offshore accounts. The Programme provides Swiss banks with an
opportunity to obtain resolution, through non-prosecution agreements or non-target letters, concerning their
status in connection with the DOJ’s investigations.
Coutts & Co Ltd, a member of the Group incorporated in Switzerland, notified the DOJ that it intended to
participate in the Programme based on the possibility that some of its clients may not have declared their
assets in compliance with US tax laws. The Programme required a detailed review of all US related
accounts. The results of Coutts & Co Ltd’s review were presented to the DOJ in June 2014. Coutts & Co Ltd
has now completed the collection of evidence of the tax status of all US related account holders, including
those US account holders participating in an offshore voluntary disclosure programme.