State Street has agreed to pay about $7.5 million to settle allegations its subsidiary Charles River Development received payments and redacted invoices from two Russian entities that faced U.S. sanctions restrictions.
Charles River Development is a financial technology company specializing in software for communicating trading information. It allegedly altered the dates and reissued invoices and accepted contractual payments from two clients majority-owned by Russian banks Sberbank or VTB Bank between 2016 and 2020, according to the U.S. Treasury Department’s Office of Foreign Assets Control. Sberbank and VTB Bank are among entities facing U.S. sanctions measures that restrict U.S. companies and individuals from dealing in their new debt beyond specified periods of maturity. The time periods differ based on when the debt was issued.
The issuance of an invoice represents a dealing in debt, and Charles River Systems was prohibited from accepting payments outside of the maturity periods, OFAC said.
OFAC alleged that Charles River Systems maintained minimal compliance procedures before the acquisition and that it was also aware of its payments being scrutinized and delayed by its U.S. bank because of sanctions and had at least two payments from the two Russian clients rejected by its bank because they were outside of the applicable payment windows. OFAC said staff from Charles River Systems reached out directly to the two Russian clients to ask about the outstanding invoices and the Russian clients asked them to alter the dates of invoices to prevent the payments from being rejected by U.S. banks.
Roughly 18 staff members, including from accounting and collections, were involved in or aware of the reissuance of the invoices for the two Russian clients, according to the settlement agreement.
Jeff Newman represents whistleblowers nationwide relating to Medicare and Medicaid fraud, under the state and federal False Claims Act (Qui Tam) laws. He also represents whistleblowers in major claims under the SEC, CFTC and FINCEN whistleblower programs and can be reached at Jeff@JeffNewmanLaw.com or at 617-823-3217
