State-run Industrial Bank of Korea said Tuesday it has agreed to pay $86 million in penalties to New York State authorities over illegal cash transfers to Iran.

As part of the settlement, IBK will pay $51 million to the New York State Attorney General’s office and $35 million to the New York State Department of Financial Services.

The US authorities charged the Korean lender with violating the anti-money laundering laws in 2014. One of its clients has reportedly transferred more than $1 billion to the Iran entities. 

“IBK’s branch in New York failed to report illegal payments to Iranian entities, as the bank failed to institute an effective anti-money laundering program,” said Geoffrey S. Berman, US attorney for the Southern District of New York. 

In line with the agreement, the US government has agreed to defer prosecution for two years, after which it will seek to dismiss the charges, he added.

By Choi Jae-hee (cjh@heraldcorp.com)