Lloyds TSB has agreed to forfeit $350 million (£231 million) to US authorities in connection with charges it faked records so clients from Iran, Sudan and elsewhere could do business with the US banking system.

The actions violated the International Emergency Economic Powers Act, which allows the U.S. president to block commerce with countries deemed a threat to the United States.

The U.S. Justice Department and Manhattan District Attorney said on Friday the London-based Lloyds had agreed to the forfeiture to settle charges stemming from the investigation.

'Lloyds' criminal conduct was designed to assist its clients in avoiding detection by filters employed by U.S. banks because of United States economic sanctions against Iran, Sudan and Libya,' said a fact sheet on a deferred prosecution agreement between the government and Lloyds that was filed in U.S. District Court in Washington, D.C.

Lloyds said it had set aside 180 million pounds last year to cover a possible settlement in the U.S. case and it 'does not anticipate any further enforcement actions.'

The U.S. Justice Department said that, from 1995 to 2007, Lloyds' offices in Britain and Dubai removed information such as customer names, bank names and addresses so wire transfers would not be flagged and blocked as improper by U.S. financial institutions.

'This process of 'repairing' or 'stripping' ... allowed more than $350 million in transactions to be processed by U.S. correspondent banks that might have otherwise been blocked or rejected,' the department said in a statement.

Most of that was money sent from overseas and into the United States, said Matthew Friedrich, acting assistant attorney general for the criminal division.

The stripping allowed about $300 million to be sent between the United States and Libya, about $21 million between the United States and Sudan and about $20 million between Libya and the United States without scrutiny to ensure it was legal.

Friedrich said he did not know who received the funds in the United States, but added the agreement required Lloyds to provide any information it had on the source of the money.

Asked if terrorists had received stripped funds, Friedrich said: 'The point is we don't know and that's the entire purpose of that information being required in the first place.'

Lloyds had disclosed settlement talks in interim results for the first half of 2008.

'We are committed to running our business with the highest levels of integrity and regulatory compliance across all of our operations and have undertaken a range of significant steps to further enhance our compliance programs,' Lloyds said in a statement on Friday.-Reuters