The UK’s Royal Bank of Scotland (RBS) has become the latest major financial institution to be investigated by US authorities for possible sanction violations with Iran.

The Federal Reserve and Department of Justice began looking into RBS’ dealings with Iran after the bank volunteered information to US and UK regulators in early 2011, according to a report in the UK’s Financial Times.

In its latest quarterly report published this month, the bank said it had “initiated discussions with UK and US authorities to discuss its historical compliance with applicable laws and regulations, including US economic sanctions regulations”.

The bank conceded it could face financial penalties as a result of the investigations.

“The investigation costs, remediation required or liability incurred could have a material adverse effect on the group’s net assets, operating results or cash flows in any particular period,” the report stated.

RBS has previously been implicated in sanction violations involving Dutch subsidiary ABN Amro. In 2010, the bank paid $500m in fines for concealing illegal transactions involving clients from sanctioned countries, including Iran. RBS subsequently signed an agreement with US regulators forcing it to improve its bank secrecy and anti-money laundering provisions. RBS acquired ABN Amro in 2007.

US authorities have targeted international banks’ dealings with Iran in recent months as part of the West’s latest round of economic sanctions aimed at halting Iran’s nuclear programme.

UK banks including Standard Chartered Bank (SCB), Lloyd’s Bank, HSBC and Barclays have been tarnished in recent investigations.

Last month, SCB was charged with concealing more than $250bn in transactions involving Iranian clients and deliberately misleading US investigators. The bank recently agreed to pay $340m in fines.

HSBC’s reputation was hit after investigators revealed the bank had failed to prevent money laundering by Mexican drug cartels in the US and a host of clients in Iran. The bank has allocated $700m to cover fines imposed by US authorities, although HSBC chief executive officer Stuart Gulliver recently conceded the ultimate cost to the bank “could be significantly higher”.