The Federal Reserve and Department of Justice are conducting the investigation, the paper said, citing several people close to the situation. The investigation comes after the UK bank volunteered information to U.S. and UK regulators 18 months ago, the Financial Times said.

Ed Canaday, a spokesman for RBS, declined comment.

But in its quarterly report filed August 8, RBS 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 said it could not predict the outcome of those discussions.

RBS made a similar disclosure to investors 18 months ago.

A spokesman for the Federal Reserve said it could not "comment on supervisory matters pertaining to individual institutions." A representative at the Justice Department did not respond to a request for comment.

The report of the investigations into RBS followed last week's $340 million settlement by Standard Chartered (STAN.L). The British bank had been accused by the New York Department of Financial Services of concealing $250 billion in Iranian transactions.

The Financial Times said that the New York state agency is not investigating RBS.

In 2010, RBS agreed to pay $500 million to settle similar allegations by U.S. federal authorities that ABN Amro, a Dutch bank RBS acquired in 2007, had violated U.S. sanction laws.

(Reporting by Nate Raymond in New York; additional reporting by Rachelle Younglai and Aruna Viswanatha; Editing by Phil Berlowitz)

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