Bank of Tokyo-Mitsubish-UFJ (BTMU) circumvented the sanctions between April 2006 and March 2007, Treasury said in a statement.
"BTMU's Tokyo operations engaged in practices designed to conceal the involvement of countries or persons subject to U.S. sanctions in transactions that BTMU processed through financial institutions in the United States," the US government authority said in its statement.
Washington said the bank's "egregious" conduct "displayed reckless disregard for US sanctions."
"BTMU employees systematically deleted or omitted from payment messages any information referencing US sanctions targets that would cause the funds to be blocked or rejected, prior to sending the transactions through the United States," the Treasury Department statement said.
"As a result of these practices, BTMU processed at least 97 funds transfers, with an aggregate value of approximately $5,898,943, through BTMU's New York branch or other banks in the United States."
Treasury said the deception was uncovered in 2007 by senior officials at the Japanese bank, who undertook an internal audit and brought their findings to US officials.