Credit Suisse Agrees to Pay Sanctions for Rogue Banking
Nathan Vardi reported in Forbes.com that Credit Suisse reached an agreement with the U.S. Government and the Manhattan District Attorney’s Office to pay $536 million in monetary penalties, the largest of its kind, in connection with violations of the International Emergency Economic Powers Act and New York State law.
According to the U.S. government and the Manhattan District Attorney's Office, Credit Suisse became one of the main conduits for Iranian banks and financial firms to gain access to the U.S. banking system. Credit Suisse first started dealing with rogue regimes that were sanctioned by the U.S. government in 1986, when the Zurich-based bank began to assist Libyan customers in evading sanctions by executing payment orders without stating their names, according to U.S. authorities. Later Credit Suisse started to refine its methods, processing payments for clients in sanctioned countries with payment messages that concealed the identity of customers by using false codes. Credit Suisse did this kind of business for other clients in countries that faced U.S. sanctions, including Sudan, Libya, Burma, Cuba, and Charles Taylor's Liberia, the Treasury Department says. But Credit Suisse's biggest rogue clients were in Iran, who as the years went on had to deal with enhanced U.S. sanctions. Credit Suisse employed elaborate procedures for altering payments to hide the involvement of sanctioned Iranian clients from U.S. banks involved in transactions, including stripping out the names of sanctioned parties from payment instructions. Upon request, Credit Suisse not only omitted Iranian bank customer names and identification codes from payment messages sent to U.S. correspondent banks, the Swiss bank also used cover payment messages, eventually doing so for Iranian clients 95% of the time. Then Credit Suisse's employees went into overdrive. With the global financial system cracking down on illicit transactions, Credit Suisse's "specially designated payment team," as it liked to call itself, started to manually review all payments involving Iran before they were sent to U.S. financial institutions, removing any Iranian reference. The time-intensive method was then marketed to sanctioned clients as a special service and subsequently improved with several additional procedures in the face of new money laundering regulations. Credit Suisse provided clients with a pamphlet explaining how they could evade detection.
Credit Suisse terminated its business with Iran and other sanctioned parties in 2006. It is not the only major financial firm that has been caught granting Iranian banks entry to the U.S. banking system, which Iranian firms often need to get dollars to complete international transactions with .jpg)
vendors demanding American currency. In January, Lloyds TSB reached a $350 million settlement with U.S. and New York state authorities, admitting it moved more than $300 million for Iranian clients by stripping information to hide their clients' identity. At a press conference on Wednesday, Manhattan District Attorney Robert Morgenthau said his office continued to investigate "more than a handful of banks" for similar sanction-busting behavior, adding, "these are not the only ones." "This case show what happens when a prominent bank ignores sanctions and moves money for a dangerous and repressive regime," Morgenthau said.
In a statement, Credit Suisse said: "Credit Suisse is committed to the highest standards of integrity and regulatory compliance in all its businesses, and takes this matter extremely seriously. Credit Suisse has enhanced its procedures to prevent practices of this type from occurring in the future."
