Wednesday, October 4, 2023
Courthouse News Service
Wednesday, October 4, 2023 | Back issues
Courthouse News Service Courthouse News Service

Credit Suisse to Pay $536M to Avoid Charges

MANHATTAN (CN) - Credit Suisse AG agreed to pay $536 million to avoid criminal charges that it secretly helped customers in Iran and other sanctioned countries gain access to U.S. banks.

Credit Suisse helped funnel hundreds of millions of dollars illegally through banks in Manhattan and helped its customers skirt U.S. sanctions, according to the U.S. District Attorney's Office.

It allegedly disguised payments from Iran, Sudan, Libya, Burma and Cuba. The bank also processed more than $700 million in fraudulent transactions and an additional $1.1 billion in payments from Iranian customers, which may or may not have been illegal, prosecutors said.

Its London-based subsidiary, Credit Suisse Asset Management Group, illegally invested more than $150 million in funds belonging to banned-banks in Libya and Sudan, according to prosecutors.

"This case shows what happens when a prominent bank ignores sanctions and moves money for a dangerous and repressive regime," District Attorney Robert Morgenthau said. "Banks should know that if you violate sanctions and deal with Iran, you're going to pay a severe penalty."

Credit Suisse agreed to pay $536 million, with $268 going to New York and the other half to the Department of Justice, which conducted a parallel investigation.

Attorney General Eric Holder called the scheme "simply astounding" in its scope and complexity.

"At one point, the company even developed a pamphlet for its Iranian clients, explaining how to fill out payment messages so as not to trigger U.S. filters," Holder said. "They created a 'how-to' book on committing a crime - and it worked well for years."

The Swiss bank established a successful business model for rogue investors who sought access to U.S. markets.

To ensure its customers' payments weren't held up, the bank replaced their names with the phrase "By order of a customer," according to the DA's office.

It allegedly schooled the Iranian banks in how to format payment messages that would avoid Foreign Assets Control filters. Morgenthau said Credit Suisse assured its Iranian clients that it would manually review every payment before it went through to the United States.

The payments were processed by Lloyds Bank and others.

Lloyds settled similar claims earlier this year by agreeing to forfeit $350 million.

Both cases stemmed from the DA's investigation into the Alavi foundation and its connection with Bank Melli Iran. The Islamic foundation had its Manhattan office building seized by federal authorities and is suspected of having ties to the Iranian bank. DA staffers found evidence of wire payments from Bank Melli to people associated with Alavi, according to Morgenthau.

The 90-year-old district attorney said he remembers a time when obtaining a settlement like this would have been far more difficult. He said it was "unprecedented" for a Swiss bank and the Swiss government to provide the kind of access to its data and records that made the settlement possible.

"The standards of transparency have come a long way since I first began investigating financial crime in the 1960's," the 35-year veteran said. "From secret Swiss and Liechtenstein accounts then, to the conduct of BCCI in the 1990's, to this year's actions involving Iranian banks, the standards of transparency have risen, and we expect more from institutions today than ever before."

He gave the bank credit for cooperating with the investigation.

"The message to other banks involved in similar practices should be clear: If you are engaged in sanction-busting misconduct, you should self-report, clean up your shop, and give us full accounting," Morgenthau said. "This is what we should expect and demand from major international banks."

Categories / Uncategorized

Read the Top 8

Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.