Crédit Agricole Corporate and Investment Bank, a corporate and investment bank owned by Crédit Agricole, will pay $787.3 million in criminal and civil financial penalties for economic sanctions violations.
A one-count felony criminal information and a related civil forfeiture complaint were filed this week in federal court in the District of Columbia charging Crédit Agricole with knowingly and willfully conspiring to defraud the United States and to commit violations of the International Emergency Economic Powers Act (IEEPA) and the Trading With the Enemy Act (TWEA). Crédit Agricole has waived federal indictment, agreed to the filing of the information and civil forfeiture complaint, and has accepted responsibility for its criminal conduct and that of its employees.
Crédit Agricole will pay $156 million to the U.S. Attorney’s Office for the District of Columbia and $156 million to the New York County District Attorney’s Office.
The New York County District Attorney’s Office has entered into a separate deferred prosecution agreement. In the corresponding factual statement, Crédit Agricole admitted that it violated New York state law by falsifying the records of New York financial institutions.
In addition, the Federal Reserve announced that Crédit Agricole has agreed to a cease and desist order, to take certain remedial steps to ensure its compliance with U.S. law in its ongoing operations and to pay a civil monetary penalty of $90.3 million.
Crédit Agricole also has agreed to, among other things, employ a compliance consultant for a period of one year and pay a monetary penalty of $385 million to the New York State Department of Financial Services (NYDFS). The U.S. Department of the Treasury is also imposing a penalty of approximately $329.5 million that is deemed satisfied by the amounts Crédit Agricole is paying to the other agencies.
“Crédit Agricole engaged in a series of schemes to evade U.S. sanctions and deceive its regulators,” Acting Superintendent Anthony Albanese of NYDFS said in a statement. “Our agency will continue to aggressively investigate and uncover misconduct at banks meant to circumvent U.S. sanctions laws—both past and present.”
AML Compliance Failures
According to the NYDFS, from at least 2003 to 2008, Crédit Agricole engaged in a series of schemes to process more than $32 billion in U.S. dollar payments through its New York branch from its branches in Paris, London, Singapore, Geneva, Hong Kong and the Gulf, providing U.S. dollar clearing services on behalf of Sudanese, Iranian, Burmese and Cuban entities. Crédit Agricole has admitted that its employees permitted 11 Sudanese banks to maintain U.S. dollar accounts with Crédit Agricole—six of the Sudanese banks were Specially Designated Nationals (SDNs).
Specifically, foreign branches often transmitted payment requests to Crédit Agricole’s New York branch using non-transparent payments messages that did not disclose the identity of the remitter or beneficiary. “As a result Specially Designated Nationals (SDNs).
“Foreign branches often transmitted payment requests to Crédit Agricole’s New York Branch using nontransparent SWIFT payments messages that did not disclose the identity of the remitter or beneficiary,” the NYDFS said. ”As a result of not having a complete picture of the transactions, Crédit Agricole’s New York Branch’s compliance processes and controls were ineffective, and fewer alerts or red flags were raised than would have been if full information had been shared.”
From its Geneva branch, the bank developed and implemented policies and procedures for processing these U.S. dollar-denominated transfers through the New York branch in a manner that was designed to conceal relevant information that would permit the institutions and their regulators to determine whether the transactions were lawful and consistent with New York State and U.S. laws and regulations.
Many of the bank’s policies and procedures to omit identifying details about sanctioned parties to U.S. dollar transactions were reviewed and approved by its highest level legal and compliance staff at the Geneva branch. Accordingly, it was the policy of the bank, as directed by its Geneva compliance professionals, to remove or omit Sudanese, Iranian, Burmese or Cuban information from U.S. dollar denominated payment messages.
Personnel in the Geneva office directed, possessed and oversaw these U.S. dollar transactions with the mentality that “Swiss activities are only subject to [laws] in force in the Switzerland and not those aboard.” Furthermore, written economic sanctions directives from the bank’s compliance managers that were in place throughout the review period assured staff that, with respect to U.S. dollar transactions, “the effect of the OFAC [SDN] list does not have any reach (outside of the United States).”
“In addition, interviews of numerous bank employees, including its legal and compliance professionals, revealed that many of the bank’s staff who were involved with, or had knowledge of, the bank’s business with sanctioned parties claimed ignorance of U.S. sanctions laws and the fact that they applied or could be applied to foreign banks engaged in U.S. dollar denominated transactions—despite contrary admonitions from their colleagues at the New York Branch,” the NYDFS stated.
Although Crédit Agricole has terminated most of the employees involved in the improper conduct, one of those individuals remains employed by the bank: a relationship manager who at the time had responsibility for Iranian clients and drafted the 2005 memo detailing the bank’s policy on non-transparency related to U.S. dollar payments for Iranian clients. NYDFS said it has ordered the bank “to take all steps necessary” to terminate this individual.