Credit Suisse AG, a Swiss corporation headquartered in Zurich, has agreed to forfeit $536 million to the United States and to the New York County District Attorney’s Office in connection with violations of the International Emergency Economic Powers Act (IEEPA) and New York state law. The forfeiture is the largest ever entered against an entity for IEEPA violations.
The violations relate to transactions Credit Suisse illegally conducted on behalf of customers from Iran, Sudan and other countries sanctioned in programs administered by the Department of the Treasury’s Office of Foreign Assets Control (OFAC).
A criminal information was filed today in the U.S. District Court for the District of Columbia charging Credit Suisse with one count of violating the IEEPA. Credit Suisse waived indictment, agreed to the filing of the information, and has accepted and acknowledged responsibility for its criminal conduct. Today, Credit Suisse also entered into an agreement with OFAC to settle the apparent civil violations of IEEPA and other authorities arising from this conduct. Credit Suisse agreed to forfeit the funds as part of the deferred prosecution agreements reached with the Department of Justice and the New York County District Attorney’s Office and in settlement of the civil claims with OFAC.
"One of this administration’s top priorities is to employ our resources aggressively to hold accountable those who engage in financial misconduct," said Attorney General Eric Holder. "Credit Suisse’s decades-long scheme to flout the rules that govern our financial institutions robbed our system of the legitimacy that is fundamental to its success. Today’s announcement sends a strong message that we will not let this type of conduct stand."
Under IEEPA, it is a crime to willfully violate, or attempt to violate, any regulation issued under the act, including the regulations related to Iran, Sudan, Burma, Cuba and Libya.
According to court documents, beginning as early as 1995 and continuing through 2006, Credit Suisse, in Switzerland and the United Kingdom, altered wire transfers involving U.S. sanctioned countries or persons. Specifically, according to court documents, Credit Suisse deliberately removed material information, such as customer names, bank names and addresses, from payment messages so that the wire transfers would pass undetected through filters at U.S. financial institutions. Credit Suisse also trained its Iranian clients to falsify wire transfers so that such messages would pass undetected through the U.S. financial system. This scheme allowed U.S. sanctioned countries and entities to move hundreds of millions of dollars through the U.S. financial system.
For its Iranian clients, Credit Suisse promised that no message would leave the bank without being hand-checked by a Credit Suisse employee to ensure that the message had been formatted to avoid U.S. filters. If an Iranian client provided payment messages that contained identifying information, Credit Suisse employees would remove the detectable information so that the message could pass undetected through OFAC filters at U.S. financial institutions. According to court documents, Credit Suisse’s international communications showed a continuous dialogue about the scheme, assessing how to better process Iranian transactions to ensure increased business from existing and future Iranian clients. For example, in 1998, Credit Suisse provided its Iranian clients with a pamphlet entitled, "How to transfer USD payments", which provided detailed payment instructions on how to avoid triggering U.S. OFAC filters or sanctions. Additionally, Credit Suisse processed 88 payments for those listed as "Specially Designated Nationals" by OFAC. Specially Designated Nationals are individuals and entities specifically named by OFAC to be subject to U.S. sanctions. Their assets are blocked and U.S. persons are generally prohibited from dealing with them.
"Through its egregious conduct, Credit Suisse illegally moved hundreds of millions of dollars through the American financial system and actively assisted sanctioned countries in evading U.S. laws," said Assistant Attorney General Lanny A. Breuer of the Criminal Division. "In essence, Credit Suisse said to sanctioned entities, ‘We’ve got a service, and that service is helping you evade U.S. banking regulations.’"
"This case provides a timely lesson about how Iran seeks to involve others in deceptive conduct to evade legal and regulatory controls," said Treasury Under Secretary for Terrorism and Financial Intelligence Stuart Levey. "Those who do business with Iran expose themselves to the risk, and the consequences, of participating in transactions supporting proliferation, terrorism or sanctions evasion."
"Investigations involving OFAC regulations and IEEPA violations are often long and complicated and require significant resources," said Kevin Perkins, Assistant Director of the FBI’s Criminal Investigative Division. "The FBI will work closely with our law enforcement partners and federal regulators to ensure compliance with federal banking laws and regulations and to promote the highest level of transparency across financial institutions worldwide."
"In the world’s increasingly complex financial markets, it’s critical that global institutions follow U.S. law, including sanctions against other countries," said Steve Miller, IRS Deputy Commissioner for Services and Enforcement. "We’re proud our Criminal Investigation agents applied their special money-tracing skills to unmask this deception."
The bank’s forfeiture of $268 million to the United States and $268 million to the New York County District Attorney’s Office will settle forfeiture claims by the Department of Justice and the state of New York and civil claims by OFAC related to the misconduct. In light of the bank’s remedial actions to date and its willingness to acknowledge responsibility for its actions, the Department will recommend the dismissal of the information in two years, provided Credit Suisse fully cooperates with, and abides by, the terms of the agreement.
Throughout the investigation, Credit Suisse has provided prompt and substantial cooperation, including working with regulators to find a method consistent with Swiss law to disclose a significant portion of the data, communications and documentation underlying the misconduct. Credit Suisse has also committed substantial resources to conducting an extensive internal investigation of the misconduct and has agreed to enhance its sanctions compliance programs to be fully transparent in its international payment operations.
The case was prosecuted by Section Chief Richard Weber, Trial Attorneys Frederick Reynolds and Keith Liddle, and supported by Laurie Bender and Karina Lleva of the Criminal Division’s Asset Forfeiture and Money Laundering Section. The case was investigated by FBI’s New York Field Office and IRS-Criminal Investigation’s Washington Field Division. The Department of Justice expressed additional gratitude to Bureau Chief Adam Kaufmann, Assistant District Attorneys Gary Fishman, Richard Preiss and Aaron Wolfson of the New York County District Attorney’s Office, Investigation Division Central. The Department of Justice also expressed gratitude to the Department of Treasury’s Office of Foreign Assets Control, the New York Federal Reserve and the Board of Governors of the Federal Reserve System for the significant and valuable assistance.