Credit Suisse, the second-largest Swiss bank after UBS, is expected to pay a fine of $536 million to settle charges with the federal government and state authorities in New York that it violated sanctions against doing business with Iran and other countries, people involved in the negotiations said Tuesday.
A formal announcement from Credit Suisse acknowledging responsibility for its conduct, which would allow it to avoid prosecution, is expected this week.
In October, Robert M. Morgenthau, the district attorney for Manhattan, announced that his office, the Justice Department and the Federal Reserve were investigating a large international “mainstream bank” for allowing illicit financial transactions with Iran, which has long been subject to sanctions by Washington. At the time Mr. Morgenthau did not identify the institution.
For weeks since then, Credit Suisse executives have been negotiating the amount of the fine with federal and state authorities, according to information obtained by the Italian business newspaper Il Sole 24 Ore, The International Herald Tribune and The New York Times.
In its 2008 annual report, published this year, Credit Suisse, without disclosing that it was a target, said that American “governmental authorities are reported to be conducting a broader review of how certain financial institutions have processed U.S. dollar payments involving U.S. sanctioned countries, persons and entities.”
Credit Suisse declined to comment.
For years, the Justice Department and the Manhattan district attorney’s office have been pursuing financial institutions suspected of not complying with United States sanctions or of helping Iran and other sanctioned countries obtain access to America’s financial system.
In January, Lloyds TSB, a bank based in London that is essentially under British government control, agreed to pay a $350 million fine to the United States government to settle claims that it had helped customers invest funds from Iran, Libya and Sudan despite sanctions against these countries. The British bank admitted responsibility for removing customer information so that transfers from those countries could pass undetected through barriers established at American banks.
It has not been a good year for Swiss banks in the United States. In February, the Justice Department fined UBS $780 million for helping about 50,000 wealthy Americans evade taxes.
UBS admitted criminal wrongdoing in selling offshore banking services that the Internal Revenue Service said it suspected had been used by Americans to avoid taxes. Six months later, in August, UBS turned over the names of about 4,450 of those clients. That move contributed to the decision by 14,700 Americans to join an I.R.S. amnesty program and disclose their previously secret foreign bank accounts.
Last autumn, UBS received a $5.3 billion capital injection from the Swiss government in return for a 9 percent stake. It was allowed to dispose of up to $60 billion of illiquid securities and impaired assets. The Swiss government offered Credit Suisse a similar deal, but that bank opted to raise money from private investors.
Tensions already are heightened between the United States and Iran. The Obama administration recently signaled its intention to push for sanctions that could further constrict Tehran’s economic and commercial activities unless Iran agreed to bring its nuclear activities under stricter international supervision.
Ever since Iran took American hostages in 1979, the United States has had various sanctions in place. In response to evidence that Iran was financing terrorist activities, the sanctions were broadened in the mid-1990s to ban nearly all commercial and economic transactions with Iran by American institutions and individuals. Iran largely depends on oil exports to a handful of countries to pay for international transactions.
In 2007, the United States persuaded the United Nations Security Council to impose broader sanctions against Iran because of its nuclear activities.
At the time, the Treasury Department, led then by Henry M. Paulson Jr., and Stuart A. Levey, the under secretary for terrorism and financial intelligence, pressed dozens of banks to take further actions aimed at limiting commerce and trade with Iran.
Lloyds, as part of its settlement, agreed to share its records with the C.I.A. and the F.B.I. so that they could establish whether any transaction had benefited terrorist organizations. In the case of Credit Suisse this condition was not believed to be part of the settlement.
But investigators found that Credit Suisse’s employees had violated both state and federal laws by falsifying outgoing dollar payment messages that involved Iran. The bank’s employees removed references to Iran or its banks, a practice called stripping.
As a result, investigators say, Iranian banks like Bank Saderat and Bank Melli were able to use Credit Suisse to send hundreds of millions of dollars through New York banks unimpeded.
Posts
