By 
DISTRICT ATTORNEY – NEW YORK COUNTY
October 20, 2015
Manhattan District Attorney’s Office Initiated Investigation into Bank for Violating U.S. Sanctions by Moving Hundreds of Millions of Dollars Through the U.S. Banking System for Sudanese, Iranian, Cuban, and Burmese Clients
DA’s Office and Federal Partners Have Secured Close to $12 Billion in Penalties from 9 Banks Since 2009
Manhattan District Attorney Cyrus R. Vance, Jr., together with the U.S. Department of Justice (DOJ), today announced the resolution of a joint investigation into the criminal conduct of Crédit Agricole Corporate and Investment Bank (CACIB), a subsidiary of the French bank Crédit Agricole S.A. (CASA), and the payment of $312 million in penalties and forfeiture to resolve the matter. In the Deferred Prosecution Agreement (DPA) and corresponding Factual Statement, CACIB admitted that it violated New York State law by falsifying the records of New York financial institutions.
In addition to the $312 million which resolves the joint criminal investigation conducted by the Manhattan District Attorney’s Office and DOJ, CACIB and CASA have agreed to resolve parallel regulatory inquiries arising out of the same pattern of conduct, in which the Board of Governors of the Federal Reserve System (Federal Reserve) and the New York State Department of Financial Services (DFS) imposed additional civil monetary penalties in the amounts of $90.3 million and $385 million respectively. The total amount of $787.3 million also includes an agreement of $329.5 million reached with Office of Foreign Assets Control of the U.S. Department of the Treasury (OFAC), with this amount being credited to the total penalties and forfeiture amount.
“With this resolution, as well as eight previous agreements, my Office and our partners are sending a clear message that financial institutions must comply with sanctions against rogue nations,” said District Attorney Vance. “Over the course of our investigation, it was revealed that subsidiaries of Crédit Agricole illegally moved hundreds of millions of dollars through the U.S. on behalf of clients in Sudan, Iran, Cuba, and Burma. This type of conduct requires the bank be held accountable, and I would like to thank all our partners for their efforts to ensure that our financial system is protected.”
“Sanctions laws are critical to both our national security and foreign policy interests,” said U.S. Attorney Channing D. Phillips for the District of Columbia. “CACIB, through its subsidiaries, violated our laws and our interests by conducting business on behalf of entities in Sudan. CACIB’s subsidiaries succeeded in these efforts, in large part, by hiding their conduct from CACIB’s employees in the United States. In this case, the overwhelming majority of the unlawful conduct occurred at a foreign subsidiary that no longer exists. Although CACIB moved quickly to end these unlawful transactions and fully cooperated with investigators, today’s resolution demonstrates that there will be significant consequences for any financial institution that allows its foreign subsidiaries that do not intend to respect U.S. law to, nevertheless, access the U.S. financial system.”
“The financial penalties imposed on Crédit Agricole Corporate and Investment Bank send a powerful message to any financial institution that prioritizes profits over adherence to the law,” said Joseph S. Campbell, Assistant Director of the FBI’s Criminal Investigative Division. “This investigation is another example of our commitment to work closely with our federal and state partners to ensure compliance with U.S. banking laws to promote integrity across financial institutions and to safeguard our national security.”
Background
The U.S. government restricts certain countries – including Sudan, Iran, Cuba, and Burma – as well as entities and individuals from those countries from accessing the U.S. banking system.
OFAC is charged with administering these economic sanctions against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy, or economy of the United States. Sanctioned financial institutions, countries, and individuals generally are prohibited from accessing the U.S. financial system.
Banks in Manhattan, which process most of the world’s U.S. dollar payments, use sophisticated computer systems commonly known as “OFAC filters” to prevent sanctioned entities, as well as terrorists, money launderers, and other criminals, from gaining access to the U.S. banking system. These OFAC filters act as the first line of defense to protect the U.S. financial system.
CACIB helped its sanctioned clients, predominantly from Sudan, evade U.S. banks’ OFAC filters to illegally gain access to the U.S. financial system. Additionally, CACIB processed violative payments on behalf of Iranian, Cuban, and Burmese entities.
CACIB’s Conduct
As detailed in the DPA and Factual Statement, between August 2003 and continuing through September 2008, CACIB, through its subsidiary in Switzerland, Crédit Agricole (Suisse) SA (CAS), and its predecessor entities, Crédit Agricole Indosuez (Suisse) SA (CAIS) and Crédit Lyonnais (Suisse) SA (CLS), violated U.S. and New York State laws by sending prohibitedpayments through the U.S. financial system on behalf of entities subject to U.S. economic sanctions. In an effort to evade detection by U.S. bank personnel as well as U.S. authorities, CACIB knowingly, intentionally and willfully concealed the sanctioned entities’ involvement with these transactions. Consequently, U.S. and New York financial institutions processed transactions that otherwise should have been rejected, blocked, or stopped for investigation pursuant to regulations promulgated by OFAC relating to transactions involving sanctioned countries and parties.
The conduct of CACIB included, among other things, (1) sending payments on behalf of sanctioned customers without reference to the payments’ origin; (2) eliminating payment data that would have revealed the involvement of sanctioned countries with the specific intent to evade U.S. sanctions; and (3) using alternative payment methods to mask the involvement of sanctioned entities, including the use of two payment messages, for payments involving sanctioned financial institutions that were sent to the United States. By engaging in this conduct, CACIB caused false entries in its own records and records of other financial institutions located in Manhattan.
Specifically, CLS allowed 11 Sudanese banks to maintain USD accounts, despite the fact that CLS personnel were aware of the U.S. sanctions against Sudan and the fact that these sanctions applied to payments CLS sent through the United States. Many of these USD payments were bank-to-bank transfers, which are typically completed through a single payment message. Instead, as a general rule, CLS would generate two payment messages for bank-to-bank transfers involving its Sudanese bank customers. The first payment message would be sent to the payee’s foreign bank and reference the Sudanese entities involved in the transactions. The second message, however, that CLS sent to the US-based banks concealed the involvement of the Sudanese entities, thereby deceiving U.S. financial institutions and creating the false appearance that the transaction had no connection to the sanctioned entities.
Moreover, CAS developed policies and procedures to use cover payments, which did not reference any sanctioned entity’s involvement in transactions, fully recognizing that this payment method would conceal from U.S. financial institutions the fact that these transactions concerned sanctioned parties.
While today’s DPA was designed to impose a substantial punishment on CACIB and send a strong message of deterrence to other banks, important mitigating factors led to the agreement to defer prosecution. Those factors included the fact that CACIB cooperated throughout the investigation and devoted significant resources to both its internal investigation and the investigations conducted by the District Attorney’s Office and DOJ. CACIB also fully acknowledged and accepted responsibility for its conduct, and voluntarily undertook a series of remedial actions before entering into the DPA.
Prior Sanctions Cases
In June 2014, BNP Paribas Bank (BNPP) pleaded guilty in New York County to falsifying business records and conspiring to evade U.S. sanctions and paid a record $8.83 billion in criminal forfeiture and penalties. Since 2009, nine banks, including BNPP and CACIB, have forfeited approximately $12 billion for their illegal conduct, with half of the funds being paid to the City and State of New York. The Manhattan District Attorney’s Office previously has entered into Deferred Prosecution Agreements with the following financial institutions related to U.S. sanctions violations:
• Commerzbank AG for $342 million in 2015
• HSBC Bank for $375 million in 2012
• Standard Chartered Bank for $327 million in 2012
• ING Bank for $619 million in 2012
• Barclays Bank for $298 million in 2010
• Credit Suisse AG for $536 million in 2009
• Lloyds TSB Bank for $350 million in 2009
Acknowledgements
The investigation was conducted jointly with the United States Attorney’s Office for the District of Columbia, the Federal Bureau of Investigation, and the United States Internal Revenue Service Criminal Investigation division. District Attorney Vance recognized the substantial contributions of the Federal Reserve Bank of New York and OFAC, which conducted their own investigations.
The CACIB case was investigated and prosecuted by Assistant District Attorney Kim Han, Deputy Chief of the Tax Crimes Unit, and Judith Weinstock, former Deputy Chief of the Major Economic Crimes Bureau, under the supervision of Christopher Conroy, Chief of the Major Economic Crimes Bureau, Polly Greenberg, former Chief of the Major Economic Crimes Bureau, and Executive Assistant District Attorney David Szuchman, Chief of the Investigation Division. Financial Intelligence Analyst Morris Breitbart and Trial Preparation Assistant Victor Hollenberg assisted in the investigation.
District Attorney Vance also thanked the following individuals for their assistance in the investigation: Assistant United States Attorneys Matthew Graves and Maia Miller, of the United States Attorney’s Office for the District of Columbia; Katherine Landy, Yoon Hi Greene, and Sean O’Malley of the Federal Reserve Bank of New York; Michael Dondarski and Amanda Miralrio of OFAC; Special Agent Matthew Komar of the Federal Bureau of Investigation; and Special Agents Michael Fleishman and Jeffrey LaMirand of the Internal Revenue Service Criminal Investigation.
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