Crédit Agricole Resolves Sanctions Investigations, Agrees to Pay a Total of $787.3MOctober 21, 2015
On October 20, 2015, Crédit Agricole S.A. (Crédit Agricole) and its subsidiary Crédit Agricole Corporate and Investment Bank (CACIB) (together, the Bank) agreed to pay, collectively, a total of $787.3 million and enter into various settlement agreements with respect to apparent violations of U.S. sanctions programs. The settlements resolve federal and state investigations into the Bank’s payments on behalf of U.S.-sanctioned parties. According to the settlement documents, between 2003 and 2008, the Bank processed more than 4,000 transactions involving Sudan, Cuba, Burma and Iran routed to or through banks in the United States. The conduct involved CACIB and certain Switzerland-based subsidiaries.
John E. Smith, Acting Director of the Office of Foreign Assets Control (OFAC), stated that “while the settlement covers activities through 2008, the fact that most of the apparent violations occurred prior to 2006 highlights a positive trend.” According to Smith, investigative and enforcement efforts in recent years have dramatically enhanced awareness regarding sanctions compliance in the financial industry.
The comprehensive settlement includes a $385 million monetary penalty payable to the New York State Department of Financial Services (the NYDFS), a $156 million payment to the U.S. Attorney’s Office for the District of Columbia, a $156 million payment to the New York County District Attorney’s Office, and a $90.3 million civil monetary penalty by the Board of Governors of the Federal Reserve System (the FRB). OFAC imposed a $329,593,585 penalty, which will be deemed satisfied by the Bank’s payment of that amount to the other authorities.
The criminal resolution is in the form of deferred prosecution agreements by CACIB with federal and state authorities. Those agreements refer to charges of knowingly and willingly conspiring to defraud the United States and to commit violations of the International Emergency Economic Powers Act and the Trading with the Enemy Act, and with New York laws relating to falsifying bank records.
The settlements require Crédit Agricole and certain subsidiaries to implement an enhanced program to ensure global compliance with U.S. sanctions administered by OFAC. The consent orders with the Federal Reserve and the NYDFS prohibit the Bank from re-employing individuals involved in the apparent violations or retaining them as consultants or contractors and require the Bank to assist in ongoing investigations against these individuals or other persons. The NYDFS consent order requires the bank to hire an independent consultant, reporting directly to the NYDFS, to conduct a comprehensive review of the Bank’s existing BSA/AML and OFAC sanctions compliance programs.
The Crédit Agricole settlements are the latest in a series of sanctions-related enforcement actions against large financial institutions, e.g., Commerzbank, BNP Paribas, HSBC, Barclays and Standard Chartered for non-transparent payment practices. The agreement continues law enforcement’s use of deferred prosecution agreements in many of the cases involving apparent sanctions violations, and indicates a willingness to bring actions relating to conduct occurring over ten years earlier. The agreement also highlights the continuing prominent role in many of these settlements of the NYDFS, which imposed the largest penalty relative to the other authorities.