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United States: In The Matter Of Crédit Agricole Corporation And Investment Bank: Several Regulators Reach Settlements With Crédit Agricole Corporation And Investment Bank For A Total Of $787 Million For Sanctions Violations
On 20 October 2015, Crédit Agricole Corporate and
Investment Bank ("CA-CIB"), a subsidiary of the French
bank Crédit Agricole S.A., reached settlements with several
US federal and state regulators in which the company agreed to pay
a total of $787,300,000, entered into deferred prosecution
agreements with certain regulators, and agreed to certain other
compliance conditions in order to resolve its potential liability
for violations of US sanctions regulations and other federal and
state laws prohibiting financial transactions with improper parties
and the falsification of financial records. The conduct at issue
related to thousands of transactions that CA-CIB processed using
several methods designed to avoid detection by US financial
institutions.
From 2003 to 2008, CA-CIB, through subsidiaries and predecessor
entities primarily located in Switzerland, processed thousands of
transactions, totaling at least hundreds of millions of dollars,
that traveled through the US on behalf of parties subject to US
sanctions mainly against parties located in Sudan, but also in
Burma, Iran and Cuba. CA-CIB employees used several techniques that
were approved by high-level officers to remove the names and
locations of the sanctioned parties from transactions traveling
through the US, including transactions sent to CA-CIB's New
York branch. Communications uncovered during the investigations
showed CA-CIB employees, including compliance personnel, taking
positions that were clearly inconsistent with US law (such as the
position that US regulations did not apply to activities conducted
in Switzerland even if they involved transactions traveling through
the US). This evidence also showed written policies directing
employees to omit information from transactions that would identify
parties as being from certain sanctioned countries in order to
avoid detection by US financial institutions.
CA-CIB's activities were investigated by the US
Attorney's Office for the District of Columbia (which is part
of the DOJ), the Treasury Department's Office of Foreign Assets
Control ("OFAC") and the Board of Governors of the
Federal Reserve System at the federal level and by the New York
County District Attorney's Office and the New York State
Department of Financial Services at the state level. The
approximately $787 million that CA-CIB agreed to pay was divided
among these different regulators. In addition, CA-CIB entered into
deferred prosecution agreements and agreed to compliance and
remedial steps. While CA-CIB received some credit for, among other
things, its cooperation with the investigation, its remedial
actions, and the fact that the conduct at issue subsided recently,
other factors, such as the egregiousness of the conduct,
CA-CIB's status as a global financial institution and
CA-CIB's lack of proper controls were deemed to aggravate the
nature of its conduct. This matter serves as a reminder that
foreign companies doing business in the US are not shielded from
the laws and regulations of the United States just because the
companies are located outside the US. Such companies should assess
what US rules apply to their business and take the steps necessary
to ensure compliance with those rules.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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