Legal News

Credit Suisse, Other Banks, Get Hit for Playing Ball With Rogues

By Ashby Jones

It hasn’t been a year of peace, love and understanding between the Department of Justice and banks headquartered in the land of Heidi. For starters, the past 12 months were pockmarked with developments in the DOJ’s huge tax-fraud case with UBS. (Click here for LB coverage on that imbroglio.)

Now, comes word that AG Eric Holder has gone after Zurich-based Credit Suisse Group. On Wednesday, Holder said the bank helped clients in Iran and elsewhere conduct financial transactions in secret, saying that the Swiss bank “established a business model to allow these rogue players access to U.S. dollars.”

Holder, along with Manhattan District Attorney Robert Morgenthau, announced a $536 million settlement by Credit Suisse, one of several banks accused in a long-running case that has reportedly netted roughly $1 billion in fines. The bank, which paid the biggest of the fines, reached a 24-month deferred prosecution agreement, meaning it could face criminal prosecution if further problems occur.

Click here for the WSJ story.

Holder said Credit Suisse built a business based on actively helping its clients avoid detection by U.S. authorities on their financial transactions. The bank produced a pamphlet titled, “How to transfer USD payments” and told Iranian clients that bank employees would check each message individually to make sure it would avoid detection.

The investigation started in 2006 by Morganthau’s office showed that Credit Suisse processed more than $700 million in payments that violated U.S. sanctions between 2002 and 2006. It also processed $1.1 billion in payments manipulated to hide their Iranian origin, often manually reviewing trades.

The bank “accepted and acknowledged responsibility for its criminal conduct in violating the International Emergency Economic Powers Act,” the Justice Department said. The $536 million to be forfeited by Credit Suisse will be split by the U.S., New York state and New York City. It was the largest forfeiture on record for violations of the act, government officials said.

The firm said it “takes this matter very seriously,” and “has enhanced its procedures to prevent practices of this type from occurring.”

Photo: Reuters

Full post as published by Law Blog - WSJ.com on December 17, 2009 (boomark / email).