Credit Suisse settles with U.S. in probe | world | Hindustan Times
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Credit Suisse settles with U.S. in probe

world Updated: Dec 16, 2009 10:46 IST

Credit Suisse expects to pay a $536 million fine to settle charges with the federal government and New York county authorities that it violated rules against conducting business with sanctioned countries, ending a five-year probe.


U.S.-regulated financial institutions by law cannot do business with sanctioned countries such as Iran or Sudan.

"Credit Suisse confirms that it is in advanced settlement discussions," it said in a surprise statement on Tuesday. "As part of the settlement, Credit Suisse is likely to pay a total of $536 million."

The bank said it was in talks with the Manhattan District Attorney's Office, the U.S. Justice Department, the Federal Reserve and the Foreign Assets Control Office. Credit Suisse did not identify the countries in question, but detailed a previous decision to shut down its Tehran office.

Credit Suisse said the expected settlement would likely result in an additional 445 million Swiss franc ($428.3 million) fourth-quarter charge, or about 360 million francs. The charge goes beyond provisions booked in previous periods.

"There are negotiations but there is no final agreement," Alicia Maxey-Greene, spokeswoman for Manhattan District Attorney Robert Morgenthau, said in response to inquiries about the Credit Suisse statement. She declined further comment on details of settlement terms.

Officials at the U.S. Justice Department, the U.S. Treasury Department, the Federal Reserve Board in Washington and the Federal Reserve Bank of New York all declined comment.

Credit Suisse said its settlement discussions included those U.S. government agencies relating to what it described as a previously disclosed investigation.


Such a settlement would be the second heavy penalty paid by a Swiss bank to U.S. authorities this year. Credit Suisse rival UBS agreed in February to pay $780 million to avoid criminal charges for helping about 50,000 rich Americans evade taxes.

Earlier this year, Britain's Lloyds TSB Group Plc agreed to forfeit $350 million to U.S. authorities in connection with charges it faked records so clients from Iran, Sudan and elsewhere could do business with the U.S. banking system.

Credit Suisse said on Tuesday it undertook an extensive investigation into the Zurich-based payment activity and other practices relevant to the U.S. probe and had worked closely with regulators and U.S. authorities.

"Credit Suisse has enhanced its procedures to prevent practices of this type from occurring in the future," the bank said. The bank also said it had decided in December 2005 to exit the business in question.

The bank in 2006 terminated business with all parties subject to U.S. sanctions and closed its representative office in Tehran. It had also boosted its global compliance efforts, it said.

Credit Suisse first disclosed the probe in 2007.

Contrary to domestic competitor UBS, Credit Suisse managed to avoid the risky bets on subprime mortgages that nearly brought UBS to its knees and was able to emerge from the crisis without any state aid.

Neither Credit Suisse or the U.S. authorities would provide details of the settlement, or where Credit Suisse directed the payments in question.

Countries under U.S. economic sanctions include Iran, North Korea, Sudan and Syria.

In September, Morgenthau told reporters that U.S. prosecutors expected a "mainstream international bank" to strike a settlement within 30 days over illicit links with Iran.

The bank "was stripping the identity of Iranian money, just like Lloyd's," Morgenthau said at a news conference at that time, involving a separate case. "There is no question about what the bank did. There is a question of how much they are willing to pay to settle the case."

Justice and Morgenthau's office for years have been pursuing financial institutions suspected of not complying with U.S. sanctions or of helping Iran and other sanctioned countries obtain access to America's banking system, The New York Times reported on its website.