Credit Suisse ready to pay US millions over sanctions

Credit Suisse says it expects to pay 536 million dollars to the US government to settle an investigation into business it did with countries, such as Iran, regarded as “state sponsors of terror” and subject to American economic sanctions.

In a release issued late Tuesday, Switzerland’s second biggest bank said it was in “advanced settlement discussions” over the matter with the US department of justice and other authorities.

These include the board of governors of the Federal Reserve System, the Federal Reserve Bank of New York, the Manhattan district’s attorney’s office and the US treasury department’s office of foreign assets control (OFAC).

The bank confirmed that the talks related to an investigation of US dollar payments made between 2002 and 2007 “involving parties subject to US sanctions.”

Alicia Maxey Greene, spokeswoman for the Manhattan district attorney’s office, confirmed it was negotiating with the bank but said no final agreement had been reached, Associated Press reported.

Credit Suisse said it had previously disclosed the investigation by US authorities.

The bank said it had conducted an internal review of US dollar payments involving “countries, persons or entities” that may be subject to US sanctions.

As a result, Credit Suisse said it had closed its office in Tehran in 2006 and terminated all business with countries facing US sanctions.

At the time, those countries included Cuba, Iran, North Korea, Sudan and Syria.

Credit Suisse did not disclose which of these countries it was conducting business with, apart from Iran.

In 2007, the American Securities and Exchange Commission released a long list of businesses doing businesses with these states, sanctioned by OFAC.

Credit Suisse was one of three Swiss companies that appeared on the list, in addition to ABB, the engineering giant, and Syngenta, a seed and fertilizer company.

Credit Suisse said it had “enhanced its procedures to prevent practices of this type from occurring in the future.”

In particular, it said it had appointed a “global sanctions compliance officer” in addition to designating individuals to coordinate and monitor compliance with sanctions programmes and to train employees on the issue.

Credit Suisse said it had already recorded provisions for the investigation at the end of the third quarter of 2009.

But it expects to record an additional pre-tax charge of 445 million francs for the fourth quarter of 2009, which is estimated at about 360 million francs after tax.

The banks said it would reveal more information about the case once it reached a final deal with US authorities.

The matter again reflects the degree of involvement of Switzerland’s two biggest banks with the American justice system.

UBS, the country’s biggest bank, was forced to pay US authorities 780 million dollars earlier this year to settle a tax fraud case, in addition to disclosing information about thousands of Americans with accounts at the financial institution.

“It does seem to me that banks have an obligation to due diligence,” said Daniel Warner, director of the Centre for International Governance at the Graduate Institute of Geneva.

Warner acknowledged that keeping track of business with countries that have sanctions against them can be a complex affair.

“It’s not always easy to trace money, there can be intermediaries involved and investigating these things can take time,” he said.

Nonetheless, Credit Suisse should have had a system in place to comply with the sanctions, said Warner, who added that he found it “interesting” that the bank did not contest the American investigation.