Credit Agricole SA, a French lender, is to reach an agreement with US officials, regarding an investigation into the bank’s business with Iran and other sanctioned countries, Bloomberg reported Thursday, citing sources familiar with the matter.
Credit Agricole’s case is similar to the one concerning the German lender, Commerzbank AG, which is likely to settle its case with US authorities for $650 million. The French bank will be fined alike.
Authorities say the penalized banks meddled with information from incoming wires to avoid red flags that would have helped regulators monitor the dealings with sanctioned countries, including Iran which has come under severe sanctions since 2010 over a decade-long nuclear dispute with the West.
Credit Agricole’s shares fell on the rumors, in Euronext Paris stock exchange. The shares which were at a three month high of €12.00 on Wednesday dropped 1.2 percent to €11.85 by 10:00 GMT on Friday. The French lender, AKA green bank, now has a €30.53 billion market cap.
In August, Jean-Paul Chifflet, Credit Agricole’s Chief Executive Officer, said the bank was “entering a phase of explanations on the case with the authorities” after performing an internal evaluation of their transactions, done in a five-year period ending in 2008. According to Chifflet, the lender has set €1.1 billion ($1.4 billion) aside for its litigation costs.
The US Department of Justice, the Treasury Department, the Federal Reserve and the Manhattan District Attorney’s office are in negotiations with Credit Agricole and are handling the investigations into foreign bank activities with sanctioned countries. Authorities form said institutions have yet to comment on their investigations into the French lender.
Tight Monitoring
The troubles of European banks started around 2007, as the US Justice Department turned its eye towards the banks that financed and processed the transactions from sanctioned countries, mainly Cuba, Iran and Sudan.
The scrutiny put on banks followed the concentrated push by US officials to penalize companies that violated sanctions and allegedly exported military equipment into blacklisted countries.
The US officials are resolute in demonstrating that they will not tolerate any evasion of the sanctions emplaced by them.
Escalating Fines
Since 2009, over six foreign banks have settled lawsuits with US authorities for violating sanctions, mostly against Iran. Recently, BNP Paribas, the fourth largest bank in the world, arranged to pay a record breaking $8.9 billion after pleading guilty to falsifying business records and conspiracy, having violated US sanctions against Cuba, Iran, and Sudan.
In 2012, ING Bank, an Amsterdam-based financial service firm, paid $619 million, then the highest penalty forfeited.
Later in 2012, Standard Chartered Plc, a universal bank with operations in consumer, corporate and institutional banking, and treasury services, paid $667 million in fines. In August, Standard Chartered was fined again, by $300 million, among other penalties, for negligence in its anti-money laundering mechanisms since the 2012 settlements.
Also in 2012, HSBC Holdings Plc., one of the largest banking and financial services organizations in the world with operations in over 80 countries, settled to pay $1.9 billion to resolve an investigation regarding violation of sanctions and allegations of being exploited by Mexican drug gangs for money laundering.
Continued Investigations
The $8.9 billion fine levied against Frances BNP Paribas SA, fourth largest bank in the world, by the US prosecutors in June, has driven foreign banks to cooperate with officials. Requests for leniency by the top brass of the French government were declined due to the bank’s lack of cooperation, sources say.
The German Deutsche Bank AG, the largest foreign exchange dealer in the world, the French Societe Generale SA and the Italian UniCredit SpA are among the banks under investigation by US prosecutors for violating sanctions against various countries, based on company filings.
