U.S. attacks banks' Iranian ties

By Glenn Kessler
Washington Post Staff Writer
Thursday, December 17, 2009

The United States on Wednesday escalated a crackdown on illicit banking relations with Iran, winning a half-billion-dollar fine against the biggest Swiss bank as other European financial institutions remain under investigation.

The agreement by Credit Suisse Group to pay $536 million to settle a Justice Department investigation comes on the heels of forfeitures of $350 million by Lloyds TSB Bank earlier this year and $80 million by ABN Amro Holding in 2005 for similar violations of U.S. sanctions. Another British bank, Barclays, has acknowledged it is cooperating with the probe and faces a substantial fine; at least another half-dozen banks are believed to be under investigation.

Credit Suisse admitted to helping banks in a rogue's gallery of nations -- including Iran, Sudan, Burma, Cuba and Libya -- evade sanctions by disguising the identity of suspect companies making dollar-denominated money transfers that totaled more than $1.6 billion. But Iran -- which faces the threat of fresh sanctions next year over its nuclear program -- clearly was the main target of the action announced by U.S. officials in Washington and Manhattan prosecutors.

"This case also provides a critical and timely lesson about the Iranian government's use of deceptive practices to evade sanctions and the fact that banks that do business with Iran expose themselves to the risk of becoming involved in Iran's proliferation and terrorism activities," said Stuart Levey, a Treasury Department undersecretary and the administration's point man in developing new sanctions against the Islamic Republic. "Sometimes Iran is able to persuade banks to assist in its deceptive schemes; other times banks find themselves unwitting victims of this nefarious conduct."

Levey has traveled the globe warning banks to avoid doing business with Iran or face a risk to their reputations, and the massive fines imposed in the past year are intended to reinforce that message. Many of the new sanctions under consideration by the administration would also target Iran's economic links to the world.

When he took office, President Obama said he would give Iran a year to demonstrate it was serious about answering questions about its nuclear program -- which it insists is for peaceful purposes -- but administration officials now concede the efforts at engagement have not gained much traction. The timing of the Credit Suisse announcement Wednesday appears intended to send a message both to Iran and to financial institutions.

"The settlement we announce today ensures that Credit Suisse will not flout the law again for its own financial gain," Attorney General Eric H. Holder Jr. said. "We will be vigilant in enforcing this settlement and in pursuing other institutions and individuals who engage in similar illegal conduct."

Documents filed in U.S. District Court in Washington show that Credit Suisse for more than a decade worked to evade sanctions that prohibited Iranian customers from accessing the U.S. banking system. Employees would routinely strip out information that would potentially make clear the Iranian links to banking authorities; they would also use code words when discussing sanctioned companies and institutions. Credit Suisse even developed a pamphlet for Iranian clients, showing how to fill out payment forms to avoid triggering regulatory alarms.

When Lloyds in 2003 decided to terminate its U.S. dollar business for Iranian bank clients, Credit Suisse stepped into the breach, boosting the number of payments it executed from 49,000 in 2002 to nearly 200,000 in 2005, the documents said. In 2007, Credit Suisse decided to end its business with Iranian clients as well.

Staff researcher Julie Tate contributed to this report.

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