By CARRICK MOLLENKAMP And CHAD BRAY
Credit Suisse's role in alleged illegal transactions with Iranian enterprises previously had been disclosed. But the size of the fine and the fact that the Swiss bank joins other banking companies in settling U.S. inquiries highlight how far-reaching and secretive money flows have been with Iran and others sanctioned by the U.S.
An agreement by the Swiss bank to pay that amount now means that fines and penalties for banks investigated in the alleged transactions are in the $1 billion range.
Credit Suisse, which said it is in "advanced settlement discussions" with state and federal U.S. authorities, said that while it already set aside money to cover a fine, it will now record a 445 million Swiss franc ($430 million) pretax charge in the fourth quarter. The bank reports those results on Feb. 11.
U.S. security and law-enforcement officials have been investigating efforts by Iran to buy supplies from overseas companies that can be used in weapons.
Evidence of Iran's efforts to acquire sensitive materials also is emerging from investigations by state and federal prosecutors in New York into whether a number of major Western banks illegally handled funds for Iran and deliberately hid Iranian transactions routed through the U.S.
In its statement Tuesday, Credit Suisse said that it was in the settlement talks with the Manhattan District Attorney, the Justice Department, the Federal Reserve and the Treasury Department's unit that enforces economic and trade sanctions. Countries under sanction by the U.S. include: Sudan, Syria, North Korea and Iran.
Those talks, Credit Suisse said, center on transactions that took place between 2002 and April 2007 "involving parties that are subject to U.S. economic sanctions." Credit Suisse said it had taken steps to counter potential lax controls inside the bank.
The bank said, for example, that in December 2005, it decided to exit from the business under scrutiny and began an internal investigation. The bank said it ended its business with all parties subject to U.S. sanctions in 2006, including closing an office in Iran. The company said it has enhanced its global compliance program and filters to screen for transactions that may be subject to U.S. sanctions.
Credit Suisse also said it had closed a Tehran office in 2006.
A Credit Suisse spokeswoman declined further comment. Credit Suisse first disclosed the probes in its 2007 annual report and said earlier this year that it was cooperating with the district attorney's office, the Justice Department and other government agencies.
Alicia Maxey Greene, a spokeswoman for Manhattan District Attorney Robert Morgenthau, confirmed settlement negotiations were continuing, but said a final agreement hadn't been reached. Spokeswomen from the Justice Department, the Fed and OFAC declined comment on Tuesday. Mr. Morgenthau previously has said some nine Western banks have been involved in the transactions.
Credit Suisse's announcement comes nearly a year after the U.K.'s Lloyds Banking Group PLC agreed to pay $350 million in fines and forfeitures that enabled Iranian and Sudanese clients to access the U.S. banking system.
At the time, Lloyds had admitted to altering wire-transfer information to hide the identity of clients.
As a result, more than $300 million was transferred on behalf of Iranian banks and their customers before Lloyds ceased handling the transactions. Lloyds at the time said it provided "prompt and substantial cooperation" with U.S. authorities.
The method in which Lloyds had hidden the transactions is a process known as "stripping." That is the practice of removing wire-transfer information that would identify that transfers originated from a prohibited source. The stripping made it appear that transactions began at Lloyds in the U.K. rather than at sanctioned banks.
Then this August, Australia & New Zealand Bank Group, Ltd., agreed to pay $5.75 million to settle a probe into foreign currency exchange transactions between 2004 and 2006 by Sudanese and Cuban citizens or entities subject to U.S. sanctions. The settlement covered about $106 million in transactions.
In 2005, Dutch bank ABN Amro Holding NV paid $80 million in fines related to transactions involving Iran and Libya, while those countries were facing sanctions by the U.S. ABN said at the time it accepted the sanctions and expressed its regret.
—Deborah Ball
contributed to this article.
