Societe Generale SA (SocGen) settled its longstanding sanctions violations case with US authorities, entering a deferred prosecution agreement with federal prosecutors and paying US$1.34 billion to regulators in New York and Washington.
As part of the settlement announced on Monday, France’s third-largest bank acknowledged violations of US sanctions laws against Cuba, Iran and Sudan starting as far back as 2003 and extending to 2013.
The bank agreed to pay US$1.34 billion in all to settle the matter, the US Federal Reserve said in a statement.
For the sanctions violations, it is to pay US$717 million to the US Department of Justice, US$325 million to New York’s Department of Financial Services, US$163 million to the Manhattan District Attorney’s office, US$81 million to the Fed and US$54 million to the US Department of the Treasury.
It is to pay an additional US$95 million to the DFS for weak anti-money-laundering controls.
The settlement “will remove the bulk of the bank’s legal risks in the US,” according to a report by Bloomberg Intelligence.
WILLFUL VIOLATIONS
“Societe Generale has admitted its willful violations of US sanctions laws — and longtime concealment of those violations — which resulted in billions of dollars of illicit funds flowing through the US financial system,” said US Attorney Geoffrey Berman of the Manhattan office, which announced the settlement.
“Other banks should take heed: Enforcement of US sanctions laws is, and will continue to be, a top priority of this office and our partner agencies,” Berman said.
“The absence of an effective, global sanctions-compliance infrastructure and lack of management oversight allowed Societe Generale employees to ignore the scope and applicability of laws governing economic sanctions,” New York state Superintendent of Financial Services Maria Vullo said.
The cost of the penalties is covered entirely by legal provisions already booked in SocGen’s accounts, the bank said in a written statement on Monday.
The company sees no additional impact to its results for this year from these agreements.
“We acknowledge and regret the shortcomings that were identified,” chief executive Frederic Oudea said.
SocGen “has already taken a number of significant steps in recent years and dedicated substantial resources” to improve its compliance programs for stamping out sanctions evasion and money laundering, he said.
SocGen resolved two other US investigations — relating to bribery in Libya and the manipulation of interest rates — for a total of US$1.3 billion in June.
Monday’s settlement is the first major sanctions settlement involving a global bank during US President Donald Trump’s administration.
In 2015, Credit Agricole SA settled a sanctions matter with US authorities for US$787 million.
COVER-UP
Starting around 2002, SocGen concealed many of its illegal transactions by sending cover payments with wire transfers from US banks to foreign lenders that omitted the name of the beneficiary, according to the statement of facts filed in federal court.
After sending the blind instructions to the US bank, SocGen would notify the foreign lender that the incoming dollar transfer should be credited to the sanctioned party.
In this way, it was able to hide from US authorities its ongoing business on behalf of entities in Cuba.
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