Société Générale to Pay $1.3 Billion to Resolve U.S. Sanctions, Money Laundering Violations -- 2nd Update
November 19 2018 - 4:01PM
Dow Jones News
By Samuel Rubenfeld
French bank Société Générale SA agreed to pay $1.34 billion in
penalties to settle allegations by U.S. and New York state
authorities that the bank had processed and concealed billions of
dollars in transactions related to countries under sanctions.
New York regulators said Société Générale conducted transactions
involving parties in Iran, Cuba, and Sudan between 2003 and 2013.
Federal prosecutors, meanwhile, said the bank engaged in more than
2,500 transactions valued at about $13 billion from 2004 to 2010.
The transactions violated U.S. sanctions laws, authorities
said.
The majority of the transactions and much of the total value
involved a dollar credit facility designed to finance oil
transactions between a Dutch commodities trading firm and a Cuban
company with a state monopoly on the production and refining of
Cuban crude, federal prosecutors said.
Société Générale avoided detection, in part, by making
inaccurate or incomplete notations on payment messages that
accompanied the transactions, prosecutors alleged. The department
that managed them "engaged in a deliberate practice of concealing
the Cuban nexus of U.S. dollar payments," prosecutors said.
The total penalty amount is the second-largest imposed on a
financial institution for violations of U.S. sanctions, federal
prosecutors said. "Other banks should take heed: Enforcement of
U.S. sanctions laws is, and will continue to be, a top priority of
this office and our partner agencies," said U.S. Attorney Geoffrey
Berman, in a statement.
Frédéric Oudéa, Société Générale's chief executive, said in a
statement that the bank regrets the shortcomings identified in the
settlements.
The bank cooperated with authorities and has taken a number of
steps in recent years to enhance its sanctions and
anti-money-laundering compliance programs, Mr. Oudéa said.
He also referenced the bank's settlement in June with U.S. and
French authorities concerning its alleged manipulation of Libor
rates and transactions involving Libyan counterparts.
"These resolutions, following on the heels of the resolution of
other investigations earlier this year, allow the bank to close a
chapter on our most important historical disputes," Mr. Oudéa said
in the statement.
The penalty is fully covered by a provision for disputes in its
books, the bank said, noting that it won't have any additional
effect on the bank's results for the year. The bank in September
forecast an expected $1.3 billion penalty over the sanctions
violations, saying at the time it had entered into a phase of
active discussions with U.S. authorities over the matter.
Société Générale struck a deferred-prosecution agreement with
the U.S. Justice Department, and agreed to forfeit $717.2 million
in a civil forfeiture, prosecutors said. The bank also agreed to
pay $325 million to DFS, $162.8 million to the Manhattan district
attorney's office, $81.3 million to the Federal Reserve and $53.9
million to the U.S. Treasury Department's sanctions office. It also
agreed to continue to cooperate with U.S. authorities in the
future.
A second consent order with New York's DFS requires the bank to
pay an additional $95 million relating to anti-money-laundering and
compliance deficiencies, and it mandates the New York branch to
continue a series of enhancements to its compliance program. Under
the terms of the consent order, an independent consultant will
assess the branch's progress after 18 months.
The Société Générale settlements follows a pattern frequently
seen during the Obama administration, in which a bank would reach
simultaneous agreements with multiple U.S. state and federal
authorities regarding sanctions violations. The pace of these
settlements, however, had slowed in recent years.
The largest involved BNP Paribas SA, another French bank, which
agreed in 2014 to pay nearly $9 billion. Others include HSBC
Holdings PLC, which agreed to pay $1.92 billion in 2012,
Switzerland's Credit Suisse AG, which paid $536 million in 2009 and
the Netherlands' ING NV, which agreed to pay $619 million in
2012.
--Alberto Delclaux in Barcelona contributed to this article.
Write to Samuel Rubenfeld at samuel.rubenfeld@wsj.com
(END) Dow Jones Newswires
November 19, 2018 15:46 ET (20:46 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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