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Multinational Bank Settles Charges for Violating U.S. Sanctions Law

Commentary by James Treanor and James Treanor

A multinational bank agreed to pay approximately $1.3 billion in penalties for violating and attempting to conceal violations of U.S. sanctions law from approximately 2003 to 2013.

Société Générale S.A. ("SocGen") agreed to settle charges with federal and state prosecutors and regulators for engaging in prohibited activities with parties in sanctioned or embargoed countries, including Iran, Sudan, Cuba and Libya. SocGen entered into a three-year Deferred Prosecution Agreement ("DPA") with the Southern District of New York ("SDNY") to settle charges of conspiring to violate United States sanctions against Cuba by "structuring, conducting, and concealing U.S. dollar transactions using the U.S. financial system." In total, the value of allegedly unlawful Cuba-related transactions was over $15 billion. According to an investigation by the New York Department of Financial Services ("NYDFS"), SocGen failed to ensure that it was compliant with U.S. sanctions laws and regulations. Notably, NYDFS found that SocGen employees who were responsible for originating USD foreign transactions "had a minimal understanding" of sanctions laws and regulations.

SocGen agreed to refrain from future misconduct and implement remedial steps.

Commentary

While the total monetary penalties faced by SocGen are significant, the bank appears to have received substantial credit from prosecutors and regulators for its cooperation and remedial efforts. In particular, the DPA acknowledges SocGen's efforts to collect and produce "voluminous evidence located in other countries to the full extent permitted under applicable laws and regulations," as well as "its enhancement of its compliance program and sanctions-related internal controls both before and after it became the subject of a U.S. law enforcement investigation." In the SDNY's analysis, these factors, among others, "outweighed [the bank's] decision not to self-report all of its violations . . . in a timely manner[,]" and tipped the balance in favor of settlement.

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Commentary

While the total monetary penalties faced by SocGen are significant, the bank appears to have received substantial credit from prosecutors and regulators for its cooperation and remedial efforts. In particular, the DPA acknowledges SocGen's efforts to collect and produce "voluminous evidence located in other countries to the full extent permitted under applicable laws and regulations," as well as "its enhancement of its compliance program and sanctions-related internal controls both before and after it became the subject of a U.S. law enforcement investigation." In the SDNY's analysis, these factors, among others, "outweighed [the bank's] decision not to self-report all of its violations . . . in a timely manner[,]" and tipped the balance in favor of settlement.

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