The Federal Reserve Board on Monday announced that Credit Suisse will pay a $100 million penalty for unsafe and unsound practices and failure to comply with the federal banking laws governing its activities in the United States. The Federal Reserve also issued a cease and desist order requiring Credit Suisse promptly to address deficiencies in its oversight, management, and controls governing compliance with U.S. laws.
This action is taken in conjunction with actions by the Department of Justice and the New York State Department of Financial Services for violations of the federal income tax laws and various New York State laws. The penalties issued by the agencies total $2.6 billion.
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The Board’s cease and desist order and assessment of civil money penalty against Credit Suisse, a foreign bank that is subject to the International Banking Act and other U.S. federal banking laws, are based on the institution’s inadequate risk-management and compliance program, and its failure to conduct and accurately report to the Federal Reserve the operations of its New York representative office in compliance with U.S. banking laws. These failures contributed to the violation of the International Banking Act, the U.S. income tax laws, and the U.S. securities laws. Credit Suisse’s New York representative office was closed in 2009. Credit Suisse continues to operate a branch office in New York, which is covered by the enhanced policies and procedures required by the order.
The order requires Credit Suisse to complete its ongoing efforts to implement programs and policies to ensure that Credit Suisse conducts its operations in the United States and worldwide in full compliance with U.S. banking laws and the contemporaneous orders of the Department of Justice and the New York State Department of Financial Services.
As part of the order, Credit Suisse has agreed to terminate its relationship with, and not re-employ or otherwise engage, nine individuals who were involved in the actions that resulted in the violation of U.S. laws. Apart from the actions with regard to the institution, the Federal Reserve is investigating whether other specific individuals that may have been involved in the actions that resulted in violations of U.S. banking laws during the relevant period should separately be subject to actions by the Federal Reserve. These actions could include fines and orders prohibiting specific individuals from participating in the business of banking, including working for any institution subject to the jurisdiction of U.S. federal banking supervisors. Credit Suisse has agreed to cooperate in these investigations, but is not the subject of these investigations.
Statement by the Department of Justice
Statement by the New York State Department of Financial Services