Yet another French bank finds itself entangled with the Office of Foreign Assets Control (OFAC). On Tuesday, OFAC published it’s long-awaited settlement with France’s Crédit Agricole SA for alleged violations of the Sudanese, Burmese, Cuban and Iranian sanctions regulations. In addition to the OFAC settlement, the bank is subject to a consent order from the New York Department of Financial Services (“DFS”), a cease and desist order by the Federal Reserve, and will enter into deferred prosecution agreements with the Justice Department and Manhattan District Attorney’s Office. All told, the bank will pay a total of $787.3 million on charges that it transferred billions of dollars from 2003-2008 on behalf of clients in sanctioned countries. The base civil penalty for the OFAC violations as well as the statutory maximum in the case would have totaled nearly $1.5 billion.

The joint investigation unveiled several aggravating factors including indications that Crédit Agricole was aware that their actions may constitute violations of U.S. economic sanctions as well as that the fact that several of the bank’s managers were aware of the conduct that led to the violations. Juicy bits of evidence include exchanges in which bank managers overrule compliance concerns citing the high value of certain clients.   In one example, a senior bank manager opposed the termination of a relationship with a Sudanese bank, writing in an email,

“We have had a commercial relationship with [the Sudanese bank], Khartoum, since its creation …. We are one of their principal correspondents in Switzerland… It is essential that this relationship be maintained with this bank, that we know very well, that we visit in Sudan and which visits us regularly, and whose employees have for many years now been trained by us on the business of letters of credit/transfers/forex.”

Egregious as that may seem, OFAC also considered several mitigating factors including the fact that the bank had not had any OFAC violations in the past five years, that it had taken appropriate remedial measures, and that it cooperated with the investigation.

Perhaps the most interesting aspect of the settlement is the fact that in its discussion of mitigating factors, OFAC has made an effort to point out that many of Crédit Agricole’s violations occurred prior to the publication of the ABN Amro settlement. Though only one line long, the sentence seems to suggest that OFAC recognizes that the ABN Amro penalty represented a game-changer in the way that many banks thought about sanctions liability in the context of U.S. dollar clearing. Prior to ABN Amro, this particular structuring of transactions was almost industry standard amongst foreign banks. As in the BNP case, Crédit Agricole appeared to rely at least in part on guidance from outside counsel suggesting their conduct was within the scope of the regulations.

Another lesson from the settlement is how sanctions can impact mergers and acquisitions. At least some of the violations cited by OFAC were undertaken by Crédit Lyonnais prior to its merger with Crédit Agricole. Because sanctions violations are inherited, Crédit Agricole is forced to foot the bill for violations it may not have been aware of at the time of the merger.

As part and parcel to the various settlements, Crédit Agricole has (obviously) agreed to discontinue all similar future activities that resulted in the compliance failures and to establish policies and procedures that will minimize the occurrence of such failures in the future. Moreover, pursuant to a cease and desist order, the bank will have to report to the Board of Governors of the Federal Reserve System who will act in a supervisory role. OFAC will also review the bank’s submissions to the Fed. It will also be forced to accepted an “Independent Consultant,” appointed by DFS, to review its compliance program.

Crédit Agricole’s settlement is only the latest in a string of major sanctions-related bank settlements stemming from dollar-clearing that took place in the mid-2000s. Reports indicate that several other investigations will soon be concluding, with Societe Generale, Deutsche Bank and UniCredit all on deck for similar violations.