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U.S Imposes record fine on BNP in sanctions warning to banks

 

Tue, Jul 1 2014

By Joseph Ax, Aruna Viswanatha and Maya Nikolaeva

NEW YORK/WASHINGTON/PARIS (Reuters) - French bank BNP Paribas BNPP.PA has pleaded guilty to two criminal charges and agreed to pay almost $9 billion to resolve accusations it violated U.S. sanctions against Sudan, Cuba and Iran, a severe punishment aimed at sending a clear message to other financial institutions around the world.

The guilty plea is the direct consequence of a broader U.S. Justice Department shift in strategy that is expected to try to snare more major banks for possible money laundering or sanctions violations.

In an unprecedented move, regulators banned BNP for a year from conducting certain U.S. dollar transactions, a critical part of the bank's global business, in addition to the fine which was a record for violating American sanctions.

"Through a series of egregious schemes to evade detection and with the knowledge of multiple senior executives, BNP employees concealed more than $190 billion in transactions between 2002 and 2012 for clients subject to U.S. sanctions including Sudan, Iran and Cuba," the New York State regulator said.

U.S. authorities said the severe penalties reflected BNP's drive to put profits first, even after U.S. officials warned the bank of its obligation to crack down on illegal activity.

Shares in BNP closed 3.6 percent higher on Tuesday.

The bank essentially functioned as the "central bank for the government of Sudan," concealed its tracks and failed to cooperate when first contacted by law enforcement, U.S. authorities said.

They also found BNP had evaded sanctions against entities in Iran and Cuba, in part by stripping information from wire transfers so they could pass through the U.S. system without raising red flags.

With its Sudanese clients, the bank admitted it set up elaborate payment structures that routed transactions through satellite banks to disguise their origin.

"BNPP banked on never being held to account for its criminal support of countries and entities engaged in acts of terrorism and other atrocities, but that is exactly what we did today," said Manhattan U.S. Attorney Preet Bharara, whose office helped to prosecute the case.

"We deeply regret the past misconduct that led to this settlement," BNP's Chief Executive Officer Jean-Laurent Bonnafe told analysts and investors on a conference call on Tuesday. He said the bank would implement a significant strengthening of its internal controls and processes.

 

 

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