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BNP compliance staff first warned top execs, but later disguised misconduct

BNP Paribas SA ignored the warnings of its compliance staff as the bank broke U.S. sanctions, but the compliance team helped hide the origins of the transactions from U.S. authorities, according to the bank’s guilty plea this week.

Over several years, compliance staff at France’s largest bank shifted from warning to assisting in the illegal conduct, the Wall Street Journal reported Thursday.On Monday, BNP pleaded guilty to violating U.S. sanctions and agreed to pay a record $8.9 billion forfeiture and fine. The bank admitted to helping move billions of dollars in transactions from Cuba, Iran and Sudan through the U.S. financial system.

In 2005, a senior compliance officer at BNP warned: “As I understand it, we have a number of Arab Banks (nine identified) on our books that only carry out clearing transactions for Sudanese banks in dollars. … This practice effectively means that we are circumventing the U.S. embargo on transactions in USD by Sudan.”

In response, a business leader told the compliance officer that the practice had “full support” of management at BNP in Paris.

Later that year, BNP’s compliance staff met with executives to again express, “to the highest level of the bank, the reservations of the Swiss Compliance office concerning the transactions executed with and for Sudanese customers.”

An executive requested no minutes of the meeting be kept and again dismissed the issue.

In 2006, after again expressing worries about the transactions, compliance personnel signed off on them.

In 2007, a senior compliance officer warned that clearing Sudan transactions through U.S. banks could be viewed as a “grave violation” of sanctions law.

Another compliance officer warned that the banks BNP was helping “play a pivotal part in the support of the Sudanese government which … has hosted Osama Bin Laden and refuses the United Nations intervention in Darfur.”

Compliance officers eventually concluded that the bank had no other choice but to disguise the lucrative transactions involving sanctioned countries or else stop doing dollar transactions with Cuba, Iran and Sudan.

Thirteen bank executives, including a chief operating officer, were fired as part of the agreement BNP reached on June 30 with New York’s Department of Financial Services.


Julie DiMauro is the executive editor of FCPA Blog and can be reached here.

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