French banking giant BNP Paribas agreed to plead guilty to criminal charges and pay an $8.9 billion penalty for transferring billions of dollars on behalf of blacklisted Sudan, Iran and Cuba, U.S. authorities said Monday.
BNP is the seventh bank to settle criminal sanctions offenses but the first to plead guilty because its wrongdoing was so pervasive, prosecutors said.
The bank hid the names of Sudanese and Iranian clients when sending transactions through its New York operations and the larger U.S. financial system. The violations stretched from at least 2002 into 2012, including some of the time the investigation of the bank was underway.
In press conferences in D.C. and New York, officials from the Justice Department’s criminal division, the Federal Reserve, Treasury Department, New York’s Department of Financial Services (DFS), and the U.S. attorney’s office and district attorney’s office in Manhattan, described the record sum that France’s largest bank has to pay for doing business with countries facing U.S. sanctions.
U.S. Attorney Preet Bharara said the bank had performed “the hat trick of sanctions violations” by unlawfully offering the U.S. financial markets to three sanctioned countries — Sudan, Iran, and Cuba.
According to the government’s statement of facts, BNP received internal warnings as early as August 2005 that it was evading U.S. sanctions in its dollar transactions with customers from Sudan.
Senior executives including the chief operating officer repeatedly dismissed compliance officers’ concerns.
No employees have been criminally charged.
Benjamin Lawsky, who leads New York’s Department of Financial Services, said Monday his agency would suspend the bank’s ability to process payments in dollar denominations. So-called dollar clearing is essential for business with international clients. Under the plea deal, certain BNP units will be barred from clearing dollar transactions for a year beginning in January 2015.
New York’s DFS — which received more than $2.2 billion of the $8.9 billion fine — also required BNP to terminate 13 employees, including one of its chief operating officers.
“It is important to remember that banks do not commit misconduct — bankers do,” Lawsky said.
BNP CEO Jean-Laurent Bonnafé said on the bank’s website: “We deeply regret the past misconduct that led to this settlement.”
Julie DiMauro is the executive editor of FCPA Blog and can be reached here.