France’s largest bank has agreed to pay nearly 9 billion US dollars (£5.2 billion) to resolve criminal allegations that it processed transactions for clients in Sudan and other blacklisted countries in violation of US trade sanctions, the Justice Department says.
BNP Paribas pleaded guilty to state charges in New York and plans another guilty plea in federal court next month.
After months of negotiations, BNP admitted violating US trade sanctions by processing billions of dollars in illegal transactions on behalf of clients in Sudan, Cuba and Iran. The US had imposed sanctions on the countries to block their participation in the global financial system.
The transactions, which prosecutors say were processed through its New York branch office from at least 2004 through to 2012, were handled at the same time as human rights abuses – including the genocide in Sudan – were occurring in those nations.
“Sanctions are a key tool in protecting US national security interests, but they only work if they are strictly enforced,” Attorney General Eric Holder said. “If sanctions are to have teeth, violations must be strictly punished.”
The goal of such sanctions is to cut off a nation’s access to banks and other sources of capital, limiting its economic growth and ability to buy weapons, food and other items available through global trade. The restrictions on dealings with sanctioned countries generally apply to US banks and foreign banks with US operations.
The roughly billion-dollar deal is the largest sanctions case brought by the Justice Department and the largest penalty in any criminal case involving a bank. Prosecutors say the penalty was necessary not only because of the sheer volume of the illicit transactions but also because of the bank’s efforts to hide them and executives’ lack of co-operation with the Justice Department.
As the BNP deal inched closer, French officials in recent weeks had expressed deep concern about the punishment. They lobbied for White House intervention and warned that a large penalty could affect the entire European economy and hold up a transatlantic free trade agreement.
The French economy minister last week asked the Justice Department to be “fair and proportionate” in deciding on the potential penalty. President Francois Hollande wrote to the Obama administration in April asking for a “reasonable” solution, though Barack Obama deflected calls to get involved in the dispute.
Paris-based BNP yesterday entered a guilty plea in state court in New York City to falsifying business records. The bank is expected to plead guilty in federal court on July 9 for conspiring to violate the International Emergency Economic Powers Act and the Trading With the Enemy Act.
It has also agreed to fire multiple senior executives and will lose for one year its ability to process certain transactions in US dollars. No individual BNP executives were charged.
“We deeply regret the past misconduct that led to this settlement,” Jean-Laurent Bonnafe, chief executive of BNP, said in a statement. “The failures that have come to light in the course of this investigation run contrary to the principles on which BNP Paribas has always sought to operate.”
The bank said in addition to provisions it has already taken, it will book a charge of 5.8 billion euros (£4.6 billion) in the second quarter.
“It is not hyperbole to say that the most important values in the international community – respect for human rights, peaceful co-existence, and a world free of terrorism – depend in large part on the effectiveness of these sanctions,” said Manhattan District Attorney Cyrus Vance Jnr, who said the investigation started with a tip to his office.