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BNP Paribas bank pleads guilty to violating rules

Published July 9, 2014 5:42 pm

Trade • France's largest bank processed transactions for clients in blacklisted countries.
This is an archived article that was published on sltrib.com in 2014, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

New York • BNP Paribas, France's largest bank, pleaded guilty Wednesday to a federal charge of violating U.S. economic sanctions by processing transactions for clients in blacklisted countries, a development that a Manhattan judge said should show that no financial institution is "immune from the rule of law."

The plea to conspiring to violate the International Emergency Powers Act and the Trading with the Enemy Act came a week after the bank agreed to forfeit roughly $8.9 billion as it pleaded guilty to charges in state court in New York City.

The bank admitted processing billions of dollars in illegal transactions on behalf of clients in Sudan, Cuba and Iran as it violated U.S. trade sanctions imposed to block the participation of some countries in the global financial system.

U.S. District Judge Lorna G. Schofield accepted a plea agreement calling for the forfeiture and a criminal fine of $140 million, representing twice the amount the bank earned from transactions. The bank also must enhance compliance policies and procedures. Sentencing was set for Oct. 3.

"The defendant's actions not only flouted U.S. foreign policy, but also provided support to governments that threaten both our regional and national security, and in the case of Sudan, a government that has committed flagrant human rights abuses and has known links to terrorism," Schofield said.

The judge said the severity of conduct from 2004 through 2012 more than warranted a criminal charge, and the sizeable amount of the forfeiture "bears a direct correlation to the conduct at issue."

She added: "In addition, the forfeiture amount will surely have a deterrent effect on others that may be tempted to engage in similar conduct, all of whom should be aware that no financial institution is immune from the rule of law."

Prosecutors said most transactions were processed through a New York branch office.

The penalty money is being split among the federal government, the Federal Reserve, New York state, New York City and Manhattan District Attorney Cyrus R. Vance Jr.'s office, which launched the investigation after getting a tip.

Federal authorities say the nearly $9 billion forfeiture set a record for a sanctions case brought by the Justice Department and for a penalty imposed in a criminal case involving a bank.

The government said BNP Paribas essentially served as the U.S. central bank for moving large amounts of money even as human rights abuses — including the genocide in Sudan — were occurring in those nations.

Assistant U.S. Attorney Andrew D. Goldstein said records from the bank and government interviews revealed that BNP enabled Sudan to process $6.4 billion in transactions, while Iran moved $686.6 million and Cuba $1.74 billion.

Prosecutors said a senior compliance officer at the bank warned several legal, business and compliance personnel at BNP's subsidiary in Geneva in 2005 that the satellite bank system was being used to evade U.S. sanctions.

"But the bank overwhelmingly chose to continue to engage in these transactions," Goldstein said.