BNP entered a guilty plea in state court in New York City and is expected to do the same Tuesday in federal court, officials said.
"BNP Paribas went to elaborate lengths to conceal prohibited transactions, cover its tracks and deceive U.S. authorities," said Attorney General Eric Holder. "These actions represent a series breach of U.S. law."
The roughly $8.9 billion deal is the largest sanctions case brought by the Justice Department. The goal of such sanctions is to cut off an enemy 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 sanctions generally apply to U.S. bank and foreign banks with U.S. operations.
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 trans-Atlantic 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.
President Barack Obama has declined to intervene in the dispute.
The U.S. authorities pursued other big foreign banks for sanctions violations in two cases in 2012, though both matters were resolved for smaller dollar figures.
HSBC, Europe's largest bank, agreed to a $1.9 billion settlement with U.S. and New York authorities in connection with the transfer of billions of dollars on behalf of Iran, Cuba, Libya, Sudan and Myanmar.
Standard Chartered paid $340 million in a settlement with New York state regulators, who accused the bank of scheming with the Iranian government to launder billions of dollars. The bank also paid $327 million to settle U.S. and New York charges related to currency transactions for Iranian, Sudanese, Libyan and Burmese entities that were said to be concealed from regulators.
Meanwhile, in two separate similar investigations in France, authorities are also looking at Credit Agricole and Societe Generale, people involved in the probe have said. Together with BNP Paribas, they constitute France's top three banks.
The BNP announcement comes weeks after Credit Suisse struck a $2.6 billion plea deal with the Justice Department for helping wealthy Americans avoid taxes. Shortly before that case was brought, Attorney General Eric Holder — whose Justice Department has been accused of not being aggressive enough in confronting bank misconduct — issued a video message declaring that no bank was too large to prosecute.