NEW YORK, USA -- According to court documents submitted on Monday, BNP Paribas SA (BNPP), a global financial institution headquartered in Paris, agreed to enter a guilty plea and to pay a $8.9 billion penalty for conspiring to violate the US embargo against Cuba and other international economic sanctions.
BNPP admitted to processing billions of dollars of transactions through the US financial system on behalf of Sudanese, Iranian, and Cuban entities subject to US economic sanctions. The agreement by the French bank to plead guilty is the first time a global bank has agreed to plead guilty to large-scale, systematic violations of US economic sanctions.
“BNP Paribas went to elaborate lengths to conceal prohibited transactions, cover its tracks, and deceive US authorities. These actions represent a serious breach of US law,” Attorney General Eric Holder said. “Sanctions are a key tool in protecting US national security interests, but they only work if they are strictly enforced. If sanctions are to have teeth, violations must be punished. Banks thinking about conducting business in violation of US sanctions should think twice because the Justice Department will not look the other way.”
“BNP ignored US sanctions laws and concealed its tracks. And when contacted by law enforcement it chose not to fully cooperate,” Deputy Attorney General James Cole said. “This failure to cooperate had a real effect -- it significantly impacted the government’s ability to bring charges against responsible individuals, sanctioned entities and satellite banks. This failure together with BNP’s prolonged misconduct mandated the criminal plea and the nearly $9 billion penalty that we are announcing today.”
“By providing dollar clearing services to individuals and entities associated with Sudan, Iran, and Cuba – in clear violation of US law – BNPP helped them gain illegal access to the US financial system,” said Assistant Attorney General Leslie Caldwell of the Justice Department’s Criminal Division. “In doing so, BNPP deliberately disregarded US law of which it was well aware, and placed its financial network at the services of rogue nations, all to improve its bottom line. Remarkably, BNPP continued to engage in this criminal conduct even after being told by its own lawyers that what it was doing was illegal.”
According to documents released on Monday, over the course of eight years, BNPP knowingly and willfully moved more than $8.8 billion through the US financial system on behalf of sanctioned entities, including more than $4.3 billion in transactions involving entities that were specifically designated by the US government as being cut off from the US financial system.
BNPP engaged in this criminal conduct through various sophisticated schemes designed to conceal from US regulators the true nature of the illicit transactions. BNPP routed illegal payments through third party financial institutions to conceal not only the involvement of the sanctioned entities but also BNPP’s role in facilitating the transactions.
BNPP instructed other financial institutions not to mention the names of sanctioned entities in payments sent through the United States and removed references to sanctioned entities from payment messages to enable the funds to pass through the US financial system undetected.
BNPP will waive indictment and be charged in a single-count felony criminal information, filed in federal court in the Southern District of New York. BNPP has agreed to plead guilty to the information, has entered into a written plea agreement, and has accepted responsibility for its criminal conduct. BNPP is scheduled to formally enter its guilty plea before United States District Judge Lorna Schofield on July 9, 2014.
The plea agreement, subject to approval by the court, provides that BNPP will pay total financial penalties of $8.9736 billion, including forfeiture of $8.8336 billion and a fine of $140 million.
In addition to the joint forfeiture judgment, the New York County District Attorney’s Office also announced on Monday that BNPP has pleaded guilty in New York State Supreme Court to falsifying business records and conspiring to falsify business records.
In addition, the board of governors of the Federal Reserve System announced that BNPP has agreed to a cease and desist order, to take certain remedial steps to ensure its compliance with US law in its ongoing operations, and to pay a civil monetary penalty of $508 million.
The New York State Department of Financial Services (DFS) announced that BNPP has agreed, among other things, to terminate or separate from the bank 13 employees, including the group chief operating officer and other senior executives; suspend US dollar clearing operations through its New York branch and other affiliates for one year for business lines on which the misconduct centered; extend for two years the term of a monitorship put in place in 2013, and pay a monetary penalty to DFS of $2.2434 billion.
In satisfying its criminal forfeiture penalty, BNPP will receive credit for payments it is making in connection with its resolution of these related state and regulatory matters.
The Treasury Department’s Office of Foreign Assets Control has also levied a fine of $963 million, which will be satisfied by payments made to the Department of Justice.
BNPP provided Cuban sanctioned entities with access to the US financial system by hiding the Cuban sanctioned entities’ involvement in payment messages. From October 2004 through early 2010, BNPP knowingly and willfully processed approximately $1.747 billion on behalf of Cuban sanctioned entities. In the statement of facts, BNPP admitted that it continued to do US dollar business with Cuba long after it was clear that such business was illegal, in order to preserve BNPP’s business relationships with Cuban entities.
BNPP further admitted that its conduct with regard to the Cuban embargo was both “cavalier” and “criminal,” as evidenced by the bank’s 2006 decision, after certain Cuban payments were blocked when they reached the United States, to strip the wire messages for those payments of references to Cuban entities and resubmit them as a lump sum in order to conceal from US regulators the bank’s longstanding, and illicit, Cuban business.