France’s largest bank, BNP Paribas, has agreed to a record $9bn settlement with US prosecutors and will plead guilty to two criminal charges of breaking US sanctions on trade with Sudan, Iran and Cuba.
No sanctions case in US history has ended with a bigger payment. The previous high was the $1.9bn HSBC paid in 2012.
“Between 2004 and 2012, BNP engaged in a complex and pervasive scheme to illegally move billions through the US financial system,” US Attorney General Eric Holder said at a press conference. The bank, he said, “deliberately and repeatedly violated longstanding US sanctions.” Holder hoped the deal would warn other firms doing business with the US that “illegal conduct will simply not be tolerated.”
The terms
For one year from the start of 2015, BNP will be barred from clearing certain transactions in US dollars. The bank also agreed to fire, and not rehire, 13 individuals tied to the violations. Chief executive Jean-Laurent Bonnafe said the bank gets to keep its licence to operate in the US.
BNP said it will book an “exceptional charge” of 5.8bn euros in the second quarter, on top of the $1.1bn it had already set aside for the US penalties. It expects “no impact on its operational or business capabilities” and promised “solid results” for the quarter. Shares rose more than 3% in morning trading.
On a conference call Tuesday, Bonnafe explained that during the dollar-clearing ban a third party will carry out the transactions. Setting that up will be “quite some work,” he said, and the bank has six months to do it.
“We deeply regret the past misconduct that led to this settlement,” he said. Resolving the matter was, in his words, “an important step forward.”
Paris pushed back
France had pressed Washington over the size of the penalty, which comes close to BNP’s entire 2013 pre-tax income of about 8.2bn euros. French Foreign Minister Laurent Fabius had earlier said a fine of that scale would be “an extremely serious problem,” an “unfair and unilateral decision” and “not reasonable.”
Swiss regulator FINMA announced it had closed its own investigation into the bank’s operations in Switzerland after the US decision. In a statement it said BNP Paribas had “persistently and seriously violated its duty to identify, limit and monitor the inherent risks” tied to foreign transactions.
US regulators have recently stepped up action against banks over money laundering and tax evasion, among other violations. In May, Credit Suisse agreed to a $2.6bn penalty and admitted criminal wrongdoing in helping “tax cheats” avoid US taxes. In 2012, Standard Chartered paid a total of $674m to US regulators and authorities for hiding transactions with Iran and other countries under US sanctions.
Sources
Sources
- Office of Public Affairs | BNP Paribas Agrees to Plead Guilty and to…
- BNP Paribas to pay $9bn to settle sanctions violations – BBC News
