BNP trampled compliance officers, pays record $9 billion penalties for sanction offenses
Monday, May 4, 2015 at 8:22AM
Richard L. Cassin in BNP Paribas SA, Cooperation, Cuba, International Emergency Economic Powers Act, Iran, LJudge Lorna G. Schofield, Leslie R. Caldwell, Osama Bin Laden, Sudan, Trading with the Enemy Act, United Nations, sanctions violations

Paris-based BNP Paribas S.A. was sentenced Friday for processing billions of dollars of transactions through the U.S. financial system on behalf of Sudanese, Iranian and Cuban entities subject to U.S. economic sanctions. 

BNP was ordered to forfeit more than $8.8 billion to the United States and to pay a $140 million fine. The bank was also sentenced to a five-year term of probation.

The $9 billion sentence was "the largest financial penalty ever imposed in a criminal case," the DOJ said.

BNP is the world's fourth biggest bank. It pleaded guilty in July 2014 to conspiring to violate the International Emergency Economic Powers Act and the Trading with the Enemy Act.

Federal judge Lorna Schofield of the Southern District of New York sentenced the bank Friday.

BNP admitted that from at least 2004 through 2012, it "knowingly and willfully" moved over $8.8 billion through the U.S. financial system on behalf of Sudanese, Iranian, and Cuban sanctioned entities in violation of U.S. economic sanctions. 

About $6.4 billion of the illegal payments were made on behalf of sanctioned entities in Sudan.

In March 2007, a senior compliance officer wrote to other high-level BNP compliance and legal employees that certain customers played "a pivotal part in the support of the Sudanese government which . . . has hosted Osama Bin Laden and refuses the United Nations intervention in Darfur.”

In its guilty plea, BNP also admitted that it continued to do U.S. dollar business with Cuba long after it was clear that such business was illegal. BNP admitted that its conduct with regard to the Cuban embargo was both “cavalier” and “criminal.”

BNP also said it processed more than $650 million of transactions involving entities tied to Iran. Some transactions involved a Dubai-based oil business linked to the Iran government. "This conduct continued into 2012 -- nearly two years after the bank had commenced an internal investigation into its sanctions compliance and pledged to cooperate with the government," the DOJ said.

The DOJ said Friday it is exploring ways to use the forfeited funds to compensate individuals who may have been harmed by the sanctioned regimes of Sudan, Iran and Cuba. 

"As a preliminary step in this process, the Justice Department is inviting such individuals or their representatives to provide information describing the nature and value of the harm they suffered." 

"Beginning today (May 1, 2015)," the DOJ said, "interested persons can learn more about this process and submit their information at [external link], or call 888-272-5632 (within North America) or 317-324-0382 (internationally)."

In a statement Friday, Leslie Caldwell, chief of the DOJ's criminal division, explained BNP's record fine: “BNP Paribas flouted U.S. sanctions laws to an unprecedented extreme, concealed its tracks, and then chose not to fully cooperate with U.S. law enforcement, leading to a criminal guilty plea and nearly $9 billion penalty.”

In 2005, a senior compliance officer at BNP warned: "As I understand it, we have a number of Arab Banks (nine identified) on our books that only carry out clearing transactions for Sudanese banks in dollars. ... This practice effectively means that we are circumventing the U.S. embargo on transactions in USD by Sudan."

In response, a business leader told the compliance officer that the practice had "full support" of management at BNP in Paris.

Later that year, BNP's compliance staff met with executives to again express, "to the highest level of the bank, the reservations of the Swiss Compliance office concerning the transactions executed with and for Sudanese customers."

An executive requested no minutes of the meeting be kept and again dismissed the issue.

Thirteen bank executives, including a chief operating officer, were fired as part of the agreement BNP reached in June last year with New York's Department of Financial Services.

In August last year, BNP announced the retirement of its top compliance officer, Jean Clamon. He was succeeded by Eric Martin, head of internal audit. Clamon had been the chief compliance officer since 2008 and was also a former chief operating officer.


Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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