The US Attorney has announced that the Court has accepted a plea agreement from BNP Paribas involving the bank forfeiting more than $8.8 billion and to pay a fine of $140 million for its violation of economic sanctions.
Preet Bharara, the United States Attorney for the Southern District of New York, and Leslie R. Caldwell, Assistant Attorney General for the Justice Department’s Criminal Division, announced that BNP Paribas S.A. (BNPP), a global financial institution headquartered in Paris, pled guilty today before U.S. District Judge Lorna G. Schofield to a one-count Information charging the bank with conspiring to violate the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA), for its role in processing billions of dollars of U.S. dollar transactions through the U.S. financial system on behalf of Sudanese, Iranian, and Cuban entities subject to U.S. economic sanctions from 2004 through 2012.
At today’s proceeding, Judge Schofield accepted the plea agreement that had been entered into by the Government and BNPP on June 30, 2014, under which BNPP agreed to forfeit a total of $8.8336 billion, pay a criminal fine of $140 million, cooperate with U.S. authorities, and be subject to a five-year term of probation, during which BNPP must enhance its compliance policies and procedures in accordance with settlement agreements BNPP has entered into with its principal U.S. regulators, the Board of Governors of the Federal Reserve System, and the New York State Department of Financial Services. Judge Schofield set a sentencing date of October 3, 2014, at 2:00 p.m.
In accepting the bank’s guilty plea, Judge Schofield said: “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. I find that the severity of the defendant’s conduct more than warrants the criminal charge to which it has pleaded. . . . 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.”
According to the plea agreement, statements made during today’s plea proceeding, and the Statement of Facts containing further admissions by BNPP, BNPP knowingly and willfully moved more than $8.8 billion through the U.S. financial system on behalf of entities subject to U.S. embargo from 2004 through 2012, including more than $4.3 billion in transactions involving entities that were specifically designated by the U.S. Government as being cut off from the U.S. financial system.
BNPP admitted that the majority of illegal payments were made on behalf of sanctioned entities in Sudan, which was subject to U.S. embargo based on the Sudanese government’s role in facilitating terrorism and committing human rights abuses. BNPP processed approximately $6.4 billion through the United States on behalf of Sudanese sanctioned entities from July 2006 through June 2007, including approximately $4 billion on behalf of a financial institution owned by the government of Sudan, even as internal emails showed BNPP employees expressing concern about the bank’s assistance to the Sudanese government in light of its role in supporting international terrorism and committing human rights abuses during the same time period. Indeed, in March 2007, a senior compliance officer at BNPP wrote to other high-level BNPP compliance and legal employees reminding them that certain Sudanese banks with which BNPP dealt “play a pivotal part in the support of the Sudanese government which . . . has hosted Osama Bin Laden and refuses the United Nations intervention in Darfur.”
One way in which BNPP processed illegal transactions on behalf of Sudanese sanctioned entities was through a sophisticated system of “satellite banks” set up to disguise both BNPP’s and the sanctioned entities’ roles in the payments to and from financial institutions in the United States. As early as August 2005, a senior compliance officer at BNPP warned several legal, business, and compliance personnel at BNPP’s subsidiary in Geneva that the satellite bank system was being used to evade U.S. sanctions: “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 US embargo on transactions in USD by Sudan.”
Similarly, BNPP admitted that it provided Cuban sanctioned entities with access to the U.S. 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 U.S. 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 U.S. regulators the bank’s longstanding, and illicit, Cuban business.
BNPP also admitted to engaging in more than $650 million of transactions involving entities tied to Iran, and this conduct continued into 2012 – nearly two years after the bank had commenced an internal investigation into its sanctions compliance and had pledged to cooperate with the Government. The illicit Iranian transactions were done on behalf of BNPP clients, including a petroleum company based in Dubai that was effectively a front for an Iranian petroleum company and an Iranian oil company.
This case is being prosecuted by the Money Laundering and Asset Forfeiture Unit of the U.S. Attorney’s Office for the Southern District of New York, and the Money Laundering and Bank Integrity Unit of the Criminal Division’s Asset Forfeiture and Money Laundering Section (AFMLS). Assistant United States Attorneys Andrew D. Goldstein, Martin S. Bell, Micah W.J. Smith, and Christine I. Magdo of the Southern District of New York, and Trial Attorneys Craig Timm and Jennifer E. Ambuehl of AFMLS, are in charge of the prosecution.
This case was investigated by the Internal Revenue Service-Criminal Investigation’s Washington Field Division and the Federal Bureau of Investigation’s New York Field Office. The New York County District Attorney’s Office also conducted its own investigation alongside the Department of Justice on this investigation. The Department of Justice expressed its gratitude to the Board of Governors of the Federal Reserve, the Federal Reserve Bank of New York, the New York State Department of Financial Services, and the Treasury Department’s Office of Foreign Assets Control for their assistance with this matter.