France’s largest bank, BNP Paribas (BNPP), will plead guilty to violating US trade sanctions by processing billions of dollars for Burmese entities – as well as institutions from Iran, Sudan and Cuba – via US financial institutions, and will face a record penalty of nearly US$9 billion.
According to a 30 June statement by the US Department of Justice (DOJ), BNPP’s admission of guilt is “the first time a financial institution has agreed to plead guilty based on large-scale, systematic violations of US economic sanctions.”
DOJ documents show that BNPP conspired with banks and other entities located in Burma, Iran, Sudan and Cuba from 2004 to 2012 to “knowingly, intentionally and willfully move at least $8,833,600,000 through the US financial system on behalf of Sanctioned Entities in violation of US sanction laws”.
The conspiracy involved BNPP using an elaborate method of “payment messages”, which concealed the transactions of sanctioned entities processing through BNPP’s New York branches and other American financial institutions.
The French bank also structured payments in highly complicated ways, instructed co-conspirator financial institutions not to mention the sanctioned entities in their payment messages, and removed information naming identifying the sanctioned institutions.
US Assistant Attorney General Leslie Caldwell condemned BNPP’s evasion and persisted in the violations even after their own lawyers informed them of the illegality.
“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,” Caldwell said in the DOJ statement. “Remarkably, BNPP continued to engage in this criminal conduct even after being told by its own lawyers that what it was doing was illegal.”
While BNPP’s admission of guilt will waive criminal charges, stiff penalties will be instated, said Richard Weber, chief of the US Internal Revenue Service’s criminal investigation department.
“BNP Paribas will forfeit the historic figure of almost $8.9 billion representing the proceeds of criminal activity,” Weber said. “BNPP had many opportunities to take corrective action and abide by the law, and yet, despite warnings from American regulators and other banks, consciously chose to ignore those warnings and commit literally thousands of flagrant violations.”
According to a 1 July statement released by BNPP, CEO Jean-Laurent Bonnafe expressed regret for the institution’s past misconduct.
“The failures that have come to light in the course of this investigation run contrary to the principles on which BNP Paribas has always sought to operate,” he said, adding that the bank is working with US authorities to “strengthen” its internal controls and processes.
Despite this hefty fine, Bonnafe said that the bank still be able to post “solid results” for this quarter.
BNPP is the second institution that the US government has fined in June in relation to violating sanctions by conducting businesses with Burmese entities.
Earlier last month, Fokker Services, a Dutch aerospace company, was hit with a $21 million fine for providing services between 2005 and 2010 to Myanma Airways, Air Mandalay, Yangon Airways and Air Bagan – which is owned by Burmese tycoon Tay Za, who has close links to the junta.