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Comp Blog

French Bank slammed with multi-billion dollar fine for OFAC violation

By: Danielle Wright

CommentThursday - July 3, 2014

French bank BNC Paribas will pay nearly $9 billion in penalties and plead guilty to attempting to conceal some $30 billion in transactions with OFAC sanctioned countries. The bank is also expected to lose it ability to perform certain dollar-clearing transactions for a year. The settlement will conclude a long-running criminal investigation into allegations that the bank violated U.S. money laundering laws by helping clients avoid international sanctions. The settlement between the bank and prosecutors had been expected for months, but the historic settlement amount was not finalized until recently. BNPP is also required to provide OFAC with copies of its submissions to the Fed Board of Governors, relating to the OFAC compliance review that it will be conducting as part of its settlement with the BOG.

This settlement resolves OFAC’s seven-year investigation into BNPP’s systemic practice of concealing, removing, omitting, or obscuring references to information about U.S.-sanctioned parties in 3,897 financial and trade transactions routed to or through banks in the United States between 2005 and 2012. The bank is alleged to have violated sanctions against Sudan, Iran, Cuba, and Burma. The specific payment practices the bank utilized in order to process sanctions-related payments to or through the United States included:

  • omitting references to sanctioned parties,
  • replacing the names of sanctioned parties with BNPP’s name or a code word, and
  • structuring payments in a manner that did not identify the involvement of sanctioned parties in payments sent to U.S. financial institutions. 

The severity of the punishment is due to the bank's lack of cooperation over a period of years, as it continued to process transactions that the U.S. says violated the law even after the investigation began. BNP will also plead guilty to a crime, making it only the second bank to do so this year, after Credit Suisse. However, since both of these banks are foreign, it is hard to predict how markets might react to a guilty plea from a domestic US bank. It also remains to be seen how foreign banks and their regulators may respond to this historic fine.


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