BY Matt Atkins
The long arm of the law caught up with BNP Paribas (BNPP) this week, as it was slapped with a $9bn fine by US authorities.
On 30 June, France's largest bank pleaded guilty to criminal charges related to allegations it breached US sanction laws between 2004 and 2012. The heavy financial penalty is the least of BNPP's worries, however – the bank has also been banned for 12 months from conducting certain US dollar transactions, a vital part of its global business. The temporary ban is expected to trigger a client exodus, and how the bank will staunch the flow is unclear.
Such strict penalties were warranted, say authorities, by BNPP's persistent violations, which continued even after US officials warned the bank of its obligations. BNPP failed to heed calls to police illicit money flows which saw it act as a "central bank" for the Sudan – a hotbed of militant activity and human rights abuses.
The bank admitted to establishing elaborate payment structures for its Sudanese clients, routing transactions through satellite banks to disguise their origin. Internal bank memos showed that BNP officials were aware of the humanitarian crisis in Sudan and the ties of its government with al Qaeda founder Osama bin Laden, but found the commercial draw of the country too great a temptation to resist.
The French bank also evaded sanctions against entities in Iran and Cuba, stripping information from wire transfers so they could pass through the US system without raising suspicion. BNPP's illicit Iranian transactions were carried out on behalf of its clients, including a petroleum firm based in Dubai that was a front for an Iranian petroleum company.
The penalties laid on the French financial institution are far grater than those faced by Credit Suisse earlier in the year, when it admitted aiding US clients evade taxes. "We deeply regret the past misconduct that led to this settlement," said BNP Chief Executive Officer Jean-Laurent Bonnafe. "We have announced today a comprehensive plan to strengthen our internal controls and processes."
No individuals at the bank have yet been charged. However, US authorities have not closed the case and BNPP can expect more fallout in the coming days and weeks.