Bank BNP Paribas pleads guilty to violating rules

Posted on Wednesday, 07.09.14

Bank BNP Paribas pleads guilty to violating rules
BY LARRY NEUMEISTER
ASSOCIATED PRESS

NEW YORK -- BNP Paribas, France's largest bank, pleaded guilty Wednesday
to a federal charge of violating U.S. economic sanctions by processing
transactions for clients in blacklisted countries, a development that a
Manhattan judge said should show that no financial institution is
"immune from the rule of law."

The plea to conspiring to violate the International Emergency Powers Act
and the Trading with the Enemy Act came a week after the bank agreed to
forfeit roughly $8.9 billion as it pleaded guilty to charges in state
court in New York City.

The bank admitted processing billions of dollars in illegal transactions
on behalf of clients in Sudan, Cuba and Iran as it violated U.S. trade
sanctions imposed to block the participation of some countries in the
global financial system.

U.S. District Judge Lorna G. Schofield accepted a plea agreement calling
for the forfeiture and a criminal fine of $140 million, representing
twice the amount the bank earned from transactions. The bank also must
enhance compliance policies and procedures. Sentencing was set for Oct. 3.

"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," Schofield said.

The judge said the severity of conduct from 2004 through 2012 more than
warranted a criminal charge, and the sizeable amount of the forfeiture
"bears a direct correlation to the conduct at issue."

She added: "In addition, 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."

Prosecutors said most transactions were processed through a New York
branch office.

The penalty money is being split among the federal government, the
Federal Reserve, New York state, New York City and Manhattan District
Attorney Cyrus R. Vance Jr.'s office, which launched the investigation
after getting a tip.

Federal authorities say the nearly $9 billion forfeiture set a record
for a sanctions case brought by the Justice Department and for a penalty
imposed in a criminal case involving a bank.

The government said BNP Paribas essentially served as the U.S. central
bank for moving large amounts of money even as human rights abuses —
including the genocide in Sudan — were occurring in those nations.

Assistant U.S. Attorney Andrew D. Goldstein said records from the bank
and government interviews revealed that BNP enabled Sudan to process
$6.4 billion in transactions, while Iran moved $686.6 million and Cuba
$1.74 billion.

Prosecutors said a senior compliance officer at the bank warned several
legal, business and compliance personnel at BNP's subsidiary in Geneva
in 2005 that the satellite bank system was being used to evade U.S.
sanctions.

"But the bank overwhelmingly chose to continue to engage in these
transactions," Goldstein said.

Associated Press Writer Jennifer Peltz contributed to this report

Source: NEW YORK: Bank BNP Paribas pleads guilty to violating rules -
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