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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